Why I think the UAW is right

[2002 Caddy]

Originally Posted by mgescuro

Sorry Aldo.... UAW needs to give up the concessions... yesterday.

You're fooling yourself if you believe that Ford is a healthy company. You're in B-school now, do a SWOT analysis on Ford. Do simple ratio analysis on Ford. Do a cursory inspection of their balance sheet and cash flow statements.
They are NOT a healthy company.

Just because it looks like they're firing on all cylinders, doesn't actually mean they are. All it proves is that they are healthier than GM and Chrysler. Which is like saying, GM and Chrysler had the swine flu while Ford only has the regular flu. You can easily die from either strain of flu.

What's the use of going to business school if you don't use your noggin.

Yup...

Originally Posted by fp115

Of course they needed to, but what is in it for them?

Simple, a job.

Lets be honest here... about 90% of the failure at GM was due to one bone head management decision after another... But there is still 10% of blame to throw around. And while final responsibility for the union contract rests on management's desk. The union leadership needs to wake up and smell the coffee here... This whole industry is dying and under HUGE international threat.

There is ZERO political will to step in a provide for another bailout... Until last quarter, Ford was not profitable since 2005. Even now, most of the profit is from accounting magic and not from operations. Ford is off life support, but it is still in the hospital.

It is just starting to get its feet back under it. Now is not the time to play hard ball with the negotiations, what is the unemployment rate in Detroit these days? Now is the time to circle the wagons and save an industry.

[Buick61]

Originally Posted by mgescuro

Sorry Aldo.... UAW needs to give up the concessions... yesterday.

You're fooling yourself if you believe that Ford is a healthy company. You're in B-school now, do a SWOT analysis on Ford. Do simple ratio analysis on Ford. Do a cursory inspection of their balance sheet and cash flow statements.
They are NOT a healthy company.

Just because it looks like they're firing on all cylinders, doesn't actually mean they are. All it proves is that they are healthier than GM and Chrysler. Which is like saying, GM and Chrysler had the swine flu while Ford only has the regular flu. You can easily die from either strain of flu.

What's the use of going to business school if you don't use your noggin.

....no where did I say they were healthy.

I reviewed their last financial report, for what it's worth, and read all their foot notes and the balance sheet, income statement, shareholder's equity, and statement of cash flows, even.

This situation is not about their financial health, per se. It has every bit to do with Ford wanting it both ways. As bad of a financial situation they may soon be in, they still are not as bad off as GM and Chrysler were during the first half of the year, either financially, in the public's eye, or in the media.

Ford wants this image that they're healthy, righteous, and that they're NOT GM and Chrysler. Fine, I understand that. But don't, then, turnaround and whine about the labor contract those two beleaguered companies were able to get. GM and Chrysler didn't get those contracts changed easily. It took a lot of sacrifice. It took an immense hit to their public image. It cost them their companies. Ford wants to get something for nothing.

Ford doesn't have senators and representatives, media outlets and everyday citizens breathing down their necks. I think they should enjoy their other advantages and deal with the labor costs until 2011.

[Buick61]

Originally Posted by Simon says

The emotional angle does not work on the business world. But in any case Ford has gone through as much pain as GM and Chrysler. Their pain was better timed that's all. The reason being that Bill Ford and Alan Mulally are way better managers with better vision than Wagoner or Bob Nardelli ever will.

Basically your theory is that Ford ought to be punished for its success, which I guess is shared by some people but that doesn't make it any less ridiculous.

What you call GM and Chrysler misfortunes were self induced wounds, mortal wounds if you will, inflicted by incompetent, selfish and stupid management. And You, me and every other tax paying person in this country, including the members of the UAW, ended up paying for their mistakes. Ford was not foreign to the stupidity and lack of vision but Ford unlike GM and Chrysler, reacted. Now you want Ford to suffer for having rectified earlier, for having spared us the burden of having to bail them out too. Brilliant!

Its known how much you hate the fact that Ford makes cars in Mexico, for some reason you are less severe with Chrysler building their bread and butter trucks

Thanks for sharing though.

1) Chrysler also makes the Ram in the U.S. So that's not really hear or there. The day I have the choice to by a hybrid Fusion from a U.S. plant, then we can use that comparison.

2) This has nothing to do with emotion. If you don't think negative public image, one of the world's largest bankruptcies and all the chagrin and lost goodwill associated thereto, and the massive microscope put on GM and Chrysler by lawmakers has nothing to do with business and is all an emotional issue, then you really don't understand how everything is intertwined.

Yes, Ford went through a lot. No, it was no where near what GM and Chrysler were put through. Yes, they put themselves there. So what? I happened. Those labor cost changes were borne out of the bankruptcies. That's why they exist. Ford can't just come in on the back end and say, "me too." It's not a punishment for their success (that's YOU being emotional). Rather, it's business. Flat-out, cold-hearted, business.

[big swede]

Originally Posted by mgescuro

Sorry Aldo.... UAW needs to give up the concessions... yesterday.

You're fooling yourself if you believe that Ford is a healthy company. You're in B-school now, do a SWOT analysis on Ford. Do simple ratio analysis on Ford. Do a cursory inspection of their balance sheet and cash flow statements.
They are NOT a healthy company.

Just because it looks like they're firing on all cylinders, doesn't actually mean they are. All it proves is that they are healthier than GM and Chrysler. Which is like saying, GM and Chrysler had the swine flu while Ford only has the regular flu. You can easily die from either strain of flu.

What's the use of going to business school if you don't use your noggin.

Your right but it's amazing how many people believe Ford is so well off because they didn't declare bankruptcy.

All 3 of the American automakers realized they were headed for bankruptcy but Ford had a MUCH larger incentive to do something before the inevitable happened. If Ford would have declared bankruptcy then the Family could have easily been cut out of the picture or at the very least minimized. Let's not let public perception change Fords position, they made several big moves selling off assets to avoid bankruptcy for one and only one reason and that was so the Ford family remains in charge.

[mgescuro]

Originally Posted by Buick61

....no where did I say they were healthy.

I reviewed their last financial report, for what it's worth, and read all their foot notes and the balance sheet, income statement, shareholder's equity, and statement of cash flows, even.

This situation is not about their financial health, per se. It has every bit to do with Ford wanting it both ways. As bad of a financial situation they may soon be in, they still are not as bad off as GM and Chrysler were during the first half of the year, either financially, in the public's eye, or in the media.

Ford wants this image that they're healthy, righteous, and that they're NOT GM and Chrysler. Fine, I understand that. But don't, then, turnaround and whine about the labor contract those two beleaguered companies were able to get. GM and Chrysler didn't get those contracts changed easily. It took a lot of sacrifice. It took an immense hit to their public image. It cost them their companies. Ford wants to get something for nothing.

Ford doesn't have senators and representatives, media outlets and everyday citizens breathing down their necks. I think they should enjoy their other advantages and deal with the labor costs until 2011.

That's the problem with a simple business analysis.
Ford is in dire straits. 1 bad quarter will sink them. Look at their debt load. They are absolutely right to "whine" about the labor contract. What got US automakers into this jam in the first place? Bad product and way overpaid, overcompensated, and entitled labor.

Ford is as bad off as GM and Chrysler. They just managed to get the "loans" prior to collapse of the market and they have leveraged everything at the company except the kitchen sink.

Ultimately, fact of the matter is, labor needs to change in this country. The cost here is simply too high for domestic industries to remain competitive.

[fp115]

Originally Posted by 2002 Caddy

Simple, a job.

Lets be honest here... about 90% of the failure at GM was due to one bone head management decision after another... But there is still 10% of blame to throw around. And while final responsibility for the union contract rests on management's desk. The union leadership needs to wake up and smell the coffee here... This whole industry is dying and under HUGE international threat.

There is ZERO political will to step in a provide for another bailout... Untill last quarter, Ford was not profitable since 2005. Even now, most of the profit is from accounting magic and not from opperations. Ford is off life support, but it is still in the hospital.

It is just starting to get its feet back under it. Now is not the time to play hard ball with the negotiations, what is the unemployment rate in Detroit these days? Now is the time to circle the wagons and save an industry.

That's not nearly a good enough reason. If the UAW were to walk out tomorrow, Ford would be screwed. Additionally building outside of the US also adds to the complexity. In most cases companies do want to build in the market they serve, because it increases efficiency and at times quality.

Now the union knows that if Ford would threaten jobs, that Ford couldn't do it. Ford needs the production much more than the employees need their jobs. Anyone who has dealt with negotiations in the past knows that if you threaten jobs when you are in a position like Ford, you risk making the entire debate even more hostile and could end up with a much slimmer chance of success.

I don't care who you want to blame for GM's issues. I know who was the cause of them, but clearly others seem to think they know more about the root cause of the issues. The fact is that Ford is in too good of a position currently to have any negotiating power over unions and bond holders. The union will see profit and not agree to cuts. Bondholders will see profit and would not see any benefit to trading their debt in a deal that would be worth significantly less. Ford losses all bargaining power due to their current situation and is at the mercy of clever tactics.

Until Ford's short term tactics begin to expire and the long term issues come back to haunt them, they will continue to have the same issues, same cost inefficiencies and less power at any bargaining table.

[Buick61]

Originally Posted by mgescuro

That's the problem with a simple business analysis.
Ford is in dire straits. 1 bad quarter will sink them. Look at their debt load. They are absolutely right to "whine" about the labor contract. What got US automakers into this jam in the first place? Bad product and way overpaid, overcompensated, and entitled labor.

Ford is as bad off as GM and Chrysler. They just managed to get the "loans" prior to collapse of the market and they have leveraged everything at the company except the kitchen sink.

Ultimately, fact of the matter is, labor needs to change in this country. The cost here is simply too high for domestic industries to remain competitive.

And: Oh well. Ford chose to deal with their problems by taking on massive debt. GM and Chrysler chose to try to ride it out. GM and Chrysler then went through bankruptcy and one of the results of that process was the new labor contract.

Ford has to live with its decision. Whining doesn't have a place here. They went one way, the others went another way. I'm sure GM and Chrysler would trade the labor contracts for Ford's clean image. They can't. Companies have to live with the decisions they make. Ford is trying to change that, but they really don't have a dog in the fight here. The UAW already gave concessions to Ford the last time they negotiated.

If Ford is so prescient about business matters, then they should have tried harder back then to get a better contract. They didn't.

[mgescuro]

If the UAW were to walk off tomorrow, then Ford can lock them out. Ford could get a few factories running with scabs in a matter of weeks.

Furthermore, with a true global lineup, and true flex-plant operation, Ford can divert production overseas and shipments could begin in a month. Two tops.

How far Ford is on globalization, I can't say. But that is the advantage of a true global production system.

[Simon says]

Originally Posted by Buick61

1) Chrysler also makes the Ram in the U.S. So that's not really hear or there. The day I have the choice to by a hybrid Fusion from a U.S. plant, then we can use that comparison.

2) This has nothing to do with emotion. If you don't think negative public image, one of the world's largest bankruptcies and all the chagrin and lost goodwill associated thereto, and the massive microscope put on GM and Chrysler by lawmakers has nothing to do with business and is all an emotional issue, then you really don't understand how everything is intertwined.

Yes, Ford went through a lot. No, it was no where near what GM and Chrysler were put through. Yes, they put themselves there. So what? I happened. Those labor cost changes were borne out of the bankruptcies. That's why they exist. Ford can't just come in on the back end and say, "me too." It's not a punishment for their success (that's YOU being emotional). Rather, it's business. Flat-out, cold-hearted, business.

Excuse me, but this argument:

Originally Posted by Buick61

Ford wants this image that they're healthy, righteous, and that they're NOT GM and Chrysler. Fine, I understand that. But don't, then, turnaround and whine about the labor contract those two beleaguered companies were able to get. GM and Chrysler didn't get those contracts changed easily. It took a lot of sacrifice. It took an immense hit to their public image. It cost them their companies. Ford wants to get something for nothing.

. . . is purely emotional and is also the center of your entire diatribe.

What is flat-out, cold-hearted, business, is the fact that they need those concessions too, regardless of how the other two obtained them.

You want us to believe that its some sort of a sin from Ford's part to milk to the maximum the fact that they didn't go bankrupt and that they didn't need to be bailed out by the federal government. Well guess what . . . maximizing your advantages over your competitors is flat-out, cold-hearted, business.

Yes, you are advocating to punish Ford for its success. Yes, its a purely emotional argument and yes, I think its a very contradictory theory.

[fp115]

Originally Posted by mgescuro

If the UAW were to walk off tomorrow, then Ford can lock them out. Ford could get a few factories running with scabs in a matter of weeks.

Furthermore, with a true global lineup, and true flex-plant operation, Ford can divert production overseas and shipments could begin in a month. Two tops.

How far Ford is on globalization, I can't say. But that is the advantage of a true global production system.

Where would Ford get these new plants built up in weeks? If the UAW goes on strike, those plants cannot be used by anyone other than the UAW. Their contracts specifically claim this.

Most of Ford's overseas plants aren't flexible enough to adapt to a new product within weeks, it would take many months and billions of dollars to do so. Additionally the tooling and stamping would likely have a very difficult time leaving the original plant, because workers are entitled to refuse anything to leave the plant.

Lastly, plants have a limited capacity. If your Fiesta plant in Europe is already building at 80% of the capacity, that last 20% may not even be close enough to supply North America. With increasing capacity, you also risk quality. Most of the plants outside of the US cannot take over the hundreds and thousands of vehicles produced in the US.

If the UAW decides to walk off, Ford is screwed, plain and simple. Unless they have billions of dollars to throw away and build new plants all over the world.

[goochman]

Originally Posted by fp115

If the UAW decides to walk off, Ford is screwed, plain and simple. Unless they have billions of dollars to throw away and build new plants all over the world.

Maybe some short term pain is worth the long term gain................

[Barry Badrinath]

It goes back to perception. Ford has done a great job manipulating it's perceived (not accounting) financial position to the general public over the past 12 months. So much so that the average American who doesn't bother reading the financials, or review forward looking statements, believe their strength as fact.

Then again, FoMoCo has been extremely proactive over the past 30 months, and have navigated this recession remarkably well. I don't see their posturing on this particular subject as being any different. Simple as "you don't ask, you don't get".

As for the rest of it, well, these financials are only a point in time. Mulally and Co. clearly have a direction and quarterly results only verify their past actions. What happens with this contract in 2011, or their current debt load going forward, or the state of the economy, or new equity offering: it's all linear conjecturing. And a best guess about a date in the future is just that, a guess. Ford shareholders have trust in Mulally and Co. will continue to make the correct desicions.


I think Buick is right, the Union should tell Ford to pound sand. I also think Ford was smart to ask for this now. Ford has the next move...

[2002 Caddy]

Originally Posted by fp115

That's not nearly a good enough reason. If the UAW were to walk out tomorrow, Ford would be screwed.

Exactly,

Its called "MAD" Mutually Assured Destruction... if the UAW strikes Ford... Ford is likely DEAD in North America... What are all of the UAW members going to do then? How many Walmart greeters are needed in Detroit?

If the UAW leadership can't see that Ford is hanging on by a thread then they are either stupid or delusional.

[Simon says]

Originally Posted by 2002 Caddy

Exactly,

Its called "MAD" Mutually Assured Destruction... if the UAW strikes Ford... Ford is likely DEAD in North America... What are all of the UAW members going to do then? How many Walmart greeters are needed in Detroit?

If the UAW leadership can't see that Ford is hanging on by a thread then they are either stupid or delusional.

Exacto . . .

[Buick61]

Originally Posted by Simon says

Excuse me, but this argument:

. . . is purely emotional and is also the center of your entire diatribe.

I can't help it if you incorrectly interpret something I say.

I said it passionalty, sure, but the reasoning was based in business.