Further destructing the US economic base, Ford to Shift More Work Abroad

[kscarbel2]

The Wall Street Journal / July 9, 2015

Ford Motor Co. has announced its Wayne, Michigan plant that assembles its small Ford Focus and C-Max wagon will end production of those vehicles in 2018 in a new setback to efforts to create a market for small cars made in the U.S.

Production of the Focus will be moved outside the U.S.

The move could put pressure on the United Auto Workers union to temper demands for wage increases in upcoming contract negotiations. Ford, General Motors Co. and Fiat Chrysler Automobiles (FCA), although profitable, are struggling to keep pace with lower-cost Asian auto makers that now have the added advantage of weaker currencies compared with the U.S. dollar.

Small cars like the Focus deliver far lower profit margins than the pickup trucks and sport-utility vehicles the Motor City is best known for, but they are essential to helping car makers meet stringent fuel economy mandates.

Auto makers won concessions from the UAW before and after the financial crisis to dramatically lower labor costs. Those agreements helped usher in a return of U.S. small car production. GM now makes the subcompact Chevrolet Sonic in Lake Orion, Mich., and Ford its Focus in Wayne, Mich.

Ford’s Michigan Assembly Plant, which employs 4,400 workers, builds gasoline, electric and hybrid versions of the two cars. It previously built light trucks and SUVs there and the decision to shift to the smaller vehicles was helped by gasoline that once cost $4 a gallon.

Ford earlier had split production of the Focus between factories in Michigan and Mexico.

In a statement, the nation’s second-largest auto maker said it is “actively pursuing future vehicle alternatives” for the Wayne facility.

Ford builds the Focus at plants in Germany, Argentina, China, Vietnam and Thailand. It is unclear where the next generation U.S. models will be built.

Ford Fiesta subcompact cars sold in the U.S. are built in Mexico, which is becoming a production hub for global auto makers [who are leveraging the country’s low labor costs to supply the US car market more profitably, owing to the NAFTA loophole created by politicians tied to big business].

Tens of billions of dollars in new production capacity is underway or planned in Mexico by Ford, Generals Motors and Fiat Chrysler.

Toyota is shifting production of its Corolla compact to Mexico in coming years after three decades of building it for North American customers in Canada.

Honda last year began shipping its compact Fit to the U.S. from Mexico.

Mazda is now building its U.S. market Mazda 3 and Mazda 2 small cars in Mexico.

The loss of Focus production move deals a blow to the Obama administration’s attempt to encourage U.S. auto makers to make more fuel efficient vehicles domestically.

Government-backed programs, including billions of dollars in Energy Department financing lent to Ford and Treasury Department bailout funds given to GM, helped pave the way for more U.S. small car production.

Ford received a $5.9 billion U.S. loan commitment to retool 11 factories in five states to deliver fuel-efficient technologies.

The UAW enters negotiations with the Detroit Three aiming to win higher pay packages amid what has been a trend of annual profit-sharing checks that auto makers prefer over fixed increases. As Detroit car makers’ profits increase, union members have grown increasingly discontent with a wage scheme that pays entry-level workers about $19 an hour, or $9 less than workers hired before the financial crisis.

While the roughly $57-an-hour wage and benefit costs Ford spends per UAW worker is less than the $75 an hour it was spending a decade ago, it is still between $8 and $20 an hour higher than Honda or Volkswagen, according to Ann Arbor-based researcher Center for Auto Research.

How much is Ford or their lobbyist paying the center for Auto Research to lie ???

$57-an-hour ???

U.S. auto workers averaged $28.38 (25.63 Euros) per hour last year.

The average hourly pay in Japan was $33.17 (29.96 Euros).

The highest in the world is at Volkswagen in Germany, at $53.59 (48.40 Euros) per hour). VW’s labor costs are far higher than Ford.

Ford can build the Focus in Germany at a cost of over $50.00 per worker per hour, but Ford can’t build the Focus in America for the American market at a per-hour worker cost around $28.00 ??? (and worker benefits in Germany exceed those in the US)

[hurstscrambler]

The $57 an hour is pay and benefits, so they probably make 28 an hour and the other 29 covers retirment, health and dental, and any other kind of compensation they might get.

[hurstscrambler]

....I'm guessing.

[68-f-model]

Agreed with hurstscrambler,

Without the entire story one can skew the numbers to support and argument.

I know of guys on the floor at ford that were making almost double what I make with a college engineering degree. Some times unions end up being greedy and shooting themselves in the foot. I can't blame ford for moving production to mexico when every time they turn around the union is demanding a pay raise. What will the union do once all production has moved and their is zero manufacturing in the US and thus no working union members to support the "union reps" and associated bureaucracy. That will be an interesting day.

[hurstscrambler]

I think it's getting to that point now. It's been said that everything is good in moderation, I think unions fall into that category. It's seems like auto manufacturers especially like to blame there workforce for all there issues, who is managing these companies? Ford has been producing vehicles with union labor for decades, if it was so impossible to deal with th UAW, how have they managed this far?

[41chevy]

Like GM before their "collapse" the heavy payouts in pensions and retirees medical plans overload the system. The result is the need for higher wages for the rank and file to pay more into the pension fund.

[grayhair]

I don't think anyone would argue that GM has been well managed. On the other hand, we have done so many things to push manufacturing out of America. Start with hundreds of ill-conceived EPA regulations for instance.

Plus, the U.S. has one of the highest corporate income tax levies in the world. This huge tax grab is then misspent, virtually pissed away. Building libraries and water works in Iraq and millions of $ of foreign aid to countries and people that hate us. Can't walk the streets of Philadelphia at night but we send millions to Turkey. We send our money to our enemies and they laugh at our naïveté.

Cell phones and minutes for people that refuse to work. Tax returns of cash to illegals who didn't work and didn't pay a dime of tax. Truly, the inmates are running the asylum.

O'blamer's policies are being perfectly implemented. So, if you voted for him, or you voted for a U.S. Senator that supports his initiatives, then we are reaping what you have sown.

[mowerman]

interesting,,,thanks for the post....my 2 cents.....corperate greed,,,and CEO,s take a big part of the revenue,,,,and then they push the blame,onto the workers,and union reps........bob

[grayhair]

Plenty of blame to go around. Management, unions, government tax grab that fuels endless wasteful spending. But I have empathy for all sides. I worked a miserable union job when I was young and the pay was minuscule compared to management. Later in life I was a corporate manager working 80 hour weeks, airports and hotels, rarely home while my kids were growing up but the pay was awesome. I wouldn't want either of those jobs again. You just have to find the job that "fits" you. And when it doesn't "fit" any more, have the initiative to make a change for yourself.

I am often reminded that the management guys couldn't do the work the guys out on the factory floor do. At least not day in and day out. And the shop guys couldn't do the work or handle the stress of an intense management job. The other guy's job always looks easier or better.

Sorry to wax philosophic on our Big Mack site...