Daily Edition: Nov. 21, 2005

November 21, 2005

Ford Set to Trim 4000 Jobs

Ford Motor Co. took the first step in its next restructuring by confirming it plans to trim up to 4000 white-collar jobs in North America by the end of March.

Mark Fields, Ford president of the Americas, disclosed the plan in an e-mail distributed to Ford employees. The cuts will include full-time and contract positions. Some of the cuts will come through attrition but others will require layoffs, according to Fields, who is expected to lay out the full scope of the company's restructuring plan in January.

The plan is expected to include the closure of assembly plants and the reduction of other operations. The plan was originally due in October but William Clay Ford Jr., Ford's chairman and chief executive officer, decided to defer implementation to give Fields and his chief deputy Anne Stevens a chance to review the plans and put their own stamp on it.

Ron Gettelfinger, president of the United Auto Workers, confirmed last week that the union has opened discussions with Ford about revisions to the healthcare benefits that are part of the UAW's contract with the automaker. Gettelfinger didn't offer any timetable for completing the healthcare agreement with Ford, but the union has already agreed to a package of concessions to General Motors that is expected to save that automaker as much as $3 billion. Ford's problems with healthcare costs are not as severe as GM's because the company has fewer retirees, but they are still substantial.

Ford Set to Trim 4000 Jobs (11/20/2005)
More job cuts presage new restructuring plan coming from Ford's front office.

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GM Fights Bankruptcy Speculation

General Motors Corp. is under intense pressure to move ahead with its new restructuring plans as talk of bankruptcy and ruin continued to intensify throughout the financial community.

The struggling automaker also got a mixed message from the preliminary surveys of November sales by J,D. Power & Associates. Midway through the month, sales of large vehicles seemed to be recovering, but GM sales still have dropped 24 percent so far in November.

GM has staked $1 billion on the new versions of its full-size SUVs, so the report on large vehicles was interpreted as a positive development for GM, according the Power report.

Meanwhile, Richard Wagoner, GM's chairman and chief executive officer, moved to reassure employees with a message in which he said bankruptcy simply wasn't an option for the giant automaker.

"I'd like to just set the record straight here and now: there is absolutely no plan, strategy or intention for GM to file for bankruptcy," Wagoner said in a letter to employees, which a GM spokesman said was posted on an internal Web site.

Wagoner said GM has a clearly defined turnaround plan and "a robust balance sheet," with $19 billion in cash and $16 billion in assets in a trust fund for retiree healthcare.

GM Fights Bankruptcy Speculation (11/20/2005)
Company may announce new restructuring this week to counter Chapter 11 talk.

Unions Say Delphi's Miller Wrong

The United Auto Workers and the other unions representing workers at the bankrupt Delphi Corp. still hope to focus more attention on the excessive compensation promised to the company's top executives as information surfaces suggesting the company is in for a sweeping overhaul.

Reports circulated last week that buyers have begun to emerge for key Delphi assets. At least two companies from India have expressed an interest in Delphi's steering-gear unit, according to press reports from South Asia.

Meanwhile, Delphi's principal unions, including the UAW and International Union of Electrical Workers, have rejected the company's latest contract proposal and refused to rule out a strike against the bankrupt auto supplier, which remains General Motors' principal source of components six years after it was spun off from the automaker.

UAW president Ron Gettelfinger described Delphi's latest proposal as "ridiculous," adding it did not include any meaningful improvements from the one presented to the union in late October. He also said he does not believe Delphi's management was willing to engage in serious collective bargaining.

Unions Say Delphi's Miller Wrong (11/20/2005)
Chief hasn't fixed management problems - so why bargain, asks union?

Flint: Your GM Questions Answered

Everywhere I go, people ask me about General Motors. Here are the questions and my answers.

Q. Will General Motors go bankrupt?

A. Why would it? The problem people think GM could solve by bankruptcy is its labor contract. The high pay is a problem, but the major concerns are the costs of benefits: the healthcare for workers, the laid-off, and retirees and families; the Jobs Bank that keeps people paid for years when they aren't working, and the pensions. First, the pensions are safe. Second, any attempt to chop the contract through bankruptcy would bring on a strike and the union is stronger than the company, so it is hard to see how the problems would be solved. The new contract talks are six months away. Forget bankruptcy at this time.

Flint: Your GM Questions Answered (11/20/2005)
There's a lot of scuttlebutt on the street about GM. Here's the real word.

Witz: How GM Should Fix Itself

"All the President needs to do is say, 'Detroit's got to get 40 mpg or they'll be heavily fined!'" - Influential (and technically ignorant) TV/radio commentator Bill O'Reilly.

"Remember the Arab oil embargo of the '70s…when consumers reacted by flocking to smaller, higher mileage foreign-made cars…? Fast forward to today. Once again gas prices are soaring. Once again, consumers are buying high-quality, high-mileage vehicles from someone other than General Motors. Once again, GM has the wrong vehicles in its lineup." - factually challenged auto journalist/blogger.

"I had a GM car that was a piece of crap! I'll never buy Detroit again!" - GM/Detroit-bashing letter gleefully published by a major magazine.

Okay, I made that last one up. But we've all read those letters, most often about domestics. Unfortunately, the first two quotes are real and woefully indicative of mainstream media, government and public thinking about U.S. automakers and especially GM. Yet anyone tuned in and open-minded on automotive quality and efficiency knows that "Detroit" is competitive in both. And GM is currently an industry leader in both.

Witz: How GM Should Fix Itself (11/20/2005)
There's no quick and easy solution, but perceptions could help greatly.

Sentiment Shifting To Fuel Efficiency?

American consumers are showing more interest in fuel-efficient vehicles and less in big sport-utility vehicles in the wake of Gulf Coast hurricanes, says the University of Michigan economist responsible for tracking consumer sentiment.

Richard Curtin, director of the University of Michigan's closely watched survey of consumer confidence, said the recent surveys by U-M indicate the interest in smaller vehicles has grown very quickly in the past few months.

Gasoline prices had risen for 36 straight months prior to Katrina and consumers always assumed gasoline prices would fall at some point. After the hurricanes struck the Gulf Coast, however, the attitudes of American consumers shifted. "They no longer believe the increases in gasoline prices are only temporary," but are part of a more permanent shift in to higher prices for energy, Curtin said during an appearance U-M's annual economic outlook conference.

As a result, consumers' interest in fuel-efficient vehicles has increased even as gasoline prices have started to fall, he suggested. It's clear that Americans are now in the grip of "inflation angst," Curtin added.  The threat of inflation has reduced consumer confidence and could limit economic growth in the months to come, he added.

Sentiment Shifting To Fuel Efficiency? (11/20/2005)
New U-M survey shows buyers increasingly concerned with gas mileage.

VW's Moonraker Studies Malibu, Cars

Pulling a page from the reality television series Big Brother, 23 Volkswagen employees have shacked up near the laid-back California beach town of Malibu. But they aren't there for fun and games.

Times are tough for the German automaker's U.S. operations. Once the biggest of the import brands, Volkswagen of America's sales have slumped sharply since the beginning of the decade. And even the planned profusion of new product due to market next year isn't likely to turn things around, company officials have come to grudgingly concede.

A fundamental problem is that VW has lost touch with the distinctive tastes and needs of American motorists. So the employees camped out in California - including 22 Germans and one American - have been assigned to put their ears to the ground and come back with recommendations that could lead to a new wave of vehicles specifically designed for the huge U.S. marketplace.

Ultimately, the effort is meant to generate "a systematic change in how we view the United States," said Adrian Hallmark, the new American boss of the VW brand.

VW's Moonraker Studies Malibu, Cars (11/20/2005)
Is it more MTV than Detroit? Maybe so, but VW says it's learning invaluable lessons from its away team.


Honda Expanding in Brazil

Honda has decided to enlarge its Brazilian Sumaré plant, in São Paulo State. The company will spend $100 million to expand present production of 65,000 units yearly to 100,000 in 2008. Honda will use its resources, with no government incentives. Honda justified the investment by the recovery of the Brazilian market and the possibility to export to Latin America, especially Mexico, Argentina, and Venezuela, about 20 percent of production. Honda builds the Fit subcompact and Civic compact sedan at the plant. Curiously, although 95 percent of the cars sold in Brazil follow European designs, in this case the choice was for the U.S. Civic, just launched this summer. It will be manufactured in Sumaré as of June of 2006.-Fernando Calmon

Brazil's Ethanol Program Turns 30

This month, the Brazilian ethanol program turns 30 years old. Launched in 1975 in response to the 1973 oil shock, the program, which moved Brazil to ethanol fuel in part, had a hard start but quickly emerged as a success in the years 1979 through 1989. In that ten-year period, up to 95 percent of all cars made in Brazil were ethanol-powered. By 1990 the program began to suffer with lower oil prices, and five years later it slipped to a mere one to two percent - a symbolic participation by the companies building cars in the country. The program only survived because all gasoline sold in country contains 25 percent of ethanol, by law. In 2003, with the advent of the flex-fuel vehicle, the market completely turned around. Currently, 70 percent of light-vehicle production is flex-fuel powered, and the trend is heading toward 90 percent by 2006. During harvest time, ethanol costs half the price of gasoline in Brazil, but at other times and in some regions gas can be cheaper.-Fernando Calmon

FROM THE SOURCE headlines from the latest press releases


Cadillac, the American icon of luxury, design, and performance, unveiled the 2007 Escalade, the next-generation of the luxury SUV, at an exclusive event at Milk Studios in New York yesterday evening. Hosted by Melania Trump, guests including Fat Joe, Tyson Beckford, Marc Bouwer, Alice Roi, Tara Subkoff, Julie Haus, and Kwame Jackson gathered for an intimate look at Cadillac's latest design marvel.

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Name Symbol Last Change
Autobytel, Inc. ABTL 5.11 +0.19 (+3.86%)
Autoliv Inc. ALV 44.63 +1.32 (+3.05%)
AutoNation Inc. AN 20.17 +0.07 (+0.35%)
ArvinMeritor Inc. ARM 14.10 +0.39 (+2.84%)
American Axle & Mfr. Holdings Inc. AXL 21.42 +0.87 (+4.23%)
Ballard Power Systems Inc. BLDP 4.67 +0.03 (+0.65%)
BorgWarner Inc. BWA 59.75 +0.84 (+1.43%)
Cummins Inc. CMI 87.29 +1.14 (+1.32%)
Dana Corporation DCN 7.38 +0.36 (+5.13%)
DaimlerChrysler AG (ADR) DCX 51.09 -0.09 (-0.18%)
Dura Automotive Systems DRRA 2.45 +0.02 (+0.82%)
Eaton Corporation ETN 63.44 +0.07 (+0.11%)
Ford Motor Company F 8.41 +0.60 (+7.69%)
General Motors Corporation GM 24.05 +1.42 (+6.27%)
Gentex Corporation GNTX 18.20 +0.36 (+2.02%)
Goodyear Tire & Rubber GT 16.13 +0.50 (+3.20%)
Honda Motor Co. Ltd. (ADR) HMC 28.03 +0.22 (+0.79%)
Johnson Controls Inc. JCI 69.74 +1.38 (+2.02%)
Lear Corporation LEA 28.89 +0.81 (+2.88%)
Magna International Inc. MGA 69.81 +0.83 (+1.20%)
Motorola Inc. MOT 23.86 +0.31 (+1.32%)
Nissan Motor Co. Ltd. (ADR) NSANY 20.80 +0.36 (+1.76%)
Sonic Automotive Inc. SAH 19.79
Siemens AG SI 76.54 +0.66 (+0.87%)
Sirius Satellite Radio SIRI 7.28 -0.05 (-0.66%)
Toyota Motor Corporation (ADR) TM 98.66 +3.10 (+3.24%)
TRW Automotive Holdings TRW 25.05 +0.62 (+2.54%)
Tower Automotive Inc. TWRAQ.PK 0.10
United Auto Group Inc. UAG 34.74 -0.21 (-0.60%)
Visteon Corporation VC 7.04 +0.53 (+8.14%)
XM Satellite Radio Hold. XMSR 30.75 +0.60 (+1.99%)

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