Daily Edition: Dec. 12, 2005

December 12, 2005

Ford Plans Turnaround, Deals with UAW

Top Ford executives remain tight-lipped about the impending "Way Forward" turnaround plan that the automaker is expected to unveil next month, rife with plant closings and personnel cuts.

UAW president Ron Gettelfinger said he doesn't expect to learn more details about the plan until right before Ford is actually ready to announce the plans. Ford, however, is under pressure to move up the date of the announcement so it won't interfere with the company's efforts to roll out new products during the North American International Auto Show.

Meanwhile, the UAW and Ford have reached an agreement on healthcare benefits that is expected to help Ford save close to $1 billion yearly. Having the healthcare cuts from the union should help enhance credibility of the turnaround plan.

Speculation in the press has had Ford eliminating as many as ten different manufacturing and assembly plants and 30,000 jobs. Ford, however, has not confirmed any of the numbers or offered any kind of additional details, although the plan is expected to involve eliminating assembly plants in Atlanta, St. Louis and St. Paul, Minn., as well as Wixom, Mich., outside of Detroit.

Ford Plans Turnaround, Deals with UAW (12/11/2005)
Healthcare cuts agreed upon as turnaround plan takes shape.

Delphi Edges Away From Hard Line

Facing pressure from General Motors Corp. and a fierce counterattack from the United Auto Workers, Robert "Steve" Miller is backing away from some hard-line positions taken in the war over the future of Delphi Corp.

Miller told the Wall Street Journal that he was preparing a new contract offer for the union and considering changes to an executive compensation plan to which the union objected.

Ron Gettelfinger, UAW president, has dismissed the idea that Delphi's executives needed any kind of special compensation and Richard Shoemaker told reporters that the company would be better off if the senior management team resigned.

Gettelfinger said during a two-hour meeting with reporters over breakfast last week that contacts with Delphi's top management are sparse. Delphi officials admitted there were no formal negotiations with the union underway.

"They will step back and say these are the bad guys," he said. "But this thing is headed for confrontation - make no mistake about that," Gettelfinger said "We've not been bashful about letting people know that. There's no relationship and no trust," Gettelfinger said.

Delphi Edges Away From Hard Line (12/11/2005)
But no deal in sight for GM supplier.

Kerkorian Presses GM for Board Seat

General Motors and Kirk Kerkorian's Tracinda Corp. remain at odds over a seat on GM's board of directors for one of the Las Vegas mogul's top lieutenants.

The two sides couldn't quite get a deal done last week. But it still appears likely that Jerry York, the former Chrysler Corp. executive who has watched over Kerkorian's automotive interests for more than a decade, will wind up on the GM board next year.

If York, who has become a quietly controversial figure around Detroit during the past two decades, doesn't get the seat, someone who reports to him probably will.

However, York is already in regular contact with top GM executives on the board. A seat becomes the next logical step in what has been a fairly orderly entry into GM's affairs over the past eight or nine months by the 88-year-old Kerkorian.

Initially, Kerkorian didn't push for the seat on the board when he started buying up the automaker's stock last spring. But times have changed and the recent drop in GM stock, which cost Tracinda a fortune, has prompted Kerkorian and his advisers to re-think their position and take a slightly tougher line with GM's management.

Kerkorian Presses GM for Board Seat (12/11/2005)
No deal yet, but it's coming.

Crossovers Soon to Outsell SUVs

At first glance, consumers might find it hard to spot the difference between Ford Motor Co.'s popular Explorer SUV and the new Edge, which Ford will unveil at the Detroit auto show next month. Indeed, it takes a close inspection to reveal the most significant difference - but it's a distinction quickly transforming the U.S. motor vehicle market.

Long America 's best-selling sport-utility vehicle, the Explorer is wrapped around a truck-like frame, an approach that delivers plenty of towing capacity and great off-road performance. The Edge, on the other hand, shares its platform with Ford's new Fusion and other passenger-car models. It's better suited for snow-covered freeways than boulder-strewn trails, and should yield significantly better fuel economy than the Explorer.

The Edge will join Ford's fast-expanding line-up of so-called crossover vehicles. But the Michigan automaker is by no means unique. General Motors expects to more than triple its lineup of crossovers over the next several years. And Toyota now sells as many crossovers as conventional SUVs.

There already are 41 different crossovers on the market, notes George Pipas, Ford's chief market analyst, compared with just 14 five years ago. Since 2000, sales have more than quadrupled, soaring from 541,000, according to data compiled by Ward's Automotive, to an estimated 2.240 million this year. By comparison, sales of conventional sport-utility vehicles have slumped sharply, falling from 2.978 million to a projected 2.450 million for all of 2005.

Crossovers Soon to Outsell SUVs (12/11/2005)
Traditional utes losing momentum as car-based "utes" click with consumers.

Flint: Memo to Mark Fields


I wouldn't do this, but you're from New Jersey, and while I spent half my life in Detroit, I did live there myself. Three of my sons graduated from a Montclair, N.J., high school. You're CEO of Ford North America, and you will need all the help you can get. So as one Jersey guy to another, I'll give you a hand.

First, here is something you might not know. In the past, the most profitable Ford car platform was the Panther, and the cars that came off that platform were the rear-drive Lincoln Town Car, the Ford Crown Vic, and the Mercury Marquis. In its best years, the rear-drive Lincoln Town Car earned $1 billion a year. These facts, by the way, aren't my guesses. They were told me by former Presidents of the Ford Motor Co.

Recent trends confirm that luxury cars are continuing to move to rear-drive. Of course, Mercedes, BMW, Jaguar, Lexus - the big names in big luxury cars - are rear-drive. But Chrysler (the 300) and Cadillac (the CTS) have found great success by moving back to rear-drive, too. The only large all-wheel-drive luxury car is the Audi A8, with only 5000 sales here this year.

With these facts, I have to ask: Why in the world would Ford want its next large Lincoln to be an all-wheel-drive vehicle derived from a front-drive car?

Flint: Memo to Mark Fields (12/11/2005)
Some things you might want to consider before chopping away.

FROM THE SOURCE headlines from the latest press releases


Scion, from Toyota Motor Sales (TMS), U.S.A., Inc., today announced mid-year price adjustments for the 2006 Scion xB, which receives an updated interior and new exterior colors. The 2006 Scion xB urban utility vehicle will have new seat fabric and a steering wheel with integrated audio controls. Two exterior colors, Camouflage Green and Black Cherry Pearl, will be replaced with Salsa Red Pearl and Shadow Mica. Shadow Mica is new to the Scion line-up. With the additional standard equipment, prices for the xB increase only $150 on both models. The MSRP for the Scion xB will be $14,030 with a manual transmission and $14,830 with an automatic transmission, reflecting a 1.1 and 1.0 percent increase, respectively.

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Name Symbol Last Change
Autobytel, Inc. ABTL 5.30 +0.06 (+1.15%)
Autoliv Inc. ALV 44.43 +0.24 (+0.54%)
AutoNation Inc. AN 21.58 +0.02 (+0.09%)
ArvinMeritor Inc. ARM 15.40 +1.98 (+14.75%)
American Axle & Mfr. Holdings Inc. AXL 19.04 +0.85 (+4.67%)
Ballard Power Systems Inc. BLDP 4.33 -0.05 (-1.14%)
BorgWarner Inc. BWA 60.18 +0.41 (+0.69%)
Cummins Inc. CMI 87.67 +0.97 (+1.12%)
Dana Corporation DCN 7.00 +0.18 (+2.64%)
DaimlerChrysler AG (ADR) DCX 51.20 +0.66 (+1.31%)
Dura Automotive Systems DRRA 2.39 +0.04 (+1.70%)
Eaton Corporation ETN 65.01 +0.73 (+1.14%)
Ford Motor Company F 8.18 +0.01 (+0.12%)
General Motors Corporation GM 22.92 +0.92 (+4.18%)
Gentex Corporation GNTX 18.67 +0.10 (+0.54%)
Goodyear Tire & Rubber GT 17.11 +0.28 (+1.66%)
Honda Motor Co. Ltd. (ADR) HMC 28.65 -0.08 (-0.28%)
Johnson Controls Inc. JCI 70.68 -0.23 (-0.32%)
Lear Corporation LEA 28.45 +0.86 (+3.12%)
Magna International Inc. MGA 67.45 +1.34 (+2.03%)
Motorola Inc. MOT 23.41 +0.07 (+0.30%)
Nissan Motor Co. Ltd. (ADR) NSANY 19.73 -0.17 (-0.85%)
Sonic Automotive Inc. SAH 21.78 +0.07 (+0.32%)
Siemens AG SI 80.34 +2.03 (+2.59%)
Sirius Satellite Radio SIRI 7.87 +0.45 (+6.06%)
Toyota Motor Corporation (ADR) TM 96.95 +0.44 (+0.46%)
TRW Automotive Holdings TRW 26.11 +0.57 (+2.23%)
Tower Automotive Inc. TWRAQ.PK 0.09
United Auto Group Inc. UAG 38.06 -0.61 (-1.58%)
Visteon Corporation VC 6.90 +0.25 (+3.76%)
XM Satellite Radio Hold. XMSR 29.04 +1.18 (+4.24%)

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