In Ford Decision To Build Mexico Plant, UAW Is Only Getting What It Asked For

[silvrsvt]

 

UAW President Dennis Williams called Ford’s plan “very troubling,” according to Bloomberg, and said the investment by Ford meant creating jobs that “should have been available right here in the U.S.A.”

“Should” is an especially pregnant term for Williams to use, because these definitely are jobs that could — or at least might — have been retained in the United States if only he and his cohorts had played their hands differently in contract negotiations last year.

Recommended by Forbes

 

Essentially, Williams and his lieutenants knowingly sacrificed these small-car jobs in their new labor contract, risking the long-term interests of the union and its membership for the very, very short-term payoff of wages that ended up being significantly higher than they otherwise would have obtained – and for huge profit-sharing payouts, which for the average Ford worker were a record $9,300.

 

http://www.forbes.com/sites/dalebuss/2016/04/05/in-ford-decision-to-build-mexico-plant-uaw-is-only-getting-what-it-asked-for/#5fb25f605961

[akirby]

The question is whether a new Ford plant with a higher ratio of tier 1 workers (maybe even all tier 1?) could compete with Mexican plants. I bet they could but I doubt the UAW members would go for it.

So Mexico gets the plant. Maybe this will be a wakeup call, although I suspect union leaders know this but don't think they can sell it to their members.

[fuzzymoomoo]

The question is whether a new Ford plant with a higher ratio of tier 1 workers (maybe even all tier 1?) could compete with Mexican plants. I bet they could but I doubt the UAW members would go for it.

So Mexico gets the plant. Maybe this will be a wakeup call, although I suspect union leaders know this but don't think they can sell it to their members.

They might be able to sell it to some of the younger, more naive workers, but beyond that I doubt it.

[akirby]

They might be able to sell it to some of the younger, more naive sensible workers, but beyond that I doubt it.

 

FTFY

 

Any worker who thinks the old tier 2 wages are realistic going forward is going to be sadly mistaken. It's like the housing boom - that house was never worth $500K in the first place - it was artificially inflated and now it needs to return to the real market price.

Edited April 6, 2016 by akirby

[fuzzymoomoo]

 

FTFY

 

Any worker who thinks the old tier 2 wages are realistic going forward is going to be sadly mistaken. It's like the housing boom - that house was never worth $500K in the first place - it was artificially inflated and now it needs to return to the real market price.

I said naive for a reason. They aren't necessarily the most sensible people, but instead the most (for lack of a better word) gullible. They're the most likely to buy into whatever agenda is being pushed at the moment instead of forming they're own opinion. Perhaps naive wasn't the wisest choice in words but at the moment it made sense to me

 

Also, perhaps you meant Tier 1 wages? The (former) Tier 2 wages were the lower ones. Despite the grumblings of some of the old guard (and I'm sure I'll catch some shit for this opinion), I like the new system with the 8 year progression to the "Traditional wage". Its kinda the best of both worlds and very similar to the agreement UNIFOR has had in Canada for years now.

[RichardJensen]

Ford assembles more vehicles in the US than anyone else, and AFAIK, will continue to do so even after they move the Focus/CMax out of Wayne.

[fuzzymoomoo]

Ford assembles more vehicles in the US than anyone else, and AFAIK, will continue to do so even after they move the Focus/CMax out of Wayne.

 

Tell that to Donald Trump..... He conveniently ignores that fact.

[jpd80]

 

Tell that to Donald Trump..... He conveniently ignores that fact.

And that GM has a bigger footprint there..........

[akirby]

I said naive for a reason. They aren't necessarily the most sensible people, but instead the most (for lack of a better word) gullible. They're the most likely to buy into whatever agenda is being pushed at the moment instead of forming they're own opinion. Perhaps naive wasn't the wisest choice in words but at the moment it made sense to me

 

Also, perhaps you meant Tier 1 wages? The (former) Tier 2 wages were the lower ones. Despite the grumblings of some of the old guard (and I'm sure I'll catch some shit for this opinion), I like the new system with the 8 year progression to the "Traditional wage". Its kinda the best of both worlds and very similar to the agreement UNIFOR has had in Canada for years now.

 

Ok I see what you were saying. And yes I meant Tier 1. I get those confused.

 

So after 8 years a tier 2 worker can reach the same salary as the legacy tier 1s? That's better than the old system but that wouldn't help Ford that much in the long run. Good for the workers that can get it but that's going to seriously hurt the chances of getting more work especially for the lower priced vehicles - as we just saw. Maybe we need a tier 3 where the top out is more in line with the rest of the market.

[fuzzymoomoo]

 

Ok I see what you were saying. And yes I meant Tier 1. I get those confused.

 

So after 8 years a tier 2 worker can reach the same salary as the legacy tier 1s? That's better than the old system but that wouldn't help Ford that much in the long run. Good for the workers that can get it but that's going to seriously hurt the chances of getting more work especially for the lower priced vehicles - as we just saw. Maybe we need a tier 3 where the top out is more in line with the rest of the market.

the parts plants (Rawsonville, Sterling and the new Hot Metal Forming department at Woodhaven Stamping) still have the old 2nd tier scale, and once people start transferring/retiring out of there, it will only be those lower paid workers.

 

Good luck with another tier, especially at the Assembly plants. Most people hired before the beginning of the 2015 contract are still upset about the whole 2 tier thing. A third one won't pass.

Edited April 6, 2016 by fuzzymoomoo

[grbeck]

UAW leadership has to express anger in statements to the press, but I'm sure that UAW leadership knew the ramifications of the contract, and knew that this was going to happen.

 

If you pay employees high wages, they have to produce higher profit products.

 

Even Honda produces the Fit at its Mexican plant, and Honda's American and Canadian plants aren't unionized.

[fuzzymoomoo]

UAW leadership has to express anger in statements to the press, but I'm sure that UAW leadership knew the ramifications of the contract, and knew that this was going to happen.

 

If you pay employees high wages, they have to produce higher profit products.

 

Even Honda produces the Fit at its Mexican plant, and Honda's American and Canadian plants aren't unionized.

True, but they still pay wages that are higher than what they pay at the Mexican plants

[MY93SHO]

 

Tell that to Donald Trump..... He conveniently ignores that fact.

Pfft. Do the math on his "Wall". NSFW

 

[akirby]

True, but they still pay wages that are higher than what they pay at the Mexican plants

 

It wouldn't prevent the lower priced stuff from going to Mexico but it would make it much more likely to get new shifts/new plants in the U.S. for the borderline vehicles (Focus Titanium, Fusion, Escape, etc.) if the U.S. plants had a lower average labor cost. And one way to achieve that is with more lower tier workers.

[fuzzymoomoo]

 

It wouldn't prevent the lower priced stuff from going to Mexico but it would make it much more likely to get new shifts/new plants in the U.S. for the borderline vehicles (Focus Titanium, Fusion, Escape, etc.) if the U.S. plants had a lower average labor cost. And one way to achieve that is with more lower tier workers.

I'm not really sure what your argument is here, we are in agreement on this one.

[fuzzymoomoo]

Pfft. Do the math on his "Wall". NSFW

 

No

 

Thinking about what Donald Trump says for more than 6 seconds makes my brain hurt.

[Project-Fairmont]

I was expecting a nice bump on F stock from this announcement. After all this has to do with higher profitability on low margin cars. Is Wall Street considering a future cuckoo paradigm as it relates to a Trump or Sanders Presidency?

Edited April 6, 2016 by Project-Fairmont

[focus05]

There are a lot of things that go into this decision.

 

For example, protectionist policies like South American trade fights has led to Mexico, even at higher wages, being a better place to produce some vehicles. There is a zero-tariff trade scheme down there.

 

I don't think the tier1 vs tier 2 thing is really the point either long-term. Sure lower wages in the US would keep some jobs in the US a bit longer, but automation will ultimately be the cheaper route (capital returns vs labor returns). And that's the much bigger threat to low-skill manufacturing jobs: automation! You can bet that the moment those wages in Mexico or China rise that Ford will automate as much as they can (and they can automate a lot since there is no union there).

 

We should accept that we cost a lot, that holding back against cheap labor is not a winning strategy, and focus our energy and resources on educating more technically skilled and productive workers. Period.

[mettech]

Place the lobster in a pot of warm tap water.

 

Place the pot on the stove and turn the burner on high.

 

Lobster will not notice it is being cooked until it is to late.

[Bob Rosadini]

True, but they still pay wages that are higher than what they pay at the Mexican plants

But what is Honda's differential? Ford's is over $30 right?

[Bob Rosadini]

Just out of curiosity, anyone have an idea of actual no. of labor hours that go into building say a Focus? Let's keep it simple-no component hours-just average no of manhours per car at MAP.

[grbeck]

I don't know the actual number of hours that are required to build a Focus, but generally labor costs account for about 10 percent of a vehicle's total cost.

[akirby]

Toyota/Honda I think are fairly close to UAW wages but the benefits are different and they employ a lot of part time employees IIRC.

 

Also Hermosillo was Ford's highest quality plant until the 2013 Fusion/MKZ launch. So you're not sacrificing quality.

[grbeck]

Honda and Toyota also don't abide by UAW work rules.

[fuzzymoomoo]

There are a lot of things that go into this decision.

 

For example, protectionist policies like South American trade fights has led to Mexico, even at higher wages, being a better place to produce some vehicles. There is a zero-tariff trade scheme down there.

 

I don't think the tier1 vs tier 2 thing is really the point either long-term. Sure lower wages in the US would keep some jobs in the US a bit longer, but automation will ultimately be the cheaper route (capital returns vs labor returns). And that's the much bigger threat to low-skill manufacturing jobs: automation! You can bet that the moment those wages in Mexico or China rise that Ford will automate as much as they can (and they can automate a lot since there is no union there).

 

We should accept that we cost a lot, that holding back against cheap labor is not a winning strategy, and focus our energy and resources on educating more technically skilled and productive workers. Period.

There are certain things, particularly when it comes to final assembly, that will never be able to be replaced by automation. No matter how advanced the robotics get. Mercedes is learning that lesson the hard way in Germany right now. They tried replacing people with robots and are now having major issues with that plan, and bringing back people to do the jobs the robots replaced them with.