Ford quality is up, says CEO Alan Mulally; now it wants more cost-cutting by the UAW.
Ford Motor Co. has approached the United Auto Workers Union about changes in the contract that it negotiated in February before General Motors and Chrysler Group LLC used the threat of bankruptcy to obtain even greater concessions from the union.
Joe Hinrichs, Ford group vice president for global manufacturing, said that the company has already discussed possible changes with the UAW and is now ready to negotiate a revised deal.
“On economics we have the same package,” said Hinrichs, referring to the deals granted Chrysler and GM. However, Ford is looking for additional changes in contract language that would consolidate the number of skilled trades classification. That can translate into dramatic reductions in labor costs and marked improvement in productivity – as well as impacting quality.
Ford had won a reduction in earlier rounds of negotiations in 2006 and 2007, but the new GM and Chrysler contracts go even further, accepting just two classifications. Ford would like to obtain the same language.
“Their starting wages are frozen through 2015,” Hinrichs said. “We also want the same arbitration language,” which basically means the UAW can’t strike GM or Chrysler until 2015.
It’s all part of an evolving philosophy of continuous improvement within Ford, said Derrick Kuzak, group vice president for global product development.
“We’re all about incremental change,” he said, noting that every vehicle in the Ford line has been revamped for 2010. Even the Ford Flex and new Ford F-150, which debuted last year, have been re-engineered, to some degree, for 2010.
Putting in a brief appearance, Tuesday, at a media preview of the maker’s newest line-up, Ford chief executive Alan Mulally added that Ford’s quality improvements have put the automaker on a par with competitors such as Toyota and Honday. “Toyota is a great company,” said Mulally, and one the CEO has often used as a benchmark for driving change within the Ford system.
But Mulally boasted that Ford has scored well on several recent quality surveys. Not only can Ford compete on quality, it can also compete on fuel-economy, safety and technology, he declared.
Mulally waved aside suggestions that Ford has been put at a big disadvantage because of the government bailouts of General Motors Corp. and Chrysler Group LLC. “I would not have any kind of complaints. In fact, I was one of the first to support General Motors and Chrysler request for assistance,” Mulally said.
Mulally said he did have some concerns about GMAC becoming a full-service bank – and has largely been spun off from one-time parent, General Motors. That could put it at an advantage over Ford’s in-house lender, since Ford Motor Credit remains a wholly-owned subsidiary of the Ford Motor Co., Mulally said. Still, “We think Ford Motor Credit is a great strategic asset,” the Ford CEO said.
During a wide-ranging discussion, Mulally dismissed suggestion that bankruptcy has given its domestic competitors an edge by clearing billions of dollar in debt off their balance sheets.
“We’ve eliminated more than $10.3 billion in debt this year,” he noted. “It’s the American way to pay back your loans,” he said. “Ford has based it entire turnaround on product development,” Mulally said.
Mulally, however, declined to comment on the company’s second quarter earnings report. He also refused to confirm industry speculation that Ford, which has lost billions over the past three years, is poised to exceed analysts’ estimates. “We’ll give it all to you in great detail on Thursday,” he said.