By on March 2, 2007

gulf.jpgFebruary’s sales figures are in. Ford continues to sing the blues. While FoMoCo’s spinmeisters invite us to savor the consistency of their domestic market share and clock their lessening fleet business, The Blue Oval’s retail sales are still slumping. The situation hovers somewhere between serious and six feet under. What’s worse, the domestic automaker’s execs seem bound and determined to shoot themselves in the feet, repeatedly. First, the numbers…

Ford has maintained a 13% U.S. market share average since June 2006. Meanwhile, Dearborn’s dealers moved just over 211k vehicles in the previous four weeks. That’s some 33k less than a year ago. While Ford’s PR flacks blame this [steady] decline on lower fleet sales, the sector accounts for less than half of February’s foibles.

Checking the dealer lots, some 603k FoMoCo vehicular orphans are still left looking for homes. Clearly, The Blue Oval Boyz need motor-city March madness to start now. Unfortunately, even if March sales come in and go out like a lion, Ford’s revenues will still be quiet as a lamb. 

As the crossover twins (Edge, MKX) and Mexican troika (Fusion, Milan, MKZ) continue to lead the way Fordward, the gravy-train known as F-Series is spinning its wheels. F-Series sales are down twelve percentage points. Worse still, production of Ford’s most profitable of profitables, the diesel-powered F-Series Super Duty pickup, hit a bump in the road due to “supplier issues.” 

Back in January, Mulally’s legal beagles filed a lawsuit against Navistar International Corp. for warranty claims. The engine maker threatened to cut supplies quicker than locks at the Spears’ household. The threat was realized Monday, when Navistar halted production of Dearborn’s 6.4-liter diesel, claiming short payments by the Glass House Gang. 

Despite a court order putting those oil-burners back on the front burner (and forcing Ford to pay up), Navistar won’t be bothering their logistics teams any time soon. Getting the glow plugs glowing again will take time. When the lines were halted, Navistar cut back their blue collar workforce and kyboshed some parts orders needed to pound out the PowerStrokes.  Even with a backlogged supply at the ready, when Louisville fires back up next week Navistar, Ford and their dealers will all be playing catch-up. 

Truth be told, the Super Duty was already late to the party; Ford was scrambling to fill the near 37k diesel-equipped dealer orders when the production lines fell silent. Peter Nesvold of Bear, Stearns & Co. prices a one month lag at $1b in lost revenues. Even if Louisville gets back on track today, sidestepping this supplier drama won’t be enough to dodge some bigger bullets.

The credit raters at Fitch Inc. report that Ford’s former health care woes are back, and they’re bad. The 2005 union health care “concessions” have been outrun by rising costs. Ford’s health care tab now accounts for $490 to $705 per vehicle produced. While that amount will slide slightly next year, Fitch says costs will recommence their rapid escalation in ’09– and beyond!

No question: health care costs will take center stage at this year’s UAW contract talks. Ford (and the other 1.5) will “ask” the United Auto Workers (UAW) to follow the United Steelworkers example and pick up the tab on their retiree health care costs. Ford’s reportedly looking for a 25% reduction in their employees’ medical costs. Also no question: the UAW will tell Ford to go sing.

The Wall Street Journal reports that the UAW has begun accepting changes to its restrictive working practices. But any chance of pay conciliation pretty much disappeared when Ford’s Board of Directors suddenly decided that their $35m CEO and his minions deserved a raise. An SEC filing revealed that they’re bumping up Alan Mulally’s stock options by a cool million.

In a stunning move (considering the brouhaha surrounding Prez Del America’s Mark Field’s weekend Florida commute via company jet), the Board bestowed Big Al with a second set of keys for the corporate plane, so his family and guests can jet set without him. 

But wait, there’s more! FoMoCo’s BOD also decided Mulally isn’t the only executive who deserves a little something extra in their pay packet. Mulally’s “one nation under a groove” approach means top ranking team members can now collect up to eight times their annual salary in compensatory bonuses. To balance out the old program, envelopes stuffed with undisclosed amount of cash were delivered to joyful execs.

Speaking of spondoolies, let’s finish this sucker with a quick update on the total tally for Mulally’s turnaround (you know, should the company’s planned return to black stay on track). I make it $11.18b. That’s up $2b since the last time we looked.

As thousands of Ford’s white collar workers collect their payouts and leave their “Knowledge Retention Toolkits” behind, as the UAW [rightly] sneers at Ford executives’ greed, the line between tragedy and farce is growing thinner. The final chapter in this sad saga is on its way.

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54 Comments on “Ford Death Watch 27: Staking the Raises...”


  • avatar
    BostonTeaParty

    wouldnt you be pisd if you were mark fields?!!

    they never seem to learn do they, can’t see much hope for ford now, glad i jumped ship when i did.

  • avatar
    David Peterson

    This item highlights the ongoing stupidity of the white collar sector of the industry. The so-called Gen X and Y kids have grown up with the belief that unions are greedy, work-restricting socialists that care nothing beyond their Friday envelope. They also have the twin institutional value American= poor quality, Anywhere else = Good. Now, the Executive branch shoots itself in the foot with this ridiculous bonus schedule that rightly looks like money for nothing. My 14 year old son runs his lawn mowing business with more finesse. I really want to give these guys the benefit of the doubt, but I can’t do that while wiping egg of my face.

  • avatar
    Sajeev Mehta

    Eight times their annual salary in compensatory bonuses?

    For doing what? Systematically destroying one of the most profitable American corporations over the course of a decade and wiping out tens of thousands of American jobs?

    Un-frickin-believable. Thank you for this piece, Matthew.

  • avatar
    Clueless

    The execs at Ford have balls! Mark Fields could be adopted by Allan, which would allow Mark to use the corporate jet.

  • avatar
    mikedt

    Wow big bonuses while you loose market share and post record profits. Wonder what the board would grant these guys if they were actually any good.

  • avatar
    Luther

    Corporate lifeboats cost a lot of money though…Gulfstream…Cessna…..Um, 19th hole at Augusta…..

    The price you got to pay to keep Execs from bailing early…..

    Ill be going out to buy a new Ford right now.

  • avatar
    Luther

    Keep in mind the Execs are EMPLOYEES. The Board of Directors hands out the pay.

  • avatar
    Cliff

    Well, at least when Allan is flying around in the jet he will be in a product he knows something about. You can’t get good help if you don’t pay for it, at least that is what all Boards say. Incidentally, that comment about pay only applies to top execs, the rest of the corp. should not earn more than about $10/hr. max, because everybody else’s jobs are easy….

    The Navistar issue highlights one of the chief problem of the 2.46 over the last couple of decades when the green eye-shade boys really took over: absolutely catastrophic relationships with their suppliers. Someone decided to start an argument with the chief supplier for their single most profitable product, and there were no adults in the room? Can I play poker with the F guys? Sheesh.

  • avatar

    Sometimes it is hard to see the fine line between Comedy and Tragedy.

    Looks like a lot of “bad guys” in the script, and not a “good guy” in sight.

    –chuck

  • avatar
    NickR

    All I want to know is where in a company lies the threshold above which, no matter how inept (and in many cases, corrupt) you are, you land on your feet (or more accurately, land with your ass on a big pile of greenbacks)? Someone please tell me, because I really want to cash in.

  • avatar
    graham p

    If you can’t sacrifice, at least pretend you’re not looting the place.

  • avatar
    Cowbell

    To play devils advocate, Mullally’s pay increase translates to the cost of laying off 6 UAW workers. If you call that looting, then both captain and crew are guilty of that crime.

    And considering the crapper Ford is in, it seems like a small price to pay for an executive who seems to know what he’s doing. I always wanted to give Bill Ford the benefit of the doubt because he seemed like a nice guy, but watching GM roll out new car after new car to try and turn things around, you have to wonder what the hell Ford had been up to the last 4 years. The Edge couldn’t have taken that much effort.

    Considering the sales reports, I think a better focus of this Deathwatch would have been comparing Ford’s numbers to GM’s numbers, and the relative directions they’re heading. Of course that might undermine the GM deathwatch.

  • avatar
    kasumi

    I keep looking for a justification for this, but see none. Shouldn’t the “top ranking team members” take the hit before the assembly line workers or many white collar workers? Ford may be doing the right thing cutting staff, but this money should have: a) gone to the people leaving their jobs or b) back into the company. I imagine the top team makes significantly more (and have more saved) than many other employees, thus they can miss bonuses assuming when (if) Ford survives they will be compensated. In this case, the you have to pay for talent argument does not work – many of these people got Ford into this situation. I assume they are vested in the company and the halls would not empty 10 minutes after declaring “no huge bonuses.”

    K.

  • avatar
    Sajeev Mehta

    [i]I keep looking for a justification for this, but see none. Shouldn’t the “top ranking team members” take the hit before the assembly line workers or many white collar workers? Ford may be doing the right thing cutting staff, but this money should have: a) gone to the people leaving their jobs or b) back into the company.[/i]

    I agree, plowback is where this money should have went. Then again, the concept of teamwork is long gone in modern corporations, who in the ivory towers actually sticks around when the going gets tough???

  • avatar
    Luther

    Here is my take:

    Ford is dropping like Led Zepplin after John Bonham and the top Execs (The Cs and Ds in the company) are looking for more gainful employment elsewhere. If the Execs start bailing then the financial drama-queens in the broadcast media will start drama-queen-ing about it and spook public shareholders into dumping shares of Ford. A White (Black?) Knight will then buy a controlling interest at fire-sale price (seriously Pee-ing off the Ford family I might add) and procede to sell off Ford in pieces in a kinda real-life Gordon Gecko sorta way. It is best/cheaper to bribe the Cs and Ds to stay than to risk the horribly bad publicity. If Mulally or Fields announce they are leaving to join Proctor and Gamble or something, it would most likely mean the end of Ford Motor Co. Want to cash in? Get a Harvard MBA. Good work if you can get it.

  • avatar
    Sid Vicious

    The Navistar episode is just comical. This is just more evidence of F’s incredible arrogance. They’ve been pounding suppliers into the dirt for a decade, and now the wounded animals are biting back, because they have nothing to lose.

    Stick a fork Ford. They’re done.

  • avatar
    Luther

    I heard rumors that Ford modified Navistar’s engine before installing them into their trucks. Navistar claimed the problems with the Powerstroke diesel were of Fords making. Can anybody substantiate this rumor?

  • avatar
    Sid Vicious

    I believe (but am not sure) that many of the problems with the 2003-2007 6.0L Powerstroke were caused by A) Ford pushing Navistar to release the motor before all development was complete and B) Ford pushing Navistar to crank up the power beyond what was reasonable.

    Ford Marketing got too wrapped up in the horsepower wars. In a diesel, all you have to do is turn up turbo boost (via variable vane geometry turbo) and fuel and viola! more power. Of course, all sorts of other things suffer.

    Many of the problems on the 6.0 relate to the EGR/emissions system. Once again, something that probably would have benefitted from more engineering time.

    Navistar is too good a company to release a POS like this without serious pressure. I have not heard of anywhere near as many problems with their motors in other applications. Ford back-charging for warranty was likely brutal. Ford has replaced many many of these motors over the last several years.

    A Louisville Assembly employee on an employee board stated that Navistar is charging Ford $8,200 a pop for the new motor! Holy cow.

  • avatar
    Glenn A.

    $8200 a unit for the Navistar diesel? Wow. Just goes to show – if you cannot engineer and build your own engines, you are at the mercy of your suppliers.

    Studebaker learned this the hard way in the fall of 1964 when they shut down their engine plant in South Bend (about 9 months after shutting down South Bend Main), and had to purchase General Motors V8 and six cylinder engines in order to keep their Hamilton, Ontario facility producing.

    They “knew” what it cost GM to produce engines, and GM charged them WAAAAY more than a fair mark-up price, to the point where it essentially handed over about 50% of the entire automaker’s profits to GM.

    They’d have been better off to have sold the Studebaker engine line to someone like Mercury Marine and contract-purchased the engines back for cost-plus.

    Ford’s mess is even deeper, in a sense. Ford never bothered even developing a diesel V8 for what WAS their most profitable line. As Homer Simpson says, DOH!

  • avatar
    Jon L.

    Everyone is assuming that Ford management WANTS TO AVOID BANKRUPTCY! In fact I would argue that is not the case, and that they very much want to go bankrupt. If you were in management, which would you prefer:

    1) Working long hours with the UAW and your engineers and bean counters, and everyone else so that maybe you could squeak out a turnaround and the company does not end up in bankruptcy. And having accomplished this mediocre turnaround, your stock options are worthless due to the fall of the stock. And your resume is still not impressive because Ford is just doing okay?

    or

    2) Take as much cash as you can now, take the company BK, screw everyone in the UAW, your internal middle management, and your suppliers. Then when you emerge from BK, you get a whole bunch of BRAND NEW STOCK OPTIONS, plus you could say that you were there when you took Ford out of BK and into the shining new company that it is, and make even more money?

    If you assume that the management has the best interests of the company in mind, none of what they do make sense. If you assume the management has their own best interests in mind, it makes perfect sense.

    Sorry if I am being too cynical.

  • avatar
    Luther

    Glenn A: Ford never bothered even developing a diesel V8 for what WAS their most profitable line.

    I get *extremely* nervous if I have to use a sole-source part in my electronic circuit designs…This is like giving your 14 year old son a bottle of whiskey and your Corvette keys as you and your wife take off for a week in Cancun.

  • avatar
    Steve_S

    It would be real good PR if Mulally were to refuse the stock options not to mention appropriate. It will be interesting to see how all this plays out. For doesn’t have too many divisions assuming they divest themselves of Land Rover, Aston, and Jaguar. They just don’t have any hot product in the pipeline. The Edge is comparable to the Murano which is already 4 years old. The Fusion is alright but not better than an Accord, Camry or Aura. The 500/Taurus is bland and not better than an Avalon. The only thing that sells well are Mustangs and the F-series. I hope they can put out some good new product soon. I haven’t been impressed with anything on the autoshow circuit in the past couple of years except the Reflex concept.

    And do something with Mercury and Lincoln already, give them some sort of focus or something. Rebadges are not going to cut it.

  • avatar
    Luther

    Glenn A: $8200 a unit for the Navistar diesel?

    Sounds about right considering the strength/robustness of an engine that has a 20-something:1 compression ratio and has to handle a bazillion lb-ft of torque at 1500 RPM. I am sure there is a Have-to-put-up-with-Ford’s-Crap premium in that price as well.

  • avatar
    Luther

    Jon L: If you assume that the management has the best interests of the company in mind

    Management works at the pleasure of the Class-A shareholders/Board of Directors/Gettelfinger. They execute the owners/controllers-approved plans (Whatever they may be….Its not entirely clear). The “perceived” golden parachute is in reality the owners/shareholders attempt at bribing Execs to stay. No Exec wants to be with a company when it fails… It looks bad on the Resume.

  • avatar
    Cowbell

    Jon L,
    This bonus to Mullally was stock options, so if the company went bankrupt, they would be worthless.

    And to re-ask Luther’s question, can anyone substantiate these Navistar rumors?

  • avatar
    allen5h

    What Ford management is doing is no different than what regional home builders (like Ford, these are highly leveraged businesses and not capable of sustaining bad weather) management does just before they go belly up: they grab as much remaining equity as they can with bonuses/salary increases/etc…

  • avatar
    Luther

    Sid Vicious: Navistar is too good a company to release something like this without serious pressure. I have not heard of anywhere near as many problems with their motors in other applications. Explorer/Bridgestone Tire movie – Take 2.

  • avatar
    Luther

    Forget Survivor… The US Auto industry is far more entertaining.
    I think Navistar is in a rather pissy mood about now:

    http://www.navistar.com/newsdetail.aspx?id=838
    http://www.navistar.com/newsdetail.aspx?id=839
    http://www.navistar.com/newsdetail.aspx?id=840

  • avatar
    86er

    All this news would be stunning to a person who doesn’t really follow the auto news, and lives in a rural area where the nearest dealership likely has a Blue Oval or Bowtie on it. Their product sells just fine out there, thank you. Too bad there’s not enough of them out there to count.

    Mind you, that “quantity not quality” attitude doesn’t fly anymore. It’s going to either be get your company healthy or else the Blue Oval dealer in the “middle of nowhere” will shut down and rural folk will wonder what the hell happened.

    I make these comments not as some snide city-slicker with an ax to grind, but as someone who grew up in these areas where the truck is king and people still purchased domestic cars of all shapes and sizes.

  • avatar
    wstansfi

    Sajeev,
    You’re right as usual… about loyalty and money. So how much does it cost to keep the crew on board the titanic when the cold water’s rising fast? These guys are playing the market forces, just like the labor – the big difference is that the execs have way more resources and therefore more lateral mobility than the guys on the line. Sure these execs appear to be running the company into the ground, but will second stringers do better? Nah, the board is just doing what we all do, choosing the least of many evils.

  • avatar

    While I am no friend of the union, I can certainly understand their intransigence. Why should they accept a cut in their compensation when the top brass are ADDING to theirs? Why should they agree to "givebacks" when the wife and family of the CEO are swanning around in a Gulfstream jet on the company nickel? This is an American tragedy of unbridled greed (on all sides). When a company stands for nothing, it deserves nothing. 

  • avatar
    Eric_Stepans

    Recently, the Los Angeles Times published an article about rising incidents of cheating and rules-bending in high school sports. Someone expressed the concern that these youths would go on to be “corrupt politicians and thieves of tomorrow”. The article
    suggested it was up to coaches and teachers to set the kids straight.

    I wrote I letter to the editor (which they promised to publish but didn’t) noting that they had it exactly BACKWARD.

    It’s the current generation of corrupt politicians and thieves that teach our children that such behavior is the way to get ahead in the world.

    Kids are bright. When they see how much money, fame and power the likes of Enron, Tyco, Worldcom, Global Crossing, Britney Spears, Barry Bonds, the current administration, etc. get through crooked, greedy and questionable conduct, they learn a powerful lesson (cheating works).

    Ford’s management is just the latest mesquite chip on a huge bonfire.

  • avatar
    Rastus

    So many people’s heads spin when they see all the jobs being lost, yet all the lofty “bonuses” being handed out…as if there were no rhyme or reason for any of it. It sounds CRAZY.

    It’s only CRAZY when you believe in the traditional sense of a corporation…an “ongoing concern”.

    These guys are NOT interested in preserving a company. Once you realize management is CASHING *OUT*, then it all becomes clear.

    Management is raping the company…what’s left of it. Don’t be surprised people…it’s all according to plan.

    This is the NEW AMERICA! Get used to it!!

  • avatar
    Rastus

    Just to follow up:

    It USED to be the idea of a corporation was thus: You (the investor) GIVE this “Entity” called a Corporation YOUR MONEY such that they could provide you with a return GREATER than what you could on your own. They, being the corporate chieftans, POOLED your money, and that of others, …and they follow through with their promise (to provide you with said return).

    NOW, in USA circa 2007, it’s totally REVERSED!!!

    YOU, the poor sucker, GIVE THEM YOUR MONEY…and they in turn say “Screw You” (I would have stated it in much harsher terms, but out of respect for this website I have toned it down a notch).

    But yes, that’s IT! YOU work for a living, and in turn GIVE the Corporate chieftans the fruits of YOUR labor!! And in turn, they LIVE OFF OF IT…and LIVE damn well I might add!!!

    Who in their right MIND would invest in such a company I have NO IDEA. Yet fools DO exit!!!

    All the while they promise you the WORLD! The “latest and greatest”…JUST AROUND THE CORNER…all the while “they” are sacking away millions for themselves and their families!

    No, I’m not sh*tting you…this is how it’s done! This ought to be taught in all MBA programs.

    Everyone…recite after me: “I work for THEM…and I DO SO WILLINGLY!!! I am a slave to the Mark Fields of this world and I will die serving THEM…and more importantly, I do so of my OWN ACCORD!!!”

    (In days gone by, didn’t we call the Moonies a “CULT”???)

    -Your Rastus

  • avatar
    frontline

    a couple of things: compensatory pay is based on Ford financial goals , execs seeing that money is a big ” if “. Envelopes stuffed with cash dosen`t sound true.

    What is dealer cost for the Navistar option ? something is wrong with that $8,500 number unless Ford is taking losses on that option.

  • avatar
    Daniel Cote

    Another excellent suicide/deathwatch article. Keep up the good work.

  • avatar
    ttilley

    Cowbell wrote, playing devil’s advocate: “And considering the crapper Ford is in, it seems like a small price to pay for an executive who seems to know what he’s doing.”

    If we’re discussing bonuses which, in theory are supposed to be performance-based, then the executive in question should actually perform first. It’s OK to hire him since he “seems to know what he’s doing”, and when he was hired he knew about the crapper and accepted the deal anyway, but let him actually demonstrate that before showering him with bonuses. Or Gulfstreams.

    This would be easier to understand, but no easier to excuse, from a company where the Board has a long-term incestuous relationship with the executive who appointed it. But in this case?! Sheesh.

  • avatar
    frontline

    I did manage to find the 07 diesel option retailing for $5,300 . Sid, that $8,200 per motor cost to Ford dosen`t sound correct .

    I am repeating myself complaining about the envelopes stuffed with cash, I just don`t think that is true.

  • avatar

    Okay, a few bits from two stories in The Detroit News, both dated March 1st:

    Story 1:
    “Ford Motor Co. revealed to employees Wednesday that it is developing a long-awaited new subcompact car for the United States and other markets that will be based on the new Mazda2.” – “A Ford spokeswoman declined to comment on the internal announcement.”

    “Unlike its major competitors, Ford does not offer a subcompact car for the U.S. market.”

    Why not? Trucks is the answer.
    When was the first gas crisis in the U.S.? 1973 is the answer.

    “While Fields gave no time frame for the car’s arrival in U.S. showrooms, Hall predicted it will probably arrive in showrooms in two years.”

    Um, That’s a long time. Esp. if gas goes back up to/over $3 a gallon *this* summer.

    “A Ford source familiar with the project said the company plans to build the car in Brazil, but said that may change. Ford had planned to expand one of its Mexican plants to accommodate the new model, but can no longer afford such a major expense.”

    Keep “can no longer afford” in mind as we go to Story 2:

    “The board also approved cash payments to other senior executives to compensate them for a bonus program the company is scrapping in favor of a new compensation plan, according to documents filed with Securities and Exchange Commission late Wednesday.”

    “Ford will cover the costs of Ford Americas President Mark Fields’ weekly commute, including first-class airfare from Detroit to Florida, following his decision to stop using a corporate jet for his weekly trips back to south Florida.”

    Must be nice. Weekends in south Florida, and commute to Detroit.

    “Ford clarified Mulally’s corporate jet privileges. His family is allowed to use a corporate jet for personal travel even if Ford’s CEO is not traveling with them.”

    Lucky them.

    “Senior executives will have to start paying their own green fees when they golf.”

    I’m feeling their pain, how about you?

    Pics of the new Ford
    http://www.detnews.com/apps/pbcs.dll/article?AID=/20070301/AUTO01/703010381/1148/AUTO01

  • avatar
    NickR

    “While Fields gave no time frame for the car’s arrival in U.S. showrooms, Hall predicted it will probably arrive in showrooms in two years.”

    By which time the Echo/Yaris will be close to it’s third iteration, while the Fit and Versa will be on their second. Way to stay ahead of the curve! Pity, actually that car actually has some flair.

  • avatar
    Luther

    Glenn Swanson: long-awaited new subcompact car

    Long-awaited by who I wonder. Laboring in the zero-margin sub-compact market is a huge waste of time/money for Ford. Imagine laboring for nothing or laboring just to go out of business in the end.

    frontline: I did manage to find the 07 diesel option retailing for $5,300 . Sid, that $8,200 per motor cost to Ford dosen`t sound correct .

    It does if you figure the Triton costs $3000 to produce. The Powerstroke must use half its power in the engine’s oil pump just to keep the crank off the crank bearings. Diesels are expensive to produce especially due to the huge torque.

    If you think Mulally’s compensation is excessive, this is what he gave up to be CEO of Ford. Do you think he is kicking himself?

    http://dailytech.com/Airbus+Loses+Its+Last+A380+Freight+Customer/article6306.htm

  • avatar
    guma

    Yeah. The jet for the wife really maximizes shareholder value.

  • avatar
    Sid Vicious

    Couple of points regardging the Powerstroke motor:

    The $8,200/per motor cost that I quoted was given up on a Ford employee website, by a guy who works at Ford’s Kentucky Truck Plant, which is the sole source of Super Duty pickups. So – don’t believe everything you read on the internet, but I have faith in the number.

    Ford has publicly said that Navistar was increasing the price of the motor “unjustifiably.” So, once again, the number should not raise any eyebrows.

    Right around $5,200 is the cost of the diesel option for either Ford, GM or Dodge. So market pressures prevent Ford from passing increased cost onto the consumer. It just doesn’t work that way. The Dodge/Cummins relationship can only be called successful. Dodge probably makes a pretty good profit on the diesel option. The fact that Ford probably doesn’t explains a lot of the tension between Ford and their engine supplier.

    And as Luther pointed out, a gas motor costs something, and $3K sounds about right. So the diesel is a $5K upgrade, problem is Ford is not making any money here, especially when you factor in crappy warranty performance.

    Finally, regarding the rumour about Ford modding the motors after they leave Navistar: That’s the first I’ve heard it. But as I stated, anybody with a laptop can plug in and alter the engine mangement system for more power or whatever they want. I can’t beleve Ford would do this, but these are strange days.

  • avatar
    kablamo

    RF said:

    “While I am no friend of the union, I can certainly understand their intransigence. Why should they accept a cut in their compensation when the top brass are ADDING to theirs?

    This is an American tragedy of unbridled greed (on all sides). When a company stands for nothing, it deserves nothing.”

    The Union will ask: “If/when times are good again, will management cut their pay and benefits?” And the answer everyone knows is of course not, it’s inconceivable and would be without precedent.

    The current situation at Ford (suppliers cutting off business, having to bribe execs to stay on, etc) aren’t the result of particularly bad decisions lately: they are the progression of the path the company set down years ago. *Any* company in this kind of trouble would eventually have to pay off management simply to keep moderately qualified leadership.

    This situation [i]does[/i] stand for unbridled greed from both sides, and this week the ball was, literally, in management’s court. ’07 will be an interesting game.

  • avatar
    JLowe

    If I could pay myself eight times more salary, fly my family and friends on a luxurious private jet with the only trade-off being poor public image and a gaggle of naivetes bleating about it…er, I probably would, wouldn’t you?

    If the ship’s going down anyway, might as well stroll up to first class and enjoy. (I speak from close observations these many years)

  • avatar
    kjc117

    They are doing what has to be done in order for Ford to survive. They deserve a raise and bonus but that amount is debatable.
    Ford can not force sales but they can reduce staff and like it or not this is the american way.

    In the end, Ford, GM, and Chrysler need to have 90% of their manufacturing plants outside the U.S. to ride themselves of the UAW. Even if Ford has profitable cars and truck the UAW will still strangle them in the end.

    The much loved Fusion built in Mexico on a Mazda platform should be the future of Ford products. Sharing platforms with Mazda, Volvo, and Euro Ford plus offshore assembly should be the future the New Ford Motor Company.

  • avatar
    tony-e30

    It seems to me that these outrageous executive bonus packages (which, unfortunately, aren’t out of line when compared with other like-sized companies’) are being utilized to keep the “executive talent” from jumping ship as Luther noted way above. I would have to say that if the immensly talented execs weren’t willing to sacrifice on a level beginning to approach that of their hourly workers, they’re interests aren’t in keeping the company alive but in ensuring bankruptcy.

    Is it possible that the true Mullaly plan is more devious/dangerous than we’ve been giving him credit for? The future of American automotive companies hinges on breaking themselves of the UAW; a fact that can’t possibly be lost on GM, Chrysler, Ford, or the UAW.

    Could that be the real plan?

  • avatar
    rtz

    “Dearborn’s dealers moved just over 211k vehicles in the previous four weeks”

    Holy smokes! I would have never guessed they could move that amount of vehicles in that amount of time.

    2007 Toyota Corolla: ~$13,000

    Which Ford was bought and how was it a better value or deal?

    “PowerStrokes”

    That’s easy. The heck with that engine. Put CAT diesels in them. 860ft/tq should sell. If not, how about 1,000-1,200 ft/tq engines?

    http://ohe.cat.com/cda/layout?m=85520&x=7

    What are the legal options for kicking out the union? Close down all U.S. operations? Move everything to non union states?

    How about can Field’s and Mulally and have the UAW run Ford and see if they can make any money with that dog?

    I think this whole fiasco is just a giant pump and dump operation from those at the top of Ford taking all they can before they shut the doors. Enron?

  • avatar
    tsofting

    The way I see the function of a free market economy is that if each one of us look out for and take care of ourselves, the whole society will benefit in the long run as this generates demand for products and services, and so on and so forth…
    So – is Mullally doing anything else than what he should be doing – lining his own pockets as best he can? The obvious answer is yes, because you have to look a little further than your own nose. His greed will obviously and deservedly enrage the guy on the assembly line who makes the product we find in the showroom. If this guy is enraged, he will definitely not perform his work as best he can (or accept any pay concessions). You don’t have to be a brain surgeon to understand that this guy will try to grab as much money as possible before the Titanic is swallowed by the frigid waves. Don’t expect the guy on the shop floor to behave as Mullally says he should behave – he will behave according to Mullally’s example; grab and run and hope for the best! Management has to set an example, and if they can’t (or rather, won’t), get rid of the morons! Problem is – time is running out for the Blue Oval…

  • avatar
    Landcrusher

    Seems to me all the MBA’s know some things about making money that us common sense folk haven’t quite figured out yet.

    If you are paid a lot on stock performance, then to really cash in big, you first want the stock to take a dive. Even if you only bring it back to where it was, you make more than steady single digit gains would get you.

    As soon as it looks like the company is “in trouble” rather than firing you, they pay you extra so you don’t leave.

    If you strip a company, and then sell it, you make even more in bonus and buy outs. No worries, if you can’t sell it, the stock is now low and ripe for a recovery.

    When dealing with unions, you have to have be losing money at negotiation time or you will never do well (there is a play here with the rental cars and fleet business, look for the 2.5 to back after the fleet biz after the contracts are signed. Also, look for them to buy up more rental car stock after their stocks dive when they can’t get cheap cars anymore).

    In fashion, brown is the new black. In business, failure is the new success.

    Boards now need compensation consultants that know business, finance, compensation, contracts, and nuclear war game theory.

  • avatar
    John

    I guess that Ford’s Circular Firing Squad is making sure that the high ranking members are well paid.

    The Board, the Management and The Unions seem to be engaged in a mutual suicide pact.

  • avatar
    jaybread

    FYI-
    2008 Ford SuperDuty Diesel option MSRP is $6800.

  • avatar
    Lumbergh21

    I didn’t see this answered in a quick scan of the replies.

    Cowbell

    “Jon L,
    This bonus to Mullally was stock options, so if the company went bankrupt, they would be worthless.”

    Not really. Just because a company goes bankrupt, that doesn’t mean their stock is worthless. The largest utility on the West Coast, PAcific Gas and Electric (PG&E) went bankrupt approximately 6 years ago (thanks ENRON). In the month or so leading up to their filing for bankruptcy, the price of their shars dropped from around $30 to below $7, but not to zero. My brother-in-law works for them and participates in an ESOP. He increased the withholding from his paycheck when the stock prices were so low so that he could get more shares. By the time they emerged from bankruptcy court a little over one year later, the price of the stock was back up over $20 and is now trading around $35 per share. Oh, PG&E execs and mid-level managers also got performance bonuses even though the company went bankrupt. SOP in the business world now to give bonuses to execs bonuses no matter what their ultimate performance.

  • avatar
    DearS

    Sales in the slump? 2 million plus vehicles is quite an achievement. Comparing to past years sales is irrelevant. The vehicles are great, they perhaps will not work for as many clients are before, lets not let that deter us from current clients.

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