It is Ford’s (F) turn to talk with the UAW. Negotiations with the other two US car companies are over.
But, Ford in negotiating from a position of hunger. Its sales have been down about 20% in each of the last two months. It trades at 10% of sales. The Japanese are not letting up in North America, and GM (GM) has a line of cars and small trucks that seems to be selling.
Ford has announced plans to close 16 plants in the US, but with its market share down to 15%, that may not be enough. The company may want to set up a health care fund like the one GM (GM) did. This would cut Ford’s annual costs, but might require the company to put up $30 billion. Ford has about $48 million on its balance sheet. That does not leave much money for carrying an ongoing deficit in it North American operations.
The issues around the UAW negotiations are clouded by the fact that both sides want to set costs, set work-force levels, and set a number of plants.
If Ford cannot get flexibility on costs, it will not be around to negotiate the next contract in 2011.
Douglas A. McIntyre
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