Tuesday, October 04, 2011

American Manufacturing Renaissance: Ford To "In-Source" 12,000 Jobs from Mexico and China

Oct. 4 (Bloomberg) -- "Ford Motor Co. said it has committed to add 12,000 hourly jobs in its U.S. manufacturing plants by 2015 as part of a four-year tentative agreement with the United Auto Workers.

The figure includes 5,750 more UAW jobs than a previously announced 6,250 hourly positions to be added by the end of 2012, Executive Vice President John Fleming said at a news conference in Dearborn, Michigan. Ford will be “in-sourcing” jobs from Mexico, China and Japan, the company said in a statement. The union said it will release details later today.

The majority of the 12,000 jobs Ford is adding will be workers making entry-level wages, said Marcey Evans, a Ford spokeswoman. Wages for those so-called Tier-2 workers have started at about $14 an hour, half of what senior workers make.
   
The second-largest U.S. automaker earned $4.95 billion in the first half of the year, as fuel-efficient models like the Fiesta subcompact attracted buyers. Ford’s U.S. light-vehicle sales are up 11 percent this year through September, ahead of the industrywide gain of 10 percent.

Ford earned $9.28 billion in the past two calendar years after $30.1 billion in losses from 2006 through 2008. The automaker borrowed $23.4 billion in late 2006, putting up all major assets including its blue oval logo as collateral. That helped Ford avoid the bankruptcies and bailouts that befell the predecessors of GM and Auburn Hills, Michigan-based Chrysler."

Comments:

1. Of course, one of the main reasons for the 12,000 jobs being "in-sourced" to the U.S. from China and Mexico is the new 2-tiered wage structure that allows Ford to bring in new workers at a more competitive, realistic, market-based wage of $14 per hour.  This increased domestic production and hiring is part of a trend that will continue as part of the renaissance of American manufacturing predicted by the Boston Consulting Group.

2. Ford lost money in 2006 (-$12.6 billion on sales of 2.73 million vehicles) and 2007 (-$2.7 billion on vehicle sales of 2.4 million).  Ford is now profitable and earned $6.5 billion last year on sales of only 1.93 million units, and it made almost $5 billion in profits during the first half of this year on a sales pace about the same as last year.  Greater cost efficiencies and lower labor costs have translated into higher profits for the automaker, despite unit sales that are almost 30% below the 2006 level. 

HT: Buddy Pacifico

21 Comments:

At 10/04/2011 1:07 PM, Blogger Benjamin said...

It absolutely pains the gold-nuts and inflation-fetishists to say it, but the current exchange rate of the dollar is helping exports and domestic manufacturing as well.

A perverted obsession with a "strong dollar"--the pig-headed conflating of true national strength with the exchange rate of the dollar--has caused untold damage to the USA manufacturing base.

 
At 10/04/2011 1:16 PM, Blogger Sean said...

Wait, I thought sending jobs overseas was good? Or are we happy to have them here or there? Or just whatever the market decides we cheer?

 
At 10/04/2011 2:33 PM, Blogger Buddy R Pacifico said...

Ford workers to receive $9700 in bonus money.

Ford hourly workers will get a $6000 contract signing bonus and $3700 in additional profit sharing for 2011.

Gee, competitive wages and making profits works a lot better than the alternative.

 
At 10/04/2011 2:36 PM, Blogger Bernie Ecch said...

low paying manufacturing jobs you mean. But the executive compensation is still high.

 
At 10/04/2011 2:50 PM, Blogger Marko said...

This comment has been removed by the author.

 
At 10/04/2011 2:51 PM, Blogger Marko said...

It is a sad state of affairs when a business needs to go hat in hand to beg a union to let them hire more workers.

What may have started as reasonable protections for employees that want to organize representation for themselves to management has turned into a bloated, one sided evil behemoth that needs to be brought down. What we need is a federal right to work law, at minimum. Get people back to work!

 
At 10/04/2011 3:11 PM, Blogger Buddy R Pacifico said...

Bernie Ecchs states that executive compensation is to high.

What salary will the Ford CEO earn for managing over 200,000 employees around the world -- as well as managing the company away from bankruptcy?

$3.4 Million dollars and stock bonuses if successful.

Alan Mullaly's salary would not be in the Top 15 NBA salaries.

 
At 10/04/2011 3:33 PM, Blogger morganovich said...

buddy-

and there are far fewer folks able to run ford well enough to have avoided BK that there are start point guards.

relative to supply and demand, mullaly is even less underpaid, especially if you, say, own ford common stock.

 
At 10/04/2011 6:32 PM, Blogger Walt G. said...

Ford avoided BK partly because GM declared BK and the Treasury bailed out their mutual suppliers while GM took the public relations hit.

Ford's success was mainly out of desperation not to lose the company with the family name in a hostile takeover (research the heat the family took for that strategy at the time). I wish all the automotive companies who supply thousands of jobs to do well, but Ford's class B voting shares allowed the family to overrule what the majority of stockholders would have done. I think Mullaly has done an excellent job; however, luck and vanity was definitely on Ford's side.

 
At 10/04/2011 7:09 PM, Blogger Craig said...

"--the pig-headed conflating of true national strength with the exchange rate of the dollar--has caused untold damage to the USA manufacturing base.

You're absolutely right. The demand for dollars has kept the exchange right higher than it should have been for decades -- especially given the inflationary policies of the Fed. You said nothing that would dismay a "gold-nut".

What made you think you did? And what on God's earth would cause you to conflate "gold nuts" with the inflationists?

 
At 10/04/2011 7:38 PM, Blogger Hydra said...

Now we will see if the buy american crowd is willing to put their money where there mouth is, or whether they really prefer toyotas. Which as MP has pointed out, are also built in America.


===============================

You think management isn't a bloated, one-sided, evil behemouth?


===============================

You gotta love gold nuts: the buying power of the dollar is way down, but the price of gold has soared!

You can't make this stuff up, it is right out of an ad for gold.

 
At 10/04/2011 8:25 PM, Blogger Itchy said...

At 10/04/2011 3:11 PM, Buddy R Pacifico said...
Bernie Ecchs states that executive compensation is to high.

What salary will the Ford CEO earn for managing over 200,000 employees around the world -- as well as managing the company away from bankruptcy?

$3.4 Million dollars and stock bonuses if successful.

Alan Mullaly's salary would not be in the Top 15 NBA salaries.


worth every penny, especially if you bought Ford common stock when it was $1/share.

 
At 10/04/2011 8:34 PM, Blogger sethstorm said...

Now if Ford would stop trying to put EU/Third World cars in the US market, they might have a chance. About everything Ford sells that isn't a flagship car seems to be some golfcart or turbocart.

 
At 10/04/2011 9:05 PM, Blogger aorod said...

To get more manufacturing, lower energy prices. Energy is a big cost for manufacturing. Drill drill drill.

 
At 10/05/2011 11:57 AM, Blogger Marko said...

"You think management isn't a bloated, one-sided, evil behemouth?"

Actually, I don't care - that is the shareholder's problem. Excessive regulations over protecting labor associations (unions) is the bloated behemoth I was referring to. Are you claiming there are excessive government regulations protecting management? Puh-lease.

 
At 10/05/2011 11:39 PM, Blogger Ron H. said...

Bernie: "low paying manufacturing jobs you mean. But the executive compensation is still high."

Most manufacturing jobs these days are low paying, If you prefer that they be in the US, that's the way it must be. Executive comp high? That has nothing to do with the topic of in-sourcing jobs, and must just be something for you to throw out there to indicate your support of class envy.

 
At 10/05/2011 11:51 PM, Blogger Ron H. said...

morganovich: "and there are far fewer folks able to run ford well enough to have avoided BK that there are start point guards."

Very few, apparently, 2 of his peers weren't able to do it. His compensation is peanuts compared to the value he has added at Ford. The 12,000 new jobs alone, are worth 10 times Mulally's salary.

 
At 10/06/2011 12:00 AM, Blogger Ron H. said...

Sean: "Wait, I thought sending jobs overseas was good? Or are we happy to have them here or there? Or just whatever the market decides we cheer?"

In case you're not sure how to feel about this,:) the correct answer is that we are happy to see jobs here and there. Wherever businesses can prosper, and improve our standard of living and well being.

 
At 10/06/2011 12:04 AM, Blogger Ron H. said...

"What made you think you did? And what on God's earth would cause you to conflate "gold nuts" with the inflationists?"

Answer C. - Ignorance

 
At 10/06/2011 12:21 AM, Blogger Ron H. said...

"You think management isn't a bloated, one-sided, evil behemouth?"

Look, both sides can't be bloated one-sided evil behemoths. One side needs to be an oppressed victim. Pick one.

 
At 10/06/2011 1:06 AM, Blogger sethstorm said...


Wherever businesses can prosper, and improve our standard of living and well being.

Only valid in the US, amongst US citizens.

 

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