Let’s focus on Ford as it has very available data.
In the first move of an announced global manufacturing strategy the newly redesigned Ford Focus, currently a high demand vehicle that as caused one US manufacturing plant to add a third shift, will have it’s new model built both in Europe and the US. Ford will be adding one new plant for that vehicle domestically as well as retooling it’s Mexico plant to switch from the F-150 to the new Focus. These plans were announced in June well before the liquidity problems of today. In addition;
With every new product, Ford expects to be the best or among the best for fuel economy. This is aided by one of the most extensive powertrain upgrades ever for Ford. By the end of 2010, nearly all of Ford’s North American engines will be upgraded or replaced. In addition, within two years, nearly all of Ford’s North American lineup will offer fuel-saving six-speed automatic transmissions or be available with an optional PowerShift dual-clutch unit. Furthermore, Ford will offer EcoBoost on more than 80% of its North American lineup by the end of 2012, and capacity for North American four-cylinder engines to more than one million units by 2011. (July 2008)
Ford has also already leaked they are retooling two plants in the US to bring to domestic production two of their European models that are smaller and gas efficient (June 2008). Ford has also added a third shift to it’s Wayne, Indiana plant to build the high demand Ford Focus. The two Euro models, currently built in Europe for European production, are the Kuga and C-Max both small vehicles to be introduced for the 2011 model year.
(David Axelrods Saturday statement that Detroit must include plans for ‘retooling’ for it’s short term $25 Billion loan shows only the lack of knowledge of manufacturing industries.)
Ford has also announced that it will continue the cost savings reogranization by continuing employee buyouts and reducing management by a minimum of 15%. This doesn’t count the savings of the newest UAW contract that cuts the beginning salary of new hires by 50% compared to long term workers. It’s the biggest reduction in UAW history.
In July industry sources published Ford’s announced intent to have an entirely revamped product line by 2010. In addition to bringing six small vehicles to North America from Ford’s European lineup, the company is also accelerating the introduction of fuel-efficient EcoBoost technology (turbocharging and direct-injection)and all-new four-cylinder engines, boosting hybrid production and converting three existing truck and SUV plants for small car production as early as December.
Notice the long lead time on retooling, moving manufacturing plants and introducing new and revamped models with new technology. It simply takes a long time to retool manufacturing facitilies. In this light the statements from David Axelrod and other implying an ‘immediate’ retooling of plants and product lines is simply naive.
Will 25 Billion get the job done for all three carmakers? This is problematic and short-sighted with the huge bailout of the financial industry. Those industries sustain jobs and illiquidity without creating any tangible goods. In the latest example, which is absolutely necessary, Citi Group will have the US Treasury “invest $20 billion in Citigroup and guarantee $306 billion in risky assets.”
That is a $20 Billion investment and a guarantee of $306 Billion in risky assets for a single company. Why are we now arguing about a $25 Billion loan to three companies that control millions of jobs? GM alone would cost the country over 3 million wage earning jobs if it fails completely. This debate, other than being politically popular as the Big Three are easy targets, makes no sense. More in Part 2