Detroit News:Ford may seek deeper cost cuts [Archive] - Ford Inside News Community

: Detroit News:Ford may seek deeper cost cuts

09-28-2007, 07:42 PM
The tentative agreement between the United Auto Workers and General Motors Corp. may be the game-changing deal that paves the way for GM's revival in its key home market, but executives at Ford Motor Co. already worry that it may not cut costs deep enough for them.

Ford is in worse financial shape than its crosstown competitor, a fact that is not lost on the UAW. The union's president, Ron Gettelfinger, said Wednesday that he expects the deal with GM to set the pattern for agreements with Ford and Chrysler LLC, as is traditional in Detroit. But experts say it is likely Gettelfinger will take a broad interpretation of that pattern, at least when it comes to Ford.

CEO Alan Mulally has made it clear that he is unwilling to accept a deal that does not make Ford fully competitive with its Asian rivals. To do that, Ford needs to cut its U.S. labor costs 30 percent.

Ford bargainers are poring over details of the UAW-GM agreement. Sources familiar with the situation told The Detroit News they still are not sure how far the deal goes on some key points, but executives in Dearborn are concerned it won't achieve Ford's cost-cutting goal.

Experts such as David Cole, chairman of the Center for Automotive Research, agree. They also believe the union is prepared to offer more favorable terms.

"The last thing the UAW wants to do is jeopardize the future of Ford," he said. "They'll get some modification that fits the situation."

Ford's turnaround is years behind GM's, and the Dearborn automaker has mortgaged all of its U.S. assets to pay for it. Ford lost $12.6 billion last year compared with GM's $2 billion.

The two-tier wage component of the GM deal helps that automaker far more than Ford. GM's work force is much older than Ford's, so more GM workers are likely to retire sooner, making room for lower-paid new hires. Moreover, Ford still has to make room for thousands of former Visteon Corp. workers that it agreed to take back as part of a bailout agreement with its former parts subsidiary in 2005.

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