AutoGuide News Blog
The AutoGuide News Blog is your source for breaking stories from the auto industry. Delivering news immediately, the AutoGuide Blog is constantly updated with the latest information, photos and video from manufacturers, auto shows, the aftermarket and professional racing.
Mere months after workers at Chrysler’s Jefferson North factory were caught drinking and smoking marijuana on their lunch breaks, three employees were arrested by law enforcement agencies after Chrysler tipped off police regarding workers who continued to abuse substances while on the job.
The workers were arrested on January 24th, but have yet to be formally charged, according to a spokesman for the Michigan State Police. Chrysler confirmed that they were co-operating with police on the matter. The company released a statement to the media, remarking “In this instance, Chrysler Group cooperated with the County of Macomb Enforcement Team in the arrest of suspected employees at Jefferson North who were allegedly in violation of state law.”
A local Fox affiliate caught workers on video engaging in similar behavior last fall. The Jefferson North plant builds the Jeep Grand Cherokee and Dodge Durango, two vehicles that have won widespread acclaim from consumers and the media.
[Source: The Detroit News]
The United Auto Workers continued its campaign of irrelevancy as its President, Bob King, launched a series of veiled threats at foreign automakers with American plants (such as the Honda plant seen above), while simultaneously stating that the very survival of the UAW is at stake – and the organization of a foreign automaker’s plant is the key to the UAW’s continued existence.
“If we don’t organize these transnationals, I don’t think there’s a long term future for the UAW — I really don’t,” said King in a speech to members of a political conference held in Washington, D.C.
Despite the fact that foreign automakers offer equivalent or better wages than UAW plants, King is aggressively targeting them, with King planning to pick a target within 90 days. Other actions include targeting dealers of the chosen automaker for protests, and asking automakers to comply with “fair bargaining” principles, despite that fact that it runs counter to the complete absence of collective bargaining in foreign auto plants. “They don’t fear us and they think they can’t get away with it,” King said, in an almost naked display of insecurity regarding his own relevance.
King was at least cognizant enough to acknowledge that the UAW was a spent force, stating “Here’s the terrible position we’re in autos. Because we’ve fallen so far in the percent of workers represented by the UAW in autos” the union can’t demand big increases because of non union competitors. “So if we go in, we dramatically raise fixed costs for Ford, General Motors or Chrysler, we’re shooting ourselves in the foot. … We don’t want to disadvantage the (Detroit 3) companies.” King ended his speech by telling UAW members that Barack Obama’s re-election in 2012 would be beneficial for the UAW, due to his pro-union stance.
[Source: The Detroit News]
General Motors will buy $2.1 billion worth of preferred stock as part of a move to pay off its $49.5 billion in federal bailout loans. GM will also launch a series of measures to reduce its debt by $11 billion.
GM will make contributions to the UAW pension fund, to the tune of $6 billion, and secure a $5 billion line of credit from a series of banks, which should help reduce its total debt obligations by a total of $11 billion.
“These actions will bring down our leverage by $11 billion by reducing debt and improving our pension funding position,” GM CFO Chris Liddell said in a statement.
[Source: Automotive News]
It’s a common truism that unionized auto workers have the most secure jobs in the world. But 13 Chrysler line workers caught drinking and smoking marijuana during their lunch break better start looking for new jobs.
Chrysler has announced that the dirty dozen (and one other poor shmuck) have been fired for their actions. Their behavior was a massive embarrassment for the company, since it was documented and broadcast by Fox News, a network that’s not exactly an ally of the UAW or government-owned Chrysler. To add insult to injury, the workers were employed at the same plant that President Obama visited just weeks ago, where he praised the workers, and the new Jeep Grand Cherokee that’s built there.
Chrysler even issued a statement, which you can see below the jump
Stories of domestic auto workers showing up to work inebriated, and displaying reckless disregard for the integrity of their job are legion among a generation of consumers who swore off American cars in favor of imports. But that was the pre-internet era, where evidence was mostly anecdotal.
Now, The Truth About Cars, via Fox News, has a mountain of documented proof that UAW workers do, in fact, get drunk and stoned on the job. A Chrysler plant worker apparently tipped off a local Fox News affiliate that a bunch of workers were getting f!$&ed up on the job every single day for a period of ten days. On their lunch hour.
The video is pretty self-explanatory, and we want to make it clear that this is only a group of bad apples among a community of hard working Americans who are working hard to help turn Chrysler around. The problem is that the job security and culture of entitlement fostered by some elements allows for this situation to happen. With Chrysler owned by the taxpayers of America, and a slate of new products on the way that will ostensibly rescue the company, this is the last thing the beleaguered automaker needs.
[Source: The Truth About Cars]
A column in today’s Wall Street Journal was hidden behind the “subscribers only” section to the detriment of many industry watchers, as the Journal’s Holman Jenkins outlined what he sees as GM’s biggest threats to becoming successful again; a resurgent Volkswagen, and a UAW that Jenkins feels is representing interests that run counter to the workers and the company’s recovery.
While Jenkins labels VW a “has-been” in the U.S. market, he notes that while other manufacturers are adopting the “world car” approach and creating one model for the entire globe, VW is tailoring their efforts to the U.S. and the rest of the world, while cutting their sticker prices. Purists may complain that the cars are losing their character, but the current generation Focus, which was a U.S. market car, trounced Saturn’s Astra, which followed the “world car” formula, in the sales race. Jenkins cites the new 2011 Jetta as a promising example of VW product to come.
Jenkins reserves an equal quantity of barbs for the UAW, blaming them for the foreign automaker’s decision to move all future plants to the South and escape the clutches of the UAW, after a disastrous effort by VW to establish a UAW staffed plant in Pennsylvania. Stating that “The union has no function except to seek uncompetitive wages, benefits and work rules from the Detroit segment of the industry,” he questions whether the policies of the Obama administration and the UAW are really in the best interests of GM and America as a whole.
[Source: The Wall Street Journal]
After acquiring the former NUMMI plant jointly owned by General Motors and Toyota, Tesla Motors was immediately targeted by the UAW for a guilt-trip campaign by the United Auto Workers to re-hire the 4,700 workers set to lose their jobs as the plant closed.
In an interview on a California radio show, Tesla CEO Elon Musk was asked about the hiring situation, Musk affirmed his commitment to getting the workers their jobs back, telling listeners that “It is always easier to hire from the neighborhood” and that “hiring former HUMMI workers is a priority for us.”
Being a low volume manufacturer, Tesla will likely only need 1,000 workers, but the opportunity always remains for expansion. More interestingly, the plant’s union status could be a future contention. No doubt the UAW will want to see it continue, but past issues with the union, and the need for strict quality control in an ultra-premium vehicle will likely not mesh well with the union’s mentality towards hiring and firing workers.
[Source: Autoblog Green]
The United Auto Workers is busy inserting itself into the Toyota/Tesla joint venture barely 24 hours after it was even announced. The two companies announced that they would be collaborating on electric vehicles, and Tesla would be taking over the revolutionary (at the time) NUMMI plant in Fremont, California, to build their new Model S sedan.
The NUMMI plant was a groundbreaking venture between Toyota and GM that saw one of the first instances of Japanese management practices and American-style union labor. Before the collaboration, the Fremont plant was responsible for some of the most notorious horror stories regarding American auto workers, such as on-the-job intoxication and workers putting coke bottles inside vehicles so that the rattling would annoy customers. By the time the plant had closed at the end of 2009, the plant had experienced a 180-degree turnaround, with quality levels on par with Toyota’s best-performing Japanese factories.
4,500 NUMMI employees lost their jobs when the plant was shuttered, and it’s no surprise that the UAW is pushing hard to get the jobs back. An all-American, union made electric car would probably go along way to boost the perception of electric cars in the public eye, but with a pricetag of over $100,00, you can be certain that the amount of tomfoolery and quality defects that Tesla will tolerate is essentially zero.
Late Sunday a judge approved the sale of GM’s assets to a group comprised of the U.S. government, the UAW and the Canadian and Ontario governments under the name NGMCO, Inc. The decision will see GM exit bankruptcy court quickly with the ‘New GM’ assets going to NGMCO, while the ‘Old GM’ assets will be sold off to the highest bidder.
Judge Robert Gerber then placed a stay on the proceedings to for four days to hear objections or appeals, but as most of those have already been dealt with, GM is expected to reemerge as a new government-owner company by Thursday.
In a statement Judge Robert Gerber said that he would, “prevent the death of the patient on the operating table.”
Gerber pointed out the seriousness of the matter and the alternative, stating that, “The only alternative to an immediate sale is liquidation – a disastrous result for GM’s creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates.”
The New GM will be majority owned by the U.S. government with a 60 percent stake in the automaker. The UAW will get 17.5 percent, while the Canadian and Ontario governments will get 12 percent.
In response to the news GM’s CEO Fritz Henderson released a statement saying that, “A healthy domestic auto industry remains vital to the global economy and we deeply appreciate the support the U.S., Canadian and Ontario governments and taxpayers have given GM, and the sacrifices that have been made by so many. This has been an especially challenging period, and we’ve had to make very difficult decisions to address some of the issues that have plagued our business for decades. Now it’s our responsibility to fix this business and place the company on a clear path to success without delay.”
The Obama Administration’s auto task force has said that sale of GM back to the private sector could begin as early as next year.
[Source: Automotive News]
As a government imposed June 1st bankruptcy deadline looms on the horizon, the UAW is reporting that it has reached a tentative agreement with General Motors and the U.S. Treasury.
The specifics of the agreement will not be made public until the contract is ratified, however, the UAW did say that changes have been made to the employees retiree health trust, referred to as the Voluntary Employee Beneficiary Association. It is not clear if the UAW has worked out a deal similar to the one with Chrysler that would see the union take control of a portion of the company.
Negotiations between the Canadian Auto Workers (CAW), GM and the Canadian Federal and Ontario Provincial governments have yet to result in an agreement.
As with Chrysler, a ratified contract would not necessarily mean that GM would avoid filing for Chapter 11 bankruptcy protection.
[Source: Automotive News]
Fleet average set at 35.5 mpg by 2016
Yesterday President Obama announced a new proposal being put forward to increase fuel-economy standards across the board. If enacted, the legislation would see the fleet average for passenger vehicles rise to 35.5 mpg by 2016.
Currently automakers are facing an 8 percent increase in fuel-economy standards that would see fleet averages for light-vehicles (cars and trucks) at 27.3 mpg for 2011. Cars would have to achieve a fleet average of 30.2 mpg by that date.
The new legislation would see increases of 5 percent annually after that, with a fleet average of 35.5 mpg by 2016.
President Obama made the announcement at the White House yesterday and was joined by representatives of 10 supporting automakers and the UAW. In attendance were GM CEO Fritz Henderson, Ford’s Alan Mullaly, Chrysler’s Bob Nardelli, Toyota’s Jim Lentz, Honda’s John Mendel, BMW’s Friedrich Eichiner, Nissan’s Dominique Thormann, Daimler’s Dieter Zetsche, Mazda’s Jim O’Sullivan, Volkswagen’s Stefan Jacoby and the UAW’s Ron Gettelfinger.
If enacted the proposal would reduce America’s fuel-consumption by 1.8 billion barrels of oil.
The agreement was arrived at with the consent of California, which will cease to have its own fuel-economy standards.
The cost of achieving the new fuel-economy standard is expected to be roughly $600 per vehicle, a tab that will no doubt be passed along to the consumer.
[Source: Automotive News]
From start to finish, Chrysler’s bankruptcy proceedings could take as long as two years, according to a Bloomberg report. The article cites an administration official, and says that the initial period of 30 to 60 days for the “quick and surgical” process only refers to the period required to sell the major assets to a new company.
The remaining “bad assets” would then be divvied up by the courts to the remaining debt holders.
This may not be as big of a setback as it sounds at first, however, as the new Chrysler would no doubt be able to begin operations once it is able, which could turn out to be long before all of the court proceedings have concluded.
Currently Chrysler is still in bankruptcy court and the process does seem to be moving along swiftly as parties opposed to the merger have either withdrawn or been denied. It is not clear how much longer it will take to approve the sale of the “good assets” to the new company owned by Fiat, the UAW and the Canadian and U.S. governments
Starting Monday, Chrysler will idle most of its plants as the company restructures under a Chapter 11 bankruptcy filing. This will include 8 U.S. assembly plants, as well as facilities in Canada and Mexico. Other pre-assembly facilities will also face temporary closure including five North American engine plants, six stamping plants and seven transmission plants.
The temporary shut-down will effect 26,000 UAW workers and 10,000 Canadian Auto Workers.
Chrysler is using the bankruptcy proceedings to its advantage, as the production stoppage will allow it to deplete the ever-increasing stockpile of vehicles.
The temporary shut-down is expected to take from 30 to 60 days, however, there is potential for it to extend beyond that.
[Source: Automotive News]
UAW oWn3S Chrysler... literally
Less than a day after the UAW, Chrysler and Fiat agreed upon the terms of a contract that would keep the struggling U.S. automaker afloat, details of the agreement have surfaced in which the union will take a controlling share in Chrysler.
At first it seemed almost too good to be true that all sides had reached an agreement without the need for decreased wages. Instead the agreement stipulated that Chrysler would significantly reduce its participation in the employee retirement program.
The agreement came just days after a similar agreement had been reach between Chrysler Canada and the Canadian Auto Workers union – an agreement that was ratified the same day Chrysler and the UAW put together the current proposal.
Now word has leaked that in exchange for Chrysler’s reduced payments to the company’s retirement plan, the company had to essentially hand itself over to the union. In total, the UAW will get a 55 percent stake in the planed Chrysler-Fiat partnership, with Fiat initially taking a 20 percent share, with up to 35 percent ownership possible if certain conditions are met.
The agreement now has to go before Chrysler’s 26,000 workers, with voting on Wednesday in order to ratify the agreement ahead of the government’s end-of-month bankruptcy deadline. If the deal is reached and Fiat signs on, the Federal Treasury will provide Chrysler (or should we say the UAW) with $6 billion to keep the automaker afloat.
Meanwhile, one other major player (which has been incredibly quiet during this ordeal) has agreed to remove itself from the situation. Daimler will shed its 20 percent stake in Chrysler and rethink ever working with a U.S. automaker again.
[Source: Automotive News]
Extended shutdowns seen as a way to reduce costs as vehicle surpluses continue to grow.
Several major news outlets are reporting that General Motors is planning extended shutdowns of its U.S. plants this summer. The plants would be idled for as much as nine weeks from mid-May through July.
While it is common practice for plants to idle for a “summer break” during the sunny season, that period has traditionally only been two weeks and not the two months that General Motors is planning.
The move is considered a necessity as the struggling automaker suffered a sales decline of 49 percent in March and currently has a stockpile of vehicles that can last 122 days.
A representative of the United Auto Workers union told the Associated Press that plan managers will be meeting with the union today and tomorrow to discuss production changes and some plants.
There is no word on if the extended shutdowns would apply to GM’s other North American facilities.
[Source: Automotive News]
Fiat is about ready to walk away from a potential partnership with Chrysler says CEO Sergio Marchionne unless the U.S. automaker can significantly cut labor costs. While the United Auto Workers union has made it known that it is willing to work with Fiat and Chrysler management, the Canadian Auto Workers union isn’t.
“From what I can tell from a distance, the CAW may have taken more rigid positions,” said Marchionne in an interview with Canada’s Globe and Mail newspaper.
Currently Chrysler and the CAW do not see eye-to-eye. The automaker has asked the union to cut labor costs by $19 CDN to $55 to match hourly wages in U.S. plants but the CAW will only go as far as reducing hourly wages by $7.25 (an amount GM workers agreed to recently).
Marchionne did not mince words in his interview with the Globe saying that a sense of entitlement in an organization that is technically bankrupt was nonsense and that the involvement of the U.S. and Canadian governments in a bailout plan was a sign of last resort for Chrysler.
Marchionne said that there is currently only a 50 percent chance the deal could go through. Meanwhile Moody’s Corporate Finance recently said that Chrysler has a greater than 70 percent chance of going into bankruptcy.
Meanwhile the Obama administration’s April 30th deadline is fast approaching.
[Source: Globe and Mail]
According to the reliable folks over at GMInsideNews, on Monday the Obama Administration will announce a bankruptcy deadline for both General Motors and Chrysler.
It has been rumored that the government will release more details about its aid for the U.S. auto industry on Monday, but now it appears the announcement will include this strong-arm measure by the feds. The “brankruptcy deadline” will be a specific date by which both companies will have to have their finances in order. For General Motors this means a date by which it will have its ongoing issues with the United Auto Workers and bondholders resolved. If the companies cannot comply with the request of the Auto Task Force it will force both U.S. auto giants into a “pre-packaged” Chapter 11 bankruptcy filing.