Throughout the crisis now gripping the auto industry, Ford has maintained, with increasing smugness, that it was different. Different from Chrysler and General Motors, in two significant ways.
Ford, alone among the once-big three, did not seek government loans, and did not declare bankruptcy. Near as I can tell, there were three reasons for this. Ford had borrowed up to the hilt in the private sector back when big corporations could still do so, before the Wall Street crash of September 2008.
Ford had shrewdly recruited Alan Mulally from Boeing, and this savvy executive helped set the House that Old Henry built on a turnaround path. And finally, Ford has, all things told, better cars right now than GM or especially Chrysler, which, when it comes to future product, is in ghastly shape, unless you want a Jeep.
Not only that, Ford surprised everyone by posting a nearly $1 billion dollar profit in the third quarter of this year - including a tiny profit in the place that really counts, North America.
The last time that happened was nearly five years ago, when George W. Bush had just started his second term.
So is it any wonder that, when asked to grant the company the same kind of concessions that GM and Chrysler got, Ford workers overwhelmingly said no? Frankly, I can’t blame them.
Today, most of the analysts are beating up on the rank-and-file United Auto Workers for turning this deal down. I don’t agree. Ford management asked for this in a couple of ways.
First, by trumpeting their success. Second, while Mulally is a business genius, he makes mistakes too. And one of the biggest was telling a congressional committee a year ago that there was nothing wrong with his $13.6 million compensation package.
“I think I am OK where I am,“ he said. Well, as Free Press business columnist Tom Walsh shrewdly observed, though Mulally later did take a big pay cut, Ford UAW workers think they are OK where they are too. Actually, they don’t think that.
They are very worried about the future. There were a hundred thousand Ford UAW workers the last time the company made a profit, back in 2005. There are exactly half that many now.
Ford workers have already taken two rounds of concessions. This time, they were being asked, among other things, to give up a union’s most powerful tool, the right to strike, for seven years, no matter what. Small wonder that three-quarters of the workers ignored their leaders’ advice and said no.
Ford now has to figure out how to cope with this. By the way, there is another way that the company is different from Chrysler and GM. It has to cope with an enormous burden of debt - $27 billion worth. Chrysler and GM shed most of their debt in bankruptcy court.
Henry Ford the First had a lot of wacky ideas, but I know this about him. He wouldn’t have gone bragging about how well he was doing, and then expected his workers to give him charity.
That’s a lesson Mulally and company might do well to heed.
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