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China's woes sandbag Detroit automakers

Through the first six months of this year, China's auto market is actually up 8.4 percent from the same period in 2014. Still, automakers aren't optimistic after June's 3.2 percent dip in year-over-year sales. Last month marked the first drop in China since February 2013, and the decline could extend through the coming months, which is a concern according to a number of analysts. In Detroit, General Motors might take the brunt of the damage, but Ford could feel some heat too. The China Association of Automobile Manufacturers is already responding to the June dip by predicting annual sales to grow only three percent this year, rather than seven percent that had been predicted earlier in the year, according to The Detroit News. Ford and GM will both release their second quarter earnings before the end of July, and those figures will give the industry a much better idea about the automakers' performance in China. Due to China's massive growth, both Ford and GM have made significant investments there. In 2014, GM announced $14 billion to make the country a focal point, including a goal of 5 million annual sales. Ford, for its part, opened 88 new Chinese dealers in one day alone last year. It has also been working to grow Lincoln since the brand's launch in 2014.The Detroit News took a much deeper look into Detroit's exposure in China, with the overall gist being that we're all uncertain about how things are going to shake out. Some industry analysts feel this is just a temporary blip, while other are much more worried. If you have any interest in the auto market there or its affect on the Big Three, the piece is well worth a read. News Source: The Detroit NewsImage Credit: Greg Baker / AP Photo Earnings/Financials Read This Ford GM

Ford shares falling on news of lower-than-expected profits next year

Ford has released projections for its 2013 profits, along with predictions of its 2014 earnings, and the news has forced the company's stock to stumble, falling over seven percent as of this writing. The Blue Oval is expecting earnings of $8.34 billion for 2013, although the bulk of that is coming largely from its North American operations, as troubles abroad continue to take a toll.
Calling 2013 an "outstanding" year, Ford expects its revenue to be up about 10 percent, thanks to gains in market share everywhere but Europe. But it's 2014 predictions that are causing stock prices to fall, as the Dearborn-based manufacturer expects pre-tax profits to fall to $7 to $8 billion, because of troubles in both Europe and South America, according to a report from Reuters. This is despite an expansion plan that will see it open an additional factory in the southern hemisphere, as well as two plants in China, all in a bid to launch 23 new or refreshed products next year.
The issues in South America aren't so much related to a fall in sales - Ford expects improved profits in Brazil and Argentina - but because of currency devaluations in Venezuela that are projected to cost it around $350 million. While that would still allow it to break even with 2013, Ford cites continued economic risks that could push losses even higher.

Second-tier UAW workers promoted for first time after Ford hits quota

The United Auto Workers put out a statement on Friday that 55 Ford workers chosen by seniority would be moved from the Tier 2, entry-level pay rate of around $19 per hour to the Tier 1, non-entry-level rate of about $28 per hour. One of the stipulations in the 2011 UAW-Ford agreement was that only 20-percent of the total hourly workforce could be paid the Tier 2 wages agreed upon in 2007; after that, those workers had to be moved to Tier 1. Even so, the new Tier 1 status makes them less expensive to Ford than veteran Tier 1 workers because they receive fewer benefits. However, Automotive News had reported that same day that Ford was 69 workers shy of the limit, and when AN asked Ford about the situation Ford said it had "some room" on the entry-level roster. If workers do move to the higher pay grade, it will be the first time that's happened since the two-tier system was agreed. But it sounds like there's going to be some haggling between the UAW and Ford before that happens. Ford is the only one of the Detroit 3 automakers to have to work with a cap, since it didn't go through bankruptcy proceedings during The Great Recession; General Motors and Chrysler jettisoned the cap in 2009. GM is said to have 16 percent of its hourly workers at Tier 2 while Chrysler has 42 percent, but Fiat-Chrysler CEO Sergio Marchionne has long been opposed to the two-wage system. The UAW is preparing for its 2015 negotiations with the US automakers. It wants to eliminate the difference in pay by going to the higher scale, if there is a consensus among automakers it seems to be that they also want a single wage, but less than the higher scale, with the addition of profit-based bonuses. The recent statement from the labor union is below. UAW President Dennis Williams and UAW-Ford Vice President Jimmy Settles announced today that the union is delivering on its promise to convert workers DETROIT, Jan. 30, 2015 /PRNewswire/ -- UAW President Dennis Williams and UAW-Ford Vice President Jimmy Settles announced today that the union is delivering on its promise to convert workers making entry-level wages to traditional employees. "The 2011 UAW-Ford agreement allows for a contractual limit of entry-level employees. Once that threshold is surpassed, entry-level employees convert by seniority to 'regular, non-entry level employment.' At this time, fifty-five UAW-Ford workers will receive the wage increases, which put them in the category of non entry-level employment.