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The UAW's 'record contract' hinges on pensions, battery plants

DETROIT - After nearly four weeks of disruptive strikes and hard bargaining, the United Auto Workers and the Detroit Three automakers have edged closer to a deal that could offer record-setting wage gains for nearly 150,000 U.S. workers. General Motors, Ford Motor and Chrysler parent Stellantis have all agreed to raise base wages by between 20% and 23% over a four-year deal, according to union and company statements. Ford and Stellantis have agreed to reinstate cost-of-living adjustments, or COLA. The companies have offered to boost pay for temporary workers and give them a faster path to full-time, full-wage status. All three have proposed slashing the time it takes a new hire to get to the top UAW pay rate. The progress in contract talks follows the first-ever simultaneous strike by the UAW against Detroit's Big Three automakers. The union began the strike on Sept. 15 in hopes of forcing a better deal from each major automaker. But coming close to a deal is not the same thing as reaching a deal. Big obstacles remain on at least two major UAW demands: restoring the retirement security provided by pre-2007 defined benefit pension plans, and covering present and future joint- venture electric vehicle battery plants under the union's master contracts with the automakers. On retirement, none of the automakers has agreed to restore pre-2007 defined-benefit pension plans for workers hired after 2007. Doing so could force the automakers to again burden their balance sheets with multibillion-dollar liabilities. GM and the former Chrysler unloaded most of those liabilities in their 2009 bankruptcies. The union and automakers have explored an approach to providing more income security by offering annuities as an investment option in their company-sponsored 401(k) savings plans, people familiar with the discussions said. Stellantis referred to an annuity option as part of a more generous 401(k) proposal on Sept. 22. Annuities or similar instruments could give UAW retirees assurance of fixed, predictable payouts less dependent on stock market ups and downs, experts said. Recent changes in federal law have removed obstacles to including annuities as a feature of corporate 401(k) plans, said Olivia Mitchell, a professor at the University of Pennsylvania Wharton School and an expert on pensions and retirement. "Retirees want a way to be assured they won't run out of money," Mitchell said.

Ford Q1 profits dragged down by warranty costs

General Motors isn't the only Detroit automaker posting falling profits in the first quarter. Ford just released its Q1 2014 financial data, and it reported a net income of $989 million, down $622 million from Q1 2013. The drop is partially blamed on higher warranty and recall expenses than the company had anticipated.
Financially, Ford suffered a rough quarter almost across the board. Its pre-tax profit of $1.4 billion was also down $765 million from a year ago. Things were even worse in the North American market where operating profit fell significantly to $1.5 billion, down from $2.392 billion in Q1 2013. However, its global revenue ticked up slightly to $35.9 billion, from $35.6 billion in this period in 2013.
Ford admitted that it spent about $900 million on expenses that it hadn't planned for during this quarter. According to Reuters, the company paid about $400 million in additional warranty and recall costs in North America. The automaker didn't explain why the costs were so much higher than expected. However, in the last three months, Ford has had several recalls, including on the 2001-2004 Escape for rust, Explorer for its steering, Edge for its fuel line and others.

Ford recalls 200K Escape, Transit Connect models over instrument panel

Ford is announcing two new recalls that cover a total of 203,494 vehicles in North America. By far the larger of the campaigns is a recall for 203,445 examples of the 2014-2015 Escape and Transit Connect in North America. Specifically, there are 182,520 units recalled in the US, 18,226 in Canada, and 2,699 in Mexico. For these models, the instrument cluster, warning messages, lights, and chimes might not work at startup. This problem puts the vehicles out of compliance with the federal motor vehicle code, and the fix is a software update. The other recall is minuscule and only affects 49 units of the 2015 Transit that are owned by a single fleet customer. The company's vans have a specially ordered front passenger seatbelt, but the parts aren't labeled correctly under the federal code. Everything works properly, though, according to Ford. The fix is simply a new decal with the required info. No accidents or injuries are known to be related to either of these two recalls. Related Video: FORD ISSUES TWO SAFETY COMPLIANCE RECALLS IN NORTH AMERICA DEARBORN, Mich., June 24, 2015 – Ford is issuing two safety compliance recalls in North America. There are no accidents or injuries attributed to these conditions. Details are as follows: Ford issues safety compliance recall for certain 2014-2015 Transit Connect and Escape vehicles for instrument panel issue Ford Motor Company is issuing a safety compliance recall for approximately 203,500 2014-2015 Transit Connect and Escape vehicles in North America for an issue with the instrument panel cluster. When starting the vehicle, the instrument cluster, warning chimes, messages and warning lights may not work, which is a compliance issue with FMVSS 101 and other applicable FMVSS requirements. If these displays don't work as intended, it could increase the risk of a crash. Ford is not aware of any accidents or injuries associated with this issue. Affected vehicles include certain 2014-2015 Transit Connect vehicles built at Valencia Assembly Plant in Spain, May 13, 2014 to Dec. 10, 2014 and certain 2014-2015 Escape vehicles built at Louisville Assembly Plant, May 19, 2014 to Feb. 6, 2015. There are 203,445 vehicles in North America, including 182,520 in the United States and federalized territories, 18,226 in Canada and 2,699 in Mexico. Dealers will update the instrument panel cluster software at no cost to the customer.