Ford Cutting Salaried Jobs
Ford expects to cut 5 percent off its North American salaried job positions by October 1, 2005 and 10 percent of its use of agency and purchased services as of July 1 (which, at press time, is a week away). Salaried managers worldwide will also have to forego their bonuses this year, and (as of July 1) will have to do without the company's 401(k) matching grant. Workers overseas may also be faced with unspecified cost-cutting measures
This news comes within the context of lower-than-expected vehicle sales and supplier challenges in North America; higher first-quarter earnings guidance due to lower taxes and strong results from Ford's financial arm, Ford Motor Credit; and reduced earnings guidance of $1 to $1.25 for the entire year, down from $1.25 to $1.50.
Also, Ford announced an S-1 filing for Hertz, a step toward an initial public offering of a portion of the rental car company. Should an IPO actually happen, then Ford says it would divest itself of all its holdings in Hertz. But while Ford is inclined to spin-off Hertz, it has signed a Memorandum of Understanding with Visteon that would essentially lead to Ford's partial reabsorption of its giant supplier in the hopes that it will reinvigorate Visteon
GM Sales Explode, Ford and Chrysler Bursting to FollowSet ablaze by General Motors' employee discount for everyone program, consumers flew to GM dealers to snatch up more than half a million new cars and trucks between June 1 to July 5. The frenzy amounted to a 47 percent boost in sales for the automaker. Burning to replicate GM's success, Ford and Chrysler have implemented similar programs. Not eager to cool its jets, GM extended its program to August 1, at the time of this writing. The discounts do not apply to all vehicles and amount to a few percentage points off from invoice
Oops!
We slipped in the Audio Overload story on page 208 of Issue No. 9. We wrote that Bobby Hillgaertner was the owner of Audio Nutz in Ocklawaha, Florida. Bobby does not own the shop. His cousin Steven Head is sole owner of the audio/video superstore.
Decaf CAF
SEMA teamed with automakers to convince sympathetic U.S. senators to quash an amendment to an energy bill that would have sought a 40-percent reduction to oil imports by 2025. According to SEMA, its opposition stems from the suspicion that this amendment was a backdoor attempt to significantly raise the CAFE (corporate average fuel economy) standards for cars and light trucks over the next 20 years. SEMA points to provisions in the legislation that it says already require the U.S. government to find ways to cut the nation's oil demand by 1 million barrels per day by 2015. SEMA and the automakers would prefer that the NHTSA (National Highway Traffic Safety Association) and not Congress set CAFE standards, citing the NHTSA's expertise in taking into account the impact on jobs, safety, consumer choice, technology, and other factors.
CAFE standards were put into place after the oil shocks of 1973 and 1974, establishing a minimum average mileage per gallon for almost every vehicle class. As of 2004, the CAFE for two-wheel-drive compact pickups is 20 mpg, in 1984 (the first year standards were established for light trucks) it was 27.2. Four-wheel-drive small pickups no longer have a standard. CAFE standards for two-wheel-drive large pickups were 19.1 in 1984 but as of 2004 were 20.6. Four-wheel-drive large pickups had a CAFE of 18.5 in 1984 and 18.8 in 2004.
The federal government has been under pressure from various interests to increase CAFE standards as pickups and SUVs have transformed from farm haulers to daily drivers and have hit the road in vast numbers. Now, light trucks (a term that includes passenger and cargo vans, pickups, SUVs, and other vehicles) comprise 52.7 percent of the nation's light-duty fleet, up from 9.8 percent in 1979. Compare the CAFE standards of 19.1 for a large pickup to the current 29.1 for a new passenger car. Advocates for increased fuel economy would like to close that gap in light of the increase of comparatively less efficient pickups on the road. Meanwhile, SEMA, automakers, and other groups would rather mitigate the implementation of regulations that can be very costly to meet.