Ford breathes a sigh of relief as it’s time for General Motors to be President Trump’s punching bag, a Chicken Tax on all cars probably would be terrible, Volvo doesn’t want to sell your data and so much more for The Morning Shift of Thursday, Nov. 29, 2018.
1st Gear: How Ford Cuts Back
There’s a lot of fancy new cars on display in Los Angeles this week, but the biggest news has still been GM’s decision to cut 15 percent of its North American workforce and close up to five plants, along with Trump’s general lividness and threats over that situation. His tariffs and trade war have had huge ripple effects on the car industry, but nobody wants to be the target of his tweets.
So now Ford—which spent a lot of 2016 getting hammered by Trump over various things when he was still the GOP nominee—is also working to retool plants, lower costs and focus on SUVs over slow-selling sedans and small cars. Except it’s doing so without cutting jobs, and will move those workers to other plants, reports Automotive News:
Ford Motor Co. on Wednesday said it will eliminate shifts at assembly plants in Michigan and Kentucky but give all affected workers jobs at other locations nearby.
About 500 workers will move from the Louisville Assembly Plant, which makes the Ford Escape and Lincoln MKC crossovers, to instead make Super Duty pickups and full-size SUVs at the Kentucky Truck Plant, also in Louisville. The Escape plant will go from three shifts to two in the spring.
Around the same time, Ford’s plant in Flat Rock, Mich., which makes the Mustang and Lincoln Continental southwest of Detroit, will go from two daily shifts to one. Most of those workers can transfer to the Livonia Transmission Plant, which will gain roughly 500 jobs, about 30 miles away. Another 150 workers will move from Flat Rock to other Ford facilities.
Ford said the moves will allow it to increase production of its profitable Expedition and Lincoln Navigator SUVs by 20 percent at Kentucky Truck. Ford earlier this year said it would build 25 percent more of the SUVs than it originally planned because of high demand.
Good news for workers and also a smart move by Ford, though the number of workers affected here pales in comparison to what GM is doing. Also Ford is also offering buyouts.
2nd Gear: But Ford Pins Lincoln’s Future On China
Don’t think Ford is doubling down on some insanely unrealistic America Only agenda, though. These are global car companies and the U.S. is now only the second-biggest car market, and a trade war with China along with more tariffs threaten growth.
That’s why Ford is trying to accelerate its Lincoln production plans in China. It’s no secret Lincoln is kind of a shadow of what it used to be, and unlike other luxury rivals it’s nonexistent in places like Europe, so China is the future here. Better get local Chinese production going soon, reports Bloomberg:
Ford Motor Co., banking on China to revive its long-lagging Lincoln brand, is trying to accelerate plans to begin building its luxury models there and avoid profit-sapping tariffs brought about by President Donald Trump’s trade war.
Ford, which had planned to start production of Lincoln models in China in late 2019 with a local partner, is trying to move that timing up, even if slightly, to help overcome tariffs China has imposed in retaliation to levies by the Trump administration.
“What we want to do is accelerate that,” Joy Falotico, head of Lincoln and Ford’s chief marketing officer, said in an interview. “We will look for opportunities, but it’s a big undertaking and I think it won’t be a significant change in our plans.”
Even a small move would help Lincoln, which lacks the local production most of its competitors have in China. Prices have soared as a result of the 40 percent tariffs the country has put on U.S.-built vehicles. Ford is absorbing some of those costs, but Lincoln’s sales have still slowed to a crawl.
And a little reminder of what’s happened so far:
Ford Chief Executive Officer Jim Hackett has said Trump’s metals tariffs will cost the automaker about $1 billion in annual profit. In August, the company scrapped a plan to export a new model called Focus Active from China into the U.S. Several of the automaker’s top executives have called for Trump to resolve its trade dispute with China.
Will China save Lincoln? Also, this happened:
3rd Gear: A Chicken Tax On Everything Would Hurt
As part of the GM cuts, Trump has threatened over Twitter to extend the hated Chicken Tax to every imported car in America. As we explained yesterday, this 25 percent tariff on light trucks and vans has kept our truck market a largely closed one, even if it has meant more U.S. production of big boy beefy full-sizers and up.
But that’s not something you can just... do overnight, as Bloomberg explains:
Building a plant from scratch is expensive and takes several years. Example: Toyota Motor Corp. and Mazda Motor Corp. are spending $1.6 billion on a new car facility in Alabama, which won’t open until 2021. And this doesn’t factor in the time it took for the companies to find a suitable site and negotiate tax and other agreements with local governments.
That’s a short article but there are more reasons an extended Chicken Tax is a dumb idea, so go read it.
4th Gear: Volvo Doesn’t Want To Sell Your Data
Enough with these dang tariffs!!! Let’s talk about something more fun: how the cars of the future can track your every move and daily behaviors, and how automakers will inevitably sell that valuable data to the highest bidders. Wait, what?
Except Volvo doesn’t want to, reports Bloomberg:
But when it comes to the future of the auto industry, Chief Executive Officer Hakan Samuelsson sounds relatively old-fashioned. He’s betting Volvo will make more money selling connected, autonomous cars to consumers and robo-taxi fleets, rather than taking a cut of the higher-margin business of selling data-driven services inside the vehicle.
“Whatever you have in the phone, you would like to have very seamless into the car, and we will make money by making an attractive car and selling more cars, rather than trying to take a fee on the information and the communication,” he said in a Bloomberg Television interview. “That would be the wrong approach.”
Most automakers have tried to keep Google and Apple Inc. at arm’s length, hoping to keep control of such valuable data as a driver’s whereabouts, driving patterns, shopping preferences and infotainment use. The companies also have sought to forge their own commercial partnerships to sell connected services rather than let tech players including Google cash in.
Good job, Volvo. But all this data shit makes me want to keep my ‘80s car running forever. Track me in that, you bastards!
5th Gear: Hyundai Needs The Palisade
I like the way the 2020 Hyundai Palisade looks. It’s not the kind of car I’d ever buy, but it’s distinctive. More than that, it’s incredibly necessary. Hyundai has been hammered by the SUV boom in its own way—mainly, by not having enough of them. The Korean automaker’s sedan-heavy lineup has cost it a lot of money as of late, and the Palisade is the answer to that. Via Automotive News:
Hyundai will have a broad lineup of utility vehicles, but observers say the automaker is several years late to the party, likely because of the way the company was set up in the past.
“Hyundai Motor missed the SUV boom. They will say that. Why they missed the SUV boom, it’s a matter of debate. It wasn’t because Hyundai Motor America wasn’t alerting Seoul to the changing consumer habits of Americans,” a former auto exec with knowledge of the inner workings of Hyundai Motor Group said recently.
“One of the reasons they created these regional units like Hyundai Motor North America was to get the decision-making process distributed away from Seoul. Maybe Seoul wasn’t hearing what Fountain Valley was telling them about SUVs.”
That story also says a pickup truck is coming, finally. Bring it on!
Bonus Gear: LA Auto Show
Be sure and check out all our coverage of the show here. The big news so far: the all-new Porsche 911 and Mazda 3, the Jeep Gladiator, Audi’s go-fast electric sedan, and the impressive range on the Kia Soul EV.
Our boys Andrew Collins and David Tracy are on the ground, so expect more from them today.
Reverse: Oh Yeah, This Guy
Neutral: Was Ford Right?
Everyone—including us—balked at Ford’s decision to kill off slow-selling small cars earlier this year. Now GM has done it too, and Fiat Chrysler has effectively done the same over time.
I still think this leaves American automakers vulnerable in the event of an economic downturn, when people need cheaper cars, or a gas price spike. And it sucks for cars we loved like the performance Focus and Fiesta. (A lot of stuff on the GM side won’t be missed.)
But for now, are these automakers doing the right thing? Was Ford right?