Ford, et al. (another Detroit story)

How can Charles Bronson break Claudia Cardinale’s heart like that? Plus what is he, blind?

Ford has announced that its circumstances are yet more straightened than we’d believed.

Ford Motor Co., the second-biggest U.S. automaker, said it expects to reduce U.S. dealerships by about 300 this year, 50 percent more than initially intended, under a plan to eliminate excess outlets.

Ford has said it has too many U.S. dealerships, especially in metropolitan areas where they compete against each other. The Dearborn, Michigan-based automaker began the reduction program before Chief Executive Officer Alan Mulally assumed the post a year ago. Ford has said the effort is voluntary.

U.S. sales of the Ford, Lincoln and Mercury brands fell 32 percent to 2.72 million cars and light trucks last year from 4.01 million in 2000, according to Autodata Corp.

Its share-holders didn’t seem much to mind:

Ford MSN chart

What didn’t seem popular last week was their plan for a third plant in China. At least they’re only laying off employees in dealerships, here, while planning plants in China. Rather than laying off manufacturing-plant workers.

Mind you…

Big Three US automakers union talks stall as deadline looms

With less than a week to go before the current agreement expires, contract talks between the United Auto Workers and Detroit’s Big Three automakers have slowed to a crawl with few signs of progress.

The contracts covering more than 160,000 workers at General Motors Corp., Ford Motor Co. and Chrysler LLC expire at midnight Friday, September 14, though the talks could easily extend through the weekend without any threat to production.

The union, which has already made major concessions to help General Motors and Ford manage massive losses, is unwilling to accept major changes without guarantees that jobs both at the automakers and their suppliers will not be shipped overseas.

And then there’s that recession we’re all apparently going to have. Flagging sales, a current workforce that is dwarfed by the former-workforce-on-benefits and fighting a non-unionised workforce in a country that already has a comparative advantage in Auto sales. I’m glad it isn’t my problem. I’m glad my livelihood, my pension and my medical benefits don’t all depend upon the health of Detroit (I’m glad I can state that honestly).

The Economist in me, of course, recognises that it would be better (like the current sub-prime troubles) for us to take our lumps right now. Let those with comparative advantages specialise, just like the textbooks say. For now, I reckon

  1. if you’re one such employee, figure out how to get out now so that the “job equity” that you’ve built up is protected under any agreement: once the paper is signed, I reckon the clauses will say that anybody fucked over afterwards stays that way. The UAW can only protect the people covered by the start-up money the Big Three kick in; and
  2. standard recession rules. Find economies that are going strongly, and increase your portfolio’s exposure in those directions. Which bodes still less well for Detroit, Chinese plants or no Chinese plants.

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