Cheap UAW labor

[Ohio XB]

I mentioned this in another topic so I thought I would find something and make a new thread about it.


I never expected this, but because of all the concessions the UAW has given Ford over the past 5 years, and also the weakening dollar against the Euro, Ford is moving production of the Kuga to the US for export to Europe. Here is just one article about it...

Ford may build Kuga in US – potentially export to Europe
10/23/2009, 6:15 AMBy Mark Kleis

In what is most likely meant to be a very visible display of Ford’s intentions to deliver on their promises to the UAW over recent contract concessions, several sources close to Ford confirm a future for the Kuga in the US.


LeftLane reported in early March, 2009 that Ford could likely move Kuga production to US soil due to a weak dollar. Now, with the dollar hitting record lows several sources close to Ford, speaking with anonymity, have released that Ford is likely to produce the Kuga at the Louisville, Kentucky assembly plant beginning in 2011.

Previous reporting was based on the speculation that Ford may introduce the Kuga to the US market at all, with or without its current nameplate, and purely for North American consumption. Now sources close to Ford have announced that it will be capable of producing and exporting as many as 80,000 C-platform based vehicles (Such as the Kuga) to the European market each year from the Louisville, Kentucky Assembly plant.

This unique change is explained by Barclays Capital auto analyst Brian Johnson, “This makes sense because western Europe is not a particularly cheap place to make cars.” Brian goes on to explain that Ford’s net labor costs could be $10 an hour lower in the US than in Germany.

The potential shift of production location to the US due to the weakening dollar makes an even stronger business case for Ford to expand its “One Ford” business model and begin selling the Kuga platform, Kuga name or not, here in the US.

Nevermind the "may build..." part, it is going to happen.


Steve

[outback_ute]

Interesting news Steve. I gather they have capacity issues in the plant it is now assembled in, so moving to the largest SUV market and a single plant for the model makes sense to me. I wonder if the rhd cars could also come here?

[irlewy86]

I was waiting for an announcement like this. I reckon we are going to see a whole new batch of US cars coming to Australia. F trucks and Mustangs thanks.

[phillyc]

Originally Posted by irlewy86

I was waiting for an announcement like this. I reckon we are going to see a whole new batch of US cars coming to Australia. F trucks and Mustangs thanks.

Well, with the US Ford plants now having equal best industry quality. This could be a good thing.

The Kuga has been selling to capacity and there has been no desire for FoE to build some for Australian consumption to our spec.

Lastly, nice to see that Ford have kept their promise to the UAW and brought production to the US in return for the concessions gained.

[banarcus]

Well they build them for the pommies, surely now with production going to the US, we might get a look in with the Kuga?

[phillyc]

Originally Posted by banarcus

Well they build them for the pommies, surely now with production going to the US, we might get a look in with the Kuga?

The KUGA really could do well for Ford Aus. That and the Tiguan are the class leaders if the press is to be believed.

Even if it's 500/mth, that is still an extra 0.6-0.7% market share. Some of which might come from Territory, but most would be conquests from Toyota/Subaru/Holden. Nice!

[Bossxr8]

The RAV 4, Forrester and CR-V sell over 1000 a month sometimes. Its an important market Ford need a good competitor in because there are a lot of important sales that can be gained there.

[Ohio XB]

Lastly, nice to see that Ford have kept their promise to the UAW and brought production to the US in return for the concessions gained.

It is about frigging time!

While we were agreeing to concessions the Fiesta went to Mexico, The Fusion, Milan, and MKZ went to Mexico, and most recently, the new 6.7L diesel that Ford just announced a couple weeks ago, will be built in Mexico.

In Mexico a Fusion is only about $800 USD cheaper than in the US, due to less destination charges. Otherwise, Mexicans making $2.50 - $5 USD an hour cannot afford to buy a $17,300 Fusion.

Hey, wait a minute!!!! In Mexico the wages are so much cheaper than in the US. Why doesn't a Fusion cost only $10,000? That's because labor is only 6 - 10% the price of the vehicle. For anyone that has ever doubted that, here's the perfect example.

US Ford worker = $28/hr.
Mexican Ford worker = $3/hr (avg,)

Car = same price as always.


Steve

[Bossxr8]

Obviously cheaper labor increases the profit margin if the RRP isn't lowered compared to a vehicle built in a higher wage country.

[phillyc]

Originally Posted by Ohio XB

$800 USD cheaper than in the US

Times 5 million vehicles worldwide. $4B USD profit. Anyway.

When are you guys going to start building the Kuga for us. Not the US, but us Australians!

[irlewy86]

Does this mean the end of the escape though?

[outback_ute]

phillyc - the price in Mexico is only $800 cheaper than the US price, not the cost to build the car. I'd expect that to be a greater difference.

irlewy86 - under the 'one Ford' theory I would say yes, but the one Ford policy does not apply to all US vehicles. They are so similar that surely the Escape would be replaced (note it is due for a new generation vehicle) especially if they can get a V6 in there for the US market. The Kuga is based on a Focus so that isn't guaranteed.

[outback_ute]

Steve there is a RHD Kuga sold in the UK. I'd think there is a fair chance the Kuga will take over from the Escape in the future. The Escape must be getting towards the end of its platform life. I know there was a substantial facelift recently - or was that a proper new model?

The presence of the Escape hybrid model means it surely will have to continue until there is another or more hybrids to take over.

Looked up some dimensions that were comparable. Couldn't find interior dimensions for the Kuga, or luggage compartment dimensions for the Escape/s. Measurement of luggage capacity didn't seem to be directly comparable either.
[CODE]Exterior Escape (Aus) Escape (US) Kuga
Overall length 4480 176.4 4437 174.7 4443 174.9
Overall height 1760 69.3 1722 67.8 1710 67.3
Overall width 1845 72.6 1806 71.1 1842 72.5
Wheelbase 2620 103.1 2619 103.1 2690 105.9
Front track 1545 60.8 1542 60.7 1574 62.0
Rear track 1535 60.4 1529 60.2 1584 62.4

Kerb weight 1578 3479 1623 3578 1613 3556
Gross VM 1986 4378 1950 4300 2130 4696

Max tow(braked) 1000 2205 1588 3500 2100 4630

Fuel tank 61 16 62 16.5 66 17
Turning Circle 10.8 35.4 11.5 37.7
[/CODE]Left column for each vehicle is metric dimensions, right is US imperial

[Ohio XB]

Wow, check that out, the Kuga is actually a touch larger than the Escape.

The last revision of the Escape was a major facelift only.


I didn't make myself clear in my last statement. What I should have said is that I have not heard of any plans for building a RHD Kuga in the US.



Steve

[outback_ute]

Ok - will have to be one of those wait and see things. Tough call, do you transfer all lhd & rhd production to the one plant or leave the small volume of rhd where it is.

Basically the same size outside, a touch shorter and lower and the same width (unless the new US Escape is actually narrower in the body with the same tire track width dimension - I don't trust the 71.1" dimension).

While I said the luggage volume figures were not directly comparable, the 2nd-row-folded figure for the Kuga was a lot smaller than the Escape. Factor in a 'racier' shape, thicker doors/pillars etc for crash purposes and airbags and it is not hard to believe. The 2nd-row-up in the Kuga was only to the cargo cover height and half the volume of the Escape's to the roof figure.