In an announcement that should be anything but shocking to anyone who even remotely follows the auto industry, United Auto Workers head Ron Gettelfinger says he and the UAW would be against any merger between automakers that would reduce either company's workforce. Considering that the Union's main job as of late has been safeguarding the jobs of its members, we would expect nothing less than an all-out war between Gettelfinger and the automakers involved, if such a merger were to take place, as much of the potential money savings would undoubtedly be in duplicate workforce reductions. In any case, Gettelfinger says that the UAW has not officially been contacted by either party regarding anything of the sort, lending further credence to the notion that any talks that are currently taking place are very much in the early stages.
Porsche wants to purchase Volkswagen, this much we know. But before that happens, the huge labor union at VW needs to agree on terms with Porsche management. This, as you may imagine, is proving a bit more difficult than Porsche had hoped, prompting the automaker's senior labor leader Uwe Hueck to lash out at the heads at VW. Not surprisingly, his initial attack received a response from Bernd Osterloh, the head of VW's labor union. It seems that some major sticking points exist that the organized Volkswagen employees are not too keen on, causing them to believe that they would be relegated to second-class status. Whether or not these negotiations will keep Porsche from purchasing a controlling stake in Volkswagen seems up in the air at the moment, though we wouldn't be surprised if some sort of deal were made sooner rather than later.
With the European Union tightening restrictions on carbon emissions, danger has been spelled out in big bright letters for the sportscar-makers we know and love. The bulk of the world's best supercar manufacturers – including Ferrari, Lamborghini, Lotus, Aston Martin and Porsche – reside in Europe, but while industry executives continue to campaign for exception and protection, things don't look good. There are, however, a few solutions that could keep the exotic automakers in business and unmolested.
Firstly, both automakers and lawmakers agree on the need to reduce weight, which helps neither emissions nor performance. However, weight reduction itself won't bring the supercars below the 120g/km target touted by the EU. One possible solution would be to give niche automakers an exemption, noting that the few cars they produce are rarely driven anyway. According to Lamborghini CEO Stephan Winkelmann, exotic automakers like his "are representing Europe to the world" and "are a species to protect", much like an art form. That's something we car lovers can appreciate, and if it strikes a cord with the lawmakers it could help some of the smaller independent automakers like Aston Martin and Lotus, but it won't help the likes of Ferrari and Lamborghini, which are part of bigger auto groups Fiat and Volkswagen, respectively. Fiat CEO Sergio Marchionne has argued that it would be unreasonable to force low-polluting little Fiats like the Panda and the 500 to bear the burden of their more polluting cousins from Ferrari and Maserati simply because they happen to be under common management.
At the end of the day, these exotic sportscars are not the big problem, though they do make easy targets. If European Union bureaucrats ignore the former and focus on the latter, Europe's most famous automakers could be legislated right out of business.
General Motors reported its second quarter earnings this morning, and the news was predictably grim. The General lost $15.5B in the quarter, as the Detroit Automaker continues to struggle with brutal market conditions and the costs associated with strikes and downsizing. Among the losses is a $4B hit from automotive operations, as stymied truck sales resulted in an 18% drop in revenue to $38B. GM's credit arm lost another $2.5B from high loan default rates and huge losses from truck and SUV lease residuals.
Another $9.1B came from one-time charges associated with GM's massive restructuring and the American Axle strike. Among the charges was a $3.3B write-down to pay for buyouts to the 19,000 UAW members that left by July. Overall, GM lost a staggering $27.33 per share in the quarter, which is even more amazing considering the General's stock is trading at about $10 per share. Among the actions GM took this week to help stem its bleeding balance sheet was ending all leasing in Canada, raising lease costs here in the States, and the announcement of 5,000 white-collar job cuts.
We're no industry analysts and we don't have any insights into the General's balance sheet, but a $15.5B Q2 loss and four straight quarters of red ink doesn't sound good at all. New fuel efficient products like the Chevy Cruze and Volt can't come soon enough, though it will be an even bigger challenge trying to make money off these small and ultra-fuel efficient cars.
Porsche is one step closer to its goal of purchasing Volkswagen. Back in April of last year, the German automaker passed the 30-percent mark, forcing it to make an outright offer for The Volkswagen Group in its entirety, which it did. Not too many VW shareholders sold their stake to Porsche, as the bid was for the bare minimum amount allowed by law. Still, the legal requirement had been met, allowing Porsche to continue gobbling up the automaker according to its own timetable. Earlier this year, the VeeDub board approved a request by Porsche to obtain 51-percent of the company for some $15.73 billion, which would give it a majority stake. Before the house that Ferdinand built could complete its acquisition, the European Commission required it to make one last purchase, which took place in June of this year. Finally, the EU has granted its permission for the buyout.
This story is likely far from over, as the German State of Lower Saxony still claims a 20-percent stake in Volkswagen, which gives it certain rights to block decisions made by VW's new parents. Still, it seems that its only a matter of time before VW and Porsche are united under a different Ferdinand... Piech that is, grandson to Mr. Porsche himself.
Buzz Hargrove, president of the Canadian Auto Workers, Canada's largest in the private sector, will step down earlier than anticipated. Hargrove wasn't expected to retire until he reached the CAW's mandatory age of 65 next year. It's tough to resist the allure of cuddling with Yorkies, Bingo every Monday night, and shuffleboard to fill in those long, wistful hours recalling the glory days of torquing valve covers in Windsor, so Hargrove has accelerated his departure to mid-September. No replacement candidate has been named yet, though an endorsee will be announced later today. Come this fall, keep an eye out on the golf courses of Florida for a relaxed looking guy drinking a Molson, eh?
The top is a tough place to be. Just ask Toyota, which is now facing charges of worker right abuses, including the use of sweat shops and human trafficking. As we've reported before, Japan even has a word for being overworked to death: karoshi. Toyota plants are not immune to this stress-related disease, as workers at its plants have indeed suffered death due to working too hard. These facts have caught the attention of The National Labor Committee, which has an entire report worked up that alleges Toyota over-works and under-pays its Japanese employees and has ties to various unsavory Dictators. It's also been well established that Toyota does not want its American workforce unionized.
The report is being directly targeted at Prius-driving celebrities who see Toyota as the shining green beacon in a world of pollution-spewing car companies. Whether or not this report has all its facts straight, if famous Toyota supporters in Hollywood react to these allegations, Toyota could indeed have a public relations disaster on its hands.
The Canadian Auto Workers union and General Motors have been less than friendly with one another since the automaker announced it would be closing its Oshawa Truck plant, and the union promises to "fight on" despite ending a 13-day protest/blockade that prevented some 900 GM employees from going to work at the company's Canadian headquarters. It took a court injunction to end the blockade, but union representatives say they are planning their next move to stop GM from closing Oshawa Truck, which employs around 2,600 workers. But with truck sales tanking on account of high gas prices and less new home construction in the U.S., it seems unlikely the General will change its mind to scuttle the plant. There is talk of converting it to produce passenger cars in the near future, but even if the decision were made to do so today, the plant would still be closed for one to two years before it reopened. For now, however, GM's white collar workers in Canada can get back to work without enduring the rank and file gauntlet.
Despite rising tensions (and a lawsuit) between General Motors and the Canadian Auto Workers union, the automaker may be interested in adding a new car line at its soon-to-closed truck plant in Oshawa, Ontario. Though that plant was originally scheduled to stay open a few more years, slumping sales of full-size trucks built there have forced GM to announce its early closure along with three other pickup and SUV plants. Since that announcement, union workers have barricaded GM Canada's headquarters for the last eight days in protest, which we'd imagine might make it difficult for GM management to negotiate with union officials... but what do we know?
According to The Detroit News, however, GM has been talking with Ontario's Economic Development and Trade Minister, Sandra Pupatello, who says that the government is very interested in securing the new vehicle line as quickly as possible. Even if a decision is made in short order, it is likely the plant's 2,600 workers would be out of work for up to two years after the closes and before its ready again with new tooling for a passenger car line.
Hold on to your britches folks. General Motors dealings with the Canadian Auto Workers union just took another turn for the worse. GM, like every other full-line automaker selling vehicles in the United States, has been unable to move as many pickup trucks as it had hoped since the price of gas has spiked. In response to the shifting tide of vehicle sales and to slow the huge financial hemorrhaging, GM announced about eight days ago that it would be closing four plants that build trucks and SUVs, including one in Oshawa, Ontario. Unfortunately, the General had recently promised to keep that particular plant open for a few more years, so the announcement more than irked the Union officials from up north.
Here's where things get real ugly. In retaliation, the CAW has blockaded the entrance to the GM headquarters in Canada for the last eight days. As you might imagine, GM has a slight problem with this and has taken the matter to court, where documents reveal that the automaker wants C$250,000 from the local union and five of its members for a total of $1.5 million in damages. We're not sure if this impending lawsuit will impact the Union's plans for a rally this Thursday in the parking lot of the Oshawa headquarters, but it's probably safe to say that this situation won't have a happy ending.
