Ford Bankruptcy

According to an article in the Star-Telegram, workers have rejected contract changes that would have allowed Ford Motor Co. to cut labor costs and remain competitive with Chrysler and GM, both of which recently emerged from bankruptcy.

The article said:

“Ford sought the deal to bring its labor costs in line with Chrysler Group LLC. and General Motors Co., both of which won concessions from the union as they headed into bankruptcy protection this year. Under pattern bargaining, the three automakers usually match pay, benefits and other contract provisions.”

But Ford workers did not believe that they needed to make any more concessions in light of the fact that Ford avoided bankruptcy and is even expected to post a profit. The only problem is that GM and Chrysler received benefits from its bankruptcy that we have yet to fully realize.  By cutting debt and labor costs, GM and Chrysler freed up millions of dollars in capital that Ford has not–which puts them in a better position. On the other hand, car buyers are still cautious about buying a new vehicle and none of the automakers are immune to this fact.  When car sales go south again, it may be Ford who is hit the hardest because Ford still has some of the highest labor costs amongst American carmakers. Maybe Ford would have been better off it if had taken advantage of the flexibility provided by the bankruptcy process.