Ford (F) will be putting over $13 billion into a fund which the UAW will use to pay health-care costs. That will take the liability for these expenses off Ford’s balance sheet and the costs off of its P&L.
But, Ford’s sales have been down for thirteen months in a row and it controls only 15% of the US vehicle market. Toyota (TM) has as much. GM (GM) is stronger, and sales for Honda (HMC) and Nissan are rising.
Ford is hinting that things could get worse. The head of its Americas operation, Mark Fields, is quoted in The New York Times as saying. “If you look at all the indicators out there, there is more risk than opportunity,” he said referring to 2008 US car sales.
The head of the UAW, Ron Gettelfinger, said “We have no doubts or reservations about Ford’s survival," because the new contract gives Ford such a large cost break. But, the cost break means little if Ford’s US market share slips toward 10%. Then Gettelfinger may have to eat his words.
Douglas A. McIntyre
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
