From the Something's Rotten in Denmark File:
Band Plays MAMA MIA on Beer Bottles

The Youtube video of the day, a band from Denmark plays Abba's Mama Mia on beer bottles. If there's any reason to quit your day job, this must be it. (Listen to the quality of the applause at the end of the song.)

I'm going to try to embed a picture link.

More on Cars We Can Drive to Work
Compact Cars and Compact SUVs

I got an e-mail that suggested my last post about cars we could drive to work was ambiguous. In that e-mail I just meant to list the traditional midsized family cars that we could drive to work. There are a few compacts that we can drive. (I'm going from memory here, not the official list. Check the official list before you plunk down your hard-earned dollars.)

Ford Focus - The 2008 Focus was redesigned to mixed reviews. Personally, I'd get a 2-year old used one. Use Yahoo Cars to find a 5-speed stick if you can drive one.

Pontiac Vibe/Toyota Matrix - These cars are twins under the skin. Both are due for a redesign next year. Wait if you can because they'll have the next generation Toyota engine technology. If you can't wait, the existing model is as good a commuter as anything else out there.

Chevrolet Cobalt/Pontiac G5 These cars are twins. I haven't driven them but I sat in them at the auto show. I found the cabin narrow and uncomfortable, but if you fit, they aren't bad cars.

Saturn Sky/Pontiac Solstice - Two seats no waiting. "Honey, I had to buy one to drive to work."

Dodge Caliber/Jeep Compass - Although they're technically compacts, you'll be luck to get 22-23 MPG in the real world or 27-28 on the highway. You'll do as well or better with any of the 4-cylinder midsized cars, with equal or better performance, not to mention better ride and handling.

Ford Escape/Mercury Mariner These compact SUVs are not particularly economical when you get the 6 cylinder engine. In fact, with the 6 and 4wd, you'll get about the same gas mileage as a minivan. Try the 4-cylinder FWD with the 5-speed manual transmission, it performs as well as the 6-cylinder with the automatic but you'll save a bunch on gas. If you really want to save on gas, go all the way and buy the Hybrid.

Chevrolet Equinox/Pontiac Torrent - Not really compact, but light-weight as SUVs go, these vehicles got spruced up for 2008 and deserve a look. They have more backseat legroom than other compact SUVs. The Equinox Sport gets the highpowered 3.6 liter V-6 but matched with the new 6-speed transmission, it should still get better than average MPG. The Equinox is larger than, but 400 lbs lighter than, the redesigned Saturn Vue.

Overall, if I was buying a UAW-Built car to commute to work in, I'd pick either a used 5-speed manual Ford Focus or Pontiac Vibe, or I'd get a two-year-old Chevrolet Malibu or Pontiac G6. If you can wait until early next year, the new Vibe should be a strong contender. The same could be said for the Chevrolet Malibu, Saturn Aura and Pontiac G6 with the 2.4 liter Ecotec engine and 6-speed automatic powertrain, but this combination won't be out until spring 08. Wait a little longer, and there'll be a slick new Mazda6.

For vehicles somewhat larger, check out the Dodge and Chrysler minivans (old or new), the Chevrolet Impala, the Ford Taurus and Taurus X, the Chrysler 300, and the GM Lambda Crossovers (Outlook, Enclave, Acadia). If you have some dough, the Cadillac CTS and the Lincoln MKZ look attractive, but you'll lose money every mile you drive them for work.

Chrysler to Cut Three Products - Maybe More
Are the Craptastic Sebring and Avenger Safe For Now?

According to the Detroit News, the Chrysler, LLC board, in its first meeting under CEO Bob Nardelli, plans to cut at least three slow selling models. On the chopping block are the Chrysler Pacifica, Chrysler PT Cruiser and Dodge Magnum. The Jeep Commander, a mega-SUV, may also be cut. Cutting the Pacifica, Magnum and PT Cruiser won't likely result in shut down of UAW final assembly plants because the Pacifica and Magnum are assembled in Canada, and the PT Cruiser is assembled in Mexico.

It is also expected that the board will spend time on the harsh critical reviews and lackluster public acceptance that greeted the Chrysler Sebring and Dodge Avenger midsized models. How ugly is the Chrysler Sebring? 35,600 Google hits and counting, up from 18,300 in August 2006As to the reviews: Here's what "Pulitzer Prize Winning" auto columnist Dan Neil had to say about the Chrysler Sebring Convertible in the L.A. Times:

Not just bad, but a veritable chalice of wretchedness, a rattling, thumping, lolling tragedy of a car, a summary indictment of Chrysler's recent management and its self-eradicating product planning, all cast in plastic worthy of a Chinese water pistol. The Sebring drop top does something I thought impossible: It makes me long for the exquisite craftsmanship of the Pontiac flipping G6.

Oh, and the Sebring Convertible is homely, too.

The Dodge Avenger has fared a little better, but not much. USA Today's car guy, James Healey found so many flaws in the test Avengers that he was provided, that Dodge was given unprecedented "equal time" to state what they have done to address the problems.

In the short term, it's not clear what can be done to address the Sebring and Avenger. Chrysler can't afford to drop them. They have nothing to replace them, unless they cut a deal with Mitsubishi to private-lable sell the Galant, but the Galant isn't really a class leader itself. What kills me about the Chrysler Sebring is that it's not even a good rental car. It only has a 13.6 cubic foot trunk. The Chrysler Sebring is a near-lock to be the top votegetter in thetruthaboutcars.com's "Ten Worst Automobiles 2008" competition. (The competition used to be the Ten Worst Automobiles Today, but there was big hairy uproar over the acronym, TWAT. Did they intend the controversy? You be the judge.)

IMHO, it was the Chrysler Sebring that convinced Daimler execs that Chrysler had to go at all costs. Daimler did not want to fund new product development at Chrysler, and Chrysler needed a lot of new product. Chrysler has no cars smaller than mid-size. The Dodge Caliber replaced the Neon, but the Caliber is the size and weight of a midsized car, and it needs a trick CVT transmission to get the MPG of a midsized car. For all the talk about selling Chinese Chery small cars as Dodges, there has been no commitment to a final design, and it remains to be seen if a Chinese manufacturer can build a car to American safety and quality standards, and if the cars can be built, whether American consumers will buy enough of them to constitute a profitable business. As far as SUVs and trucks are concerned, Chrysler's once-strong lineup is looking long in the tooth as other carmakers have targeted these areas and now have younger, fresher line-ups.

It's a true shame about the Sebring and Avenger, as UAW-Assembled midsized cars, they are two of a very few models that we can drive to work. The Ford Fusion and Mercury Milan have a reputation of being two reliable, well-performing midsizers, but both are currently assembled in Mexico. For us, that leaves the Saturn Aura, Chevrolet Malibu, Pontiac G6, and (surprisingly) the Mitsubishi Galant and Mazda6. I'm thinking about reviewing "cars we can drive to work" since more and more of us are facing extended commuting time as we are transferred to out-of-the way offices and work from multiple locations, and many of us need to shift to more economical transportation.

Brocktoon! Chrysler Contract comes down to Belvidere

The fate of the UAW/Chrysler contract comes down to the 3800 UAW employees in the Belvidere, Illinois plants. According to the Detroit News, with 56% of the already-cast votes in favor of the contract, it would take a nearly-unanimous "nay" vote at Belvidere for the contract to not be ratified. Are they underestimating the power of Brocktoon?

Tide Turns in Favor of Chrysler Pact
3 of 4 locals approved contract yesterday

Large UAW locals in Warren Michigan and Sterling Heights, Illinois voted on the Chrysler/UAW contract, and 3 out of 4 of them approved the contract. According to the Baltimore Sun, results of the 4th local were not available at presstime.

The positive votes came just a day after workers in Kokomo, Indiana voted against the contract at about a 3/1 ratio.

If the trend holds, the contract will be approved by this weekend.

What's a "Rock Rental"?

No, it's not Scooby Doo answering the question: Who stared in Smokey and the Bandit? A Rock Rental is loaning out your car in exchange for crack cocaine. I don't know about you, but I've had several strange cases cross my desk over the years that involved bad things that happened when a client loaned his/her car to a person he/she hardly knew. This article about rock rentals from the Birmingham News via Autoblog.com goes a long way towards making sense of these incidents.

Ford Update

Ford and UAW are negotiating on their contract. The future of a number of Ford factories are at stake. From the outside looking in, it appears that Ford's future product plans are more firm than Chrysler's, but less firm than General Motors'. Here's a link to the Detroit News article.

Chrysler Update
Contract Might or Might Not Be Approved

This morning, the Detroit News reports that the member vote on the tentative Chrysler, LLC agreement with the UAW could go either way. Right now the approval folks have a narrow lead. More locals will be voting this week.

Interesting Blog of the Day
Masson's Blog

I stumbled upon an excellent blog by Lafayette attorney Doug Mason. Mason's Blog covers Indiana Law, state and local politics and (like most other blogs) whatever else catches his attention. He posts with amazing frequency, averaging more than a post a day. Despite the frequency of his posting, he doesn't just throw out a link (as I've been known to do), he adds his own insight and opinion. Among other things, his blog contains running commentary on the Indiana Law Update 2-day CLE that was held in September.

Back from South Carolina
"Shrinkage" is the Word of the Day

This past weekend was the annual meeting for representatives of AFSCME 3357. I did not take detailed notes of the meeting, and I don't have time now to get into it in depth, suffice it to say that in the past few years, the Plan and local 3357 membership has seen so much shrinkage that it makes George Costanza look like Mr. Ed. The shrinkage in the unionized U.S. auto industry has resulted in a corresponding decrease in the number of UAW Legal Services attorneys.

We're down to 104 attorneys in our local, about half of our peak. There are lots of offices that serve only retirees. Some offices are down to one or 1/2 a staff attorney. Like never before our members need to be jacks of all trades. Soon it may be the norm rather than the exception that each attorney needs to be able to handle every problem code.

While some things that were discussed can't be disclosed as a matter of competitive intelligence, all of the issues that are hot button in my office were raised and discussed. Quite a few attorneys with high seniority are now commuting long distances thanks to being laid off and bumping into new offices. It is becoming apparent (if it wasn't already) that "bumping" is no substitute for severance pay or buyout packages.

I also want to point out that almost all of the area reps at our meeting were high seniority folks. Low seniority attorneys need to get more active in the union for their own self-interest. Under the last contract, we received only a minor raise due to a new retiree healthcare plan. Given that you have to have 15 years seniority and an attained age of 61 or 62 to qualify, it is unlikely that the majority of our members will ever benefit from the retiree healthcare. You will be getting a questionnaire in the mail early next year asking you what issues you think are important going into the negotiations for next year's contract. You should take this questionnaire seriously. Take time and fill it out.

Renting a Car?
Where's the Gas Cap?

Autoblog has a discussion on how to tell where the gas cap is on an unfamiliar car. Here are some tips. First, look for an arrow next to the gas pump icon under the car's fuel gauge. If there isn't one, look at the direction the gas pump nozzle is pointing on the gas pump icon. If you follow these two rules you'll be right 90% of the time.

Consumer Reports Drops Camry from "Recommended" List
Ford's Quality improvement is "real and sustained"

Detnews.com (check out the snazzy new graphics) has posted a story stating that Consumer Reports magazine is dropping the V-6 version of the Toyota Camry from its "Recommended" list after owner reports suggested below average reliability for its redesigned 2007 model. Transmission problems were to blame for the Camry's fall. The 4wd version of the Tundra pick-up and AWD Lexus GS sedan also skidded to below-average. More critically to Toyota, at this point Consumer Reports will not give redesigned Toyota's a recommended rating based upon a presumption of reliability, a presumption that has long been touted as unfair by critics.

Whereas Toyota fell in Consumer Reports' rankings, Ford came out smelling like a rose. Ford's reliability ratings went up to a level where it is actually more competetive with Toyota and Honda than with GM and Chrysler. The Ford Fusion and Mercury Milan were touted by CR "most reliable" from their inception. The latest report confirms that this was no fluke, these models continue to be very reliable, and Fords as a group are doing well.

Breaking News
Chrysler Union Leaders Approve Contract

15 minutes ago, as I write this, just at the tail end of my lunch break, Chysler UAW leaders approved the tentative contract by a voice vote over the objections of a few dissenters. Most of the union reps did not see the contract until this morning. It is likely that few had the opportunity to read the whole thing. The contract must still be voted upon by the rank and file union members.

Weather in Myrtle Beach


The weather in Myrtle Beach, South Carolina is expected to be in the low 80's through this weekend. Have no fear non-attendees, your union representatives will be toiling in a windowless conference room for your benefit.

Ford Contract Proposal:
More Buyouts - Less VEBA

According to the Detroit News, the ongoing Ford-UAW contract will likely depart markedly from the "pattern" set by the GM deal. GM's VEBA doesn't kick in for two years. Ford doesn't have that kind of time, so Ford is expected to offer less and demand a faster phase-in for the VEBA. In exchange, Ford has put on the table a bonus structure that rewards union members for future performance in a manner that more closely mimics the incentives for management. Another round of buyouts is expected to allow the company to integrate 7,500 ex-Vistion employees.

GM Gets Praise for New Products, Especially Hybrids
Hybrid SUVs and Flex platform are Big Deals
Time magazine this week joined a chorus of praise for GM's recent and upcoming new products. Later this year, General Motors is expected to introduce a "two-mode" hybrid version of the GMC Yukon full-size SUV. The all-new hybrid system is reported to deliver (2008 scale) EPA ratings of 20 city and 22 highway, about a 40% increase in fuel economy. At the same time, the truck still has V-8 performance and can tow 6,000 lbs. The new Yukon comes hot on the heels of a redesigned Cadillac CTS that has received rave reviews and last year's hits, the Enclave/Outlook/Acadia 3-row crossover SUVs. Next on deck is a redesigned Chevrolet Malibu (and a freshened Pontiac G6) and a redesigned Pontiac Vibe.

The big hype will come in 2009 when the Chevrolet Volt is scheduled to appear. The Volt is a plug-in hybrid that uses lithium batteries. Even more radical is that the Volt will be the first car built on a new architecture, the Flex or E-Flex platform that can accommodate almost any power source, from batteries, to hybrid, to hydrogen fuel cell. Opel, GM's European division, even came up with a concept car called the Flextreme that craps Segways.

Judging from future product plans, GM is taking a "it ain't over till the fat lady sings" approach. Chrysler and Ford seem to be auditioning big women wearing viking helmets.

Union Politics may KO Chrysler Contract

The Chief of the UAW bargaining committee that negotiated the tentative contract with Chrysler, LLC. that was announced last week now says the contract isn't good enough, and he's lobbying union leaders to vote against it.

According to Bloomberg.com, the union official Bill Parker, from Sterling Heights, Michigan is in somewhat of a power struggle with union head Ron Gettelfinger, and he's urging union leaders to vote against the deal in a vote scheduled for today. His chief objection is that the contract does not have any of the future work guarantees that the GM contract includes. Also, there's no guarantee that temporary workers will be offered permanent status.

If I were a UAW member, both of these items would be a big deal to me. While I don't expect that Chrysler will cave on guaranteeing future cars for any given plant, it seems to me that they should give in on the point about the temporary workers.

As an outsider looking in, it seems to me that the UAW-GM negotiating team did an excellent job at not only striking the best deal available, but also working through the political problems to sell the contract to the rank and file. (Although I didn't post on the subject, the GM deal was approved last week by a comfortable margin, though locals at a few component plants (without future work guarantees) rejected the deal.) In comparison, the Chrysler deal seemed rushed. The five hour "strike" was a joke. Whereas strategic leaks prepared the way for a positive spin campaign for ratification, there was no such preparation in the Chrysler deal. Even now, I haven't seen a copy of the proposed "white paper" contract posted on the web, and if I were a Chrysler UAW member, I'd be suspicious that somebody is trying to put one over on me.

Tune in for more information.

UAW/Chrysler Have a Deal - A Secret One

If you blinked you missed the strike, which lasted all of about 5 hours on Wednesday. Now there's a tentative deal, but two days later, there's not much info available on what the deal includes. Here's a link to what the Detroit News has published, but don't feel like you have to click on it, because it doesn't say much. Yeah, there's a VEBA, but at 55-60% funding as opposed to the GM deal which funds at 70% if everything goes right. Yeah, there's a two-tier wage scale, but nobody is saying what those wages are. Yeah there are job guarantees, but not for any particular plant. For my UAW-LSP readers - what about legal services? No information.

I'm guessing the UAW has put a clamp on disclosure of the terms while they spin up the hype machine in anticipation of a ratification fight. There's no question the union had to give up substantial ground, and they were working from a weak bargaining position. The rank and file is not likely to be pleased. It looks to me though, that this fight may have been lost when Chrysler was spun off from Daimler Chrysler. The resulting entity was undercapitalized, with an aging product line and very few replacements in the product pipeline. Chryslerberus was not in a position to guarantee replacements for given plants when the replacements have not been designed or projected.

The Chrysler of 2007 looks a lot like the American Motors of the late 1970s. AMC was reduced to rebadging the Gremlin as the "Spirit" and putting 4WD on the Hornet and calling it the "Concord". In the end, they weren't fooling anybody. In 1979 AMC was purchased by Renault, which saw value in Jeep and wanted to enter the American market. Things didn't work out, and in 1987, Renault's interest in AMC was bought out by a resurgent Chrysler. Renault has been doing well in Europe in recent years and is looking to re-enter the U.S. market. It would be ironic if Cerebus sells Chrysler to Renault.

Could GM's VEBA be DOA?
Objections at the SEC to $4.4 Billion IOU

Workers and a retiree have filed objections at the Securities and Exchange Commission to the issuance of a $4.4 Billion "convertible note" that is a core part of the Voluntary Employees Benefit Agreement or VEBA that was negotiated with the UAW as a means to fund retiree health care. The objections cite failure to disclose the risks inherent in GM's financial condition, and the risk the note would be wortheless if GM files bankruptcy. According to the Detroit News, despite the objection the VEBA is likely to be approved by the US District Court in Detroit.

Chrysler Strike Deadline 11:00 AM Today

Collective bargaining between the UAW and Chrysler, LLC., is expected to continue right until the deadline for strike, 11:00 AM today. What's going to happen then is anybody's guess. Unlike the GM-UAW contract, there have not been leaks suggesting the parties are very close to a deal.

Chrysler dealers are awash in inventory for everything except the 2008 minivans. Chrysler has already scheduled temporary shutdowns for six plants. Just yesterday, Chrysler announced layoffs of thousands of white collar workers and contractors.

There is a very real possibility of a worst-case scenario for the UAW here. The UAW strikes. Cerebus then uses costs of a strike as a justification for shutting the company down and selling it off piecemeal, a strategy that many people have said has always been Cerebus's plan for the company. The retirees get whatever has been set aside already, nothing more. It seems to me that it would be better to just continue working under the current contract until the company threatened a lock-outm then negotiate on give-backs. What do I know, I'm just a lawyer.

Chrysler in the Crosshairs
UAW says contract or Strike by Wednesday

An interesting battle is shaping up between the UAW and Chrysler, LLC. The UAW set a deadline of Wednesday to either come up with a tentative contract or strike Chrysler. This will be the first contract under Cerberus management. Even though General Motors was fiscally overdrawn at the time of its contractual negotiations, GM could look forward to a fairly broad lineup of competitive new products in the pipeline. Chrysler is somewhat more solvent in today's dollars, but it's future product pipeline is really an empty cupboard. The prospect of a strike probably doesn't scare Cerberus too much. Even though we are only a month into the new model year, six plants are temporarily idled for lack of business. With Cerberus, the UAW will be dealing with private management who are very capable of, and possibly predisposed to, breaking up the company.

What can we expect from the new Chryslerberus contract? Expect lots of pressure on healthcare benefits for both active and retired workers. If there is a VEBA, you can expect that it will not be funded at the same level as the GM plan.

Restrictions on Medical and Dental Care in
GM/UAW Agreement

Even though the Union hosted 30 minute presentations and published a 22 page summary of its new tentative agreement with General Motors, apparently there wasn't sufficient time/space to fess up to significant (but not earthshaking) reductions in health and dental coverage. According to the Detroit Free Press at freep.com, PPO and HMO plans will be sharply limited. Under the new default plan, union members and their family will now have a $25.00 co-pay per doctor appointment, with five appointments per year per family. The article mensions that dental HMOs will be eliminated, but it does not state that dental coverage in general is eliminated.

September Sales Grades:

Honda: A
GM: B-
Chrysler: C-
Ford: DDD

Auto sales in September were a mixed bag, but Honda scored its best month ever, with sales up 13.8% from last year. That's what a new Accord and blow-out deals on 07s will do for you. General Motors eked out a respectable 3.7% increase without undue incentive spending. Chrysler sales were down 1.5%, not too bad considering the new minivans hadn't hit the showrooms yet. Some troubling signs for the Chryslerberus folks, sophomore year sales of the Dodge Caliber and Jeep Compass were both down over 20%. Chrysler has scheduled two-weeks downtime for the Illinois plant that makes the Compass and Caliber.

The biggest loser was Ford with sales down 21%, a DOUBLE DIGIT DECLINE - DDD. Keep in mind, this is a decrease from 2006, a year when Ford lost over $12 billion. Ford would like to attribute the decrease in sales to a reduction in planned fleet sales. (The car division was down 45%.) Still, retail car sales were down more than 15%. The brand new Taurus (unlike the old Taurus which was selling briskly to fleets last year) seems to be glued to the dealer lots. Ford just upped the incentive from $500 to $1000 because sales are below the Five Hundred's anemic levels.

The bottom line is that Ford is just now starting to feel the full effects of years on skimping on new product design. With almost all cars on the market being at least "good", Ford loses out whenever a competitor introduces "better". Ford is at least a year away from the introduction of its new F150 pickup line. The only thing new between now and then is the new Focus, a car that has been criticized for being a mere facelift of the old one. As will be discussed in an upcoming post, Ford is the next company up for UAW contract talks. It's going to be a rough year for the blue oval.

Sources

http://www.nytimes.com/2007/10/03/business/03auto.html

http://www.autoblog.com/2007/10/02/by-the-numbers-september-2007/

http://www.detnews.com/apps/pbcs.dll/article?AID=/20071003/AUTO01/710030372/1148