Ford Contract Approved by Landslide
The Union was in a Giving Mood

Ford's UAW locals quietly and nearly uniformly approved the recently-negotiated collective bargaining agreement. About 78% of voting members approved the contract.

Surprisingly, the Ford agreement passed much more easily than recent contracts at General Motors and Chrysler even though the Ford workers are giving up significantly more than their comrades who work for the other automakers.

The Detroit News finally shook loose some of the details on the contract and posted them in Thursday's edition. Like the GM deal, the Ford contract includes a retiree healthcare VEBA (trust). The deal also includes a 2-tier wage scale. The Ford deal apparently includes UAW carrots for job creation and retention and much more flexibility on work rules and job classifications.

The VEBA: Unlike GM, Ford did not pony up a large amount of new cash to fund the plan. Ford will get rid of $23.7 billion in liabilities with a $13.6 billion trust. New money contributions will only be about $3 billion. Six billion will come from notes issued by Ford, in other words, IOUs, and the remainder will consist of assets already pegged to retiree healthcare. If the Detroit News article and my 1 AM math are correct, only $7.6 billion of the VEBA, about a third of the entire actuarial liability will be backed by real cash assets, and because the VEBA won't be fully operational until 2009, the money doesn't have to be contributed now. I think Wimpy said it best: "I will gladly repay you Tuesday for a hamburger today."

The Wage Scale: Up to 20% of Ford's workforce can be made up of lower-tier workers who start at $14.20 per hour. In addition, Ford can hire "in-sourced" workers at the lower wage without counting toward the 20% cap. UAW Workers other than the lowest 20% will not get a "baseline" wage increase. The article is silent about bonuses.

Job Security: Ford agreed to keep open 5 facilities that were scheduled to be closed in Ford's "Way Forward" plan. Also Ford agreed not to build a "low cost" North American (read that - Mexican) facility during the contract. Ford agreed to invest in flexible manufacturing for its existing facilities. The UAW is doing its part in that area by agreeing to reduce skilled labor job classifications from 350 to 22.

In summary, the UAW gave about as much as you could expect it to give. It's now up to Ford management to cure its tendency to mis-spend product development and marketing resources and stop dumping money into black holes like Jaguar.

2008 Dodge Journey
When the Lights go out in the city . . .

Dodge issued a press-release in August about a new midsized crossovever vehicle that is set to debut early next year. After I read it, I started a blog entry, but didn't have time to finish it. It's ominous that after reading the release, I couldn't remember the name of the vehicle. I few days later, I went back to blog again, and I still couldn't remember the name of the vehicle. I came back to it today, and once again - blank. It's ominous for Chrysler that even after multiple exposures, someone in their target market can't remember the name of their vehicle.

For the first vehicle released after the Cerberus buyout of Chrysler, it's appropriate that the company has picked the name "Journey" for its midsized CUV. I perused the titles of singles by the band Journey, and there are a number that you could apply to the abandonment of Chrysler by Daimler AG.

I'll be alright without you,
Separate Ways,
Still they ride. . .

My favorite: Who's crying now? That would be the Cerberus shareholders, because at first blush, the Dodge Journey seems like an also ran right out of the starting gate.

The Journey is based on a version of the platform of the Dodge Avenger, but stretched about 5 inches to leave room for a "limited use" 3rd row seat. In other words, the Journey is the station wagon version of the Avenger. The Journey apparently is designed for the slot in the Dodge line-up formerly occupied by the short-wheeelbased version of theDodge Caravan minivan. It's a family hauler shorter than and (they hope) more stylish than a minivan. In the market, the Journey directly competes with the Ford Taurus X (formerly the Freestyle) and sandwiches between the Toyota Rav4 and Highlander.

I find it interesting that Dodge did not release the curb weight of the Journey. In my experience, detailed press releases omit curb weight when the vehicle is heavy and bloated compared to its competitors. Since no Dodge vehicles are light weight, it's not a good sign. Ford did a good job keeping the weight down on its Freestyle, but even with a curb weight lower than its two-row Edge, and a performance-maximizing CVT transmission, het three-row Freestyle was criticized for its performance with a 200 horsepower 3.0 liter V-6. The Journey's two lower trim levels get by with engines that deliver less power than that of the outgoing Ford Freestyle, specifically 2.4 liter 4-cylinder and 2.7 liter 6-cylinder powerplants, both coupled to an outdated 4-speed automatic transmission. Only the 3.5 liter V-6 (six-speed auto) appears to be competitive in terms of engine-transmission pairing.

There are some nice interior touches in the Journey. There are kid-friendly middle row seats with optional integrated booster seats, and under-floor storage similar to the "stow" part of the "stow -n- go" minivan seating. The Avenger offers Chrysler's heated & cooled drink holders and Mygig(tm) entertainment system.

The Avenger will apparently be built in Mexico, initially sharing capacity with, and eventually replacing, the PT Cruiser. That means that UAW-LSP employees can't drive it to work because it is a non-uaw built vehicle.

Here's a link to more detailed information on the Chrysler buff site Allpar.com.

2009 Honda FCX Clarity
The First Fuel Cell Production Car?

This week, at the L.A. Auto Show, Honda unveiled the FCX Clarity show car. This car looks very similar to the FCX that was first shown as a concept car in 2005. Last year, Honda showed a drivable version. This year's car is a production-ready prototype, with a finished interior and refined mechanicals. Honda expects to lease several hundred of these cars starting mid-2008. By that time, General Motors may have 100 fuel-cell powered Chevrolet Equinox CUVs on the road, but these are more proof-of-concept vehicles than true production cars.

What makes the FCX unique is that it is powered by a fuel cell coupled to a lithium-ion battery pack. The fuel cell provides for a range of 270 miles on nine pounds of hydrogen. The energy-efficient car is claimed to yield the equivalent of 68 mpg. The hydrogen is packed in carbon fiber storage tanks compressed to 5,000 psi pressure. Note that General Motors' Equinox fuel cell pilot vehicles store their hydrogen at 10,000 psi, so perhaps through technology sharing there is the possibility of doubling the unrefueled range without increasing the space required by the hydrogen.

Where will customers get their hydrogen? Well, the first leases will be in southern California where hydrogen refueling stations are already in place. In the future, the hydrogen could come from your own home. Simultaneously with the FCX Clarity, Honda announced the Experimental Home Energy station IV. The Home Energy Station, a natural gas fueled hydrogen reformer, was designed to provide hydrogen for a vehicle for "daily use" plus a household's daily electricity requirement. Actually, the home energy station is both a natural gas reformer and a 5-kilowatt residential fuel cell with capability to serve as a back-up generator -- or even a cogenerator if it's hooked into the power grid.

Honda plans to lease the FCX Clarity for $600/month including maintenance and collision insurance. I currently lease a $25,000 vehicle for $535 per month not including insurance or maintenance, so Honda's price is quite competitive for a high tech vehicle with serious green street cred. Among the Hollywood elite, once the FCX hits the streets, the Toyota Prius will be (in the words of Hillary Duff) "So Yesterday."

Source (unless otherwise noted): Autoblog Green

Consumer Groups Unite to Try to Defeat Predatory Lending Bill

I don't think it would be an exageration to say that policy wonks at the various prominent consumer groups feel stabbed in the back by H.R 3915, the predatory lending bill which was supposed to go up for vote today in the House. (As far as I can tell at this time, there was no vote; however I can't confirm that.) Anyway, below is a joint press release issued by the consumer groups.

Community Legal Services of Philadelphia * Consumer Action * Consumer Justice Law Center (Wis.) * Cuyahoga County Foreclosure Prevention Program (Ohio) * Empire Justice Center (N.Y.) * Financial Protection Law Center (N.C.) * Gateway Legal Services (Mo.) * Housing Research and Advocacy Center (Ohio) * Jacksonville Area Legal Aid, Inc. (Fla.) * Legal Services (N.J.) * Mountain State Justice (W. Va.) * National Association of Consumer Advocates * National Consumer Bankruptcy Litigation Center * National Consumer Law Center * National People's Action * National Training and Information Center * Neighborhood Economic Development Advocacy Project (N.Y.) * NC Justice Center (N.C.) * Public Citizen * U.S. Public Interest Research Group * Virginia Poverty Law Center





For Immediate Release: Contact: NCLC: Alys Cohen/Margot Saunders (202) 452-6252

Nov. 15, 2007 Public Citizen: Angela Bradbery (202) 588-7741

Consumer Action: Linda Sherry (202) 544-3088

U.S. PIRG: Ed Mierzwinski (202) 546-9707

Legal Services (N.J.): David McMillin (732) 572-9100

Mountain State Justice (W.Va.): Dan Hedges (304) 344-5564

NC Justice Center: Al Ripley (919) 274-8245



Coalition of Consumer and Anti-Poverty Groups Opposes Predatory Mortgage Bill



Weak Remedies and Pre-emption of State Law Would Harm Homeowners Facing Foreclosure



WASHINGTON, D.C. – A bill designed to address abuses in the lending market would leave consumers worse off than if Congress did nothing at all, a group of national and local consumer and poverty law organizations told lawmakers today. The group is urging lawmakers to defeat H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, scheduled for a vote today in the U.S. House of Representatives. In a letter sent to the Hill, the organizations decry the bill’s insulation of Wall Street and the removal of key state protections that borrowers use to protect their homes.



“At a moment when the economy is being rocked by the subprime mortgage crisis and when predatory loans are sending millions of Americans into foreclosure, it is shocking that the House of Representatives is protecting Wall Street, instead of the consumers who are at risk of losing their homes,” said Joan Claybrook, president of Public Citizen.

“This bill represents a net loss to consumers because it replaces strong state protections with a weak, untested federal scheme,” said Alys Cohen, staff attorney with the National Consumer Law Center. “We appreciate the authors’ efforts to combat predatory lending, but compromises made to attract wider support make the bill an empty promise.”



The bill is designed to address serious abuses in the lending market, including the making of loans that homeowners cannot afford to repay; prepayment penalties that lock borrowers into high-cost loans; binding mandatory arbitration clauses that deprive homeowners of access to court; and other protections against high-cost loans.



But because it combines weak federal remedies with pre-emption of existing state-law remedies, H.R. 3915 would actually harm consumers. The measure lacks meaningful remedies that borrowers need to save their homes. Worse still, the bill contains a state-law pre-emption provision, which would entirely undercut the value of the bill’s protections. The bill would eliminate homeowners’ ability to raise state-law claims—claims they may already bring under current law—against the actual owners of their loans. If homeowners cannot sue the owners of the loans, they will have no relief available at all because, in most cases, the original issuers of the mortgage have sold the loan and, in many cases, have gone bankrupt or are otherwise out of the picture.



“We cannot support a bill that eliminates strong state-law remedies for the victims of predatory mortgage abuses,” said Ed Mierzwinski, consumer program director of U.S. PIRG. “Consumers need these protections now more than and ever, and intentionally or not, this federal law creates rights without remedies.”



In the letter sent today to Reps. Barney Frank (D-Mass.) and Spencer Bachus (R-Ala.), chairman and ranking member of the House Financial Services Committee respectively, the groups noted that the bill creates multiple hoops through which the homeowner has to jump to obtain any redress. The remedies in the bill are limited to borrowers already in foreclosure and safe harbors in the bill provide little or no incentive for the market to change.



“While we commend the bill’s sponsors for seeking to address serious abuses in the mortgage industry, it’s clear that lawmakers are not listening to consumers and the groups they trust to represent their interests,” said Linda Sherry, director of national priorities at Consumer Action. “Congress has ignored suggestions for a stronger bill that contains real remedies to protect consumers, while giving in to demands from the industry to weaken the bill.”



Added Ira Rheingold, executive director of the National Association of Consumer Advocates, “We hope that if the bill passes the House, the Senate will be able to retain the bill’s strengths while ensuring that it has real remedies that give life to the protections. Communities are being devastated by lending abuses. The market needs to be changed now.”



“While we appreciate the good effort in Congress devoted to addressing the terrible problem of predatory lending, this bill will pre-empt much stronger state laws, like those in North Carolina,” said Al Ripley, director of the Consumer Action Network at the North Carolina Justice Center. “Unfortunately, homeowners in North Carolina and in the rest of the nation will find themselves with fewer protections from predatory mortgages if the bill in its current form passes.”



Groups signing onto the letter are: Community Legal Services of Philadelphia, Consumer Action, Consumer Justice Law Center (Wis.), Cuyahoga County Foreclosure Prevention Program (Ohio), Empire Justice Center (N.Y.), Financial Protection Law Center (N.C.), Gateway Legal Services (Mo.), Housing Research and Advocacy Center (Ohio), Jacksonville Area Legal Aid, Inc. (Fla.), Legal Services (N.J.), Mountain State Justice (W. Va.), National Association of Consumer Advocates, National Consumer Bankruptcy Litigation Center, National Consumer Law Center, National People’s Action, National Training and Information Center, Neighborhood Economic Development Advocacy Project (N.Y.), NC Justice Center (N.C.), Public Citizen, U.S. Public Interest Research Group, Virginia Poverty Law Center.

For more information, see:

http://www.nclc.org/issues/predatory_mortgage/content/HR_3915_opposition_letter.pdf.

House to Vote On Predatory Lending Bill


Today the U.S. House of Representatives is scheduled to vote on Rep. Barney Frank's predatory lending bill HR-3915. As predatory lending bills go, it's a pretty good one, unfortunately, what we really need is an ANTI-predatory lending bill. It appears that most democratic and some republican representatives are expected to vote for the bill. Most consumer advocate groups and most lending industry groups oppose the bill, but for different reasons.

The consumer groups, such as Public Citizen, PIRG, and the National Association of Consumer Advocates oppose the bill because it creates a ceiling, not a floor, for consumer protection. It increases federal preemption over tough state laws, when preemption should decrease, and it creates a safe haven for assignees of mortgage obligations. If assignees would have paid attention to the crap they were buying, we would have never had this problem to begin with.

Here's a link to a critique by Alan White in the Public Citizen Consumer Protection blog.

Note- this is me talking not 3357 - I strongly urge you to call, write or email your representative, and let your representative know that you want an anti-predatory lending bill, and not a predatory lending bill, and HR-3915 just doesn't cut it.

Opel Zafira Runs the Nürburgring

Here's a video from Youtube of the Opel Zafira running Germany's famed Nürburgring road course. The video says that the Zafira is the world's fastest compact van.

Chevrolet to Get Michigan-made Version of Opel Zafira

Jalopnik, among other sites, is reporting that General Motors is planning on building a version of the European Opel Zafira mini-minivan in Michigan, starting as early as 2009. (I have my doubts whether they'll meet that on-sale date.) Even though Saturn is the new Americanized Opel, Chevrolet is set to get the first version, with Saturn to follow.

If you don't know about the Zafira, it's a 4-cylinder 3-row MPV, similar to the Mazda5 and the Kia Rondo, but with what appears to be more flexible seating and more uplevel content options (at least in Europe). I first blogged about the Zafira in 2005.

I've always been intrieged by the Zafira, especially after seeing this commercial with the Zafira being dropped out of an airplane, with freefall skydivers entering the car in mid-air. It would be interesting to see a small 3-row peoplemover powered by GM's 2.0-liter direct-injection, turbocharged Ecotech engine coupled with a dual-clutch gearbox. They might just pry money out of my hands with one of those.

From the Insult to Injury File:
Toyota Reports Record Quarterly income

Toyota announced a record quarterly profit equivalent to $8 billion (US). Toyota set quarterly records in revenue, profit and number of vehicles sold.

From the "Is this anything?" file
GM Takes $39 Billion Noncash Charge

There are lies, damn lies, and General Motors accounting. Yesterday I read that General Motors announced that it would report a $39 billion quarterly loss. That loss is dominated by a $37 billion noncash charge against assets based on a writedown of tax-loss carryforwards held as assets. The company stated that the company's cash position and business prospects weren't affected, and the market yawned, with the stock going down less than two dollars in afterhours training. Even this morning, there has been no Exodus from the stock.

The news stories that came out yesterday were garbage, basically. There was no analysis or scrutiny of the company's statement. It was no coincidence that General Motors released the statement on an election day, a near holiday with many journalists off or covering other things. Cash or no cash, $39 billion is still real money to me, so I'll tell you what I make out of this, whether it is a hat, a broach or a pterodactyl.

So far, the Detroit Free Press has done the best at putting this in perspective. The full GM spokeshole press release is here at jalopnik.com. Cash or no cash, this is the largest quarterly loss in automotive history. As I write this, GM stock is trading for about $34 and some change per share. This quarterly loss alone amounts to $68.90 per share according to freep.com.

It may be true that the paper loss does not affect GM's cash position. (Although the company's cash hord did go down $2.5 billion in the quarter.) It may also be true that GM's business prospects are unaffected. That doesn't mean that this is insignificant, especially if you are a GM shareholder. It's also important if you are a GM employee who now has a vested interest in GM stock thanks to your brand new VEBA.

To explain the significance, you have to understand the asset that GM wrote down. General Motors held on its balance sheet credits for past losses that it could use as credits to reduce future tax liability. According to Generally Accepted Accounting Practices, this type of paper asset must have some reasonable possibility of being converted into a useful cash type asset at some reasonable point of time in the future, otherwise this asset should not be given the same status as a real asset, such as cash. The write-down by General Motors is a tacit admission that they have no reasonable prospects of making profits in the near term that would make this asset useful. In other words, the company is saying that it really doesn't have the foggiest idea when it's going to be profitable again. Why announce the change now? Did the accountants suddenly get religion? Or did they realize that the leg's going to have to be cut off anyway, so they might as well bite the bullet.

I believe that General Motors may be salvagable, but virtually none of the future earnings of the company will go to current shareholders, no matter what. For the company to be successful, it will have to recapitalize at some point, and that will mean issuing new stock. Already there will likely be dilution of ownership based on the VEBA.

Speaking of VEBA, the UAW was sold a deal based upon GM's books during the negotiations. For the company's financial officer to announce suddenly that $39 billion on the books was an imaginary asset is highly suspicious, and it may end up being the subject of litigation. I'm sure the professionals that the UAW hired to look at the books realized that there was $37 billion of bullshit sitting in GM's asset column, but the union members were never explicitly told that their retirement healthcare was going to be financed to a large part based on company stock, and the company stock is supported by imaginary but worthless assets equal to twice the stock price.

In the wake of all this it is almost anticlimactic to mention that $1.6 billion of GM's quarterly losses came from losses at GMAC. It's not a record or anything, but it's half of what it would cost to develop a new car model, and there's no guarantee that things are going to be better next quarter.

If you have any investment in GM stock, what are you doing still reading this? you need to get busy. If you want to read more about this, I'm sure Robert Farago at thetruthaboutcars.com will have a new GM Deathwatch momentarily.

From the Contract Demands file:
Restroom Videogames

You never know what you absolutely gotta have until you see it. Now that I've seen it, I must have it. It's a urinal driving game. The computer monitor is at eye-level above the urinal, and you control your car by aiming your stream. We must have this. It must be written into our next contract. We can make sure that the game is adapted for the ladies. Those who are flow-challenged can start with a handicap. According to Engadget, this game is banned in Belgium, so you know it has to be good.