B USI N ESS
A N S&P boosts GM’s debt rating
MANUFACTURING
By Brent Snavely Detroit Free Press
DETROIT — Standard & Poor’s said Thursday that it has upgraded General Motors Co.’s debt rating after reviewing the company’s new four-year contract with the United Auto Workers union. “We believe the contract will allow for continued profitability and cash generation in North America,” Robert Schulz of Standard & Poor’s said in a statement. The UAW announced on Wednesday that its members had voted to ratify the contract by a 2-1 ratio. Standard & Poor’s increased GM’s debt rating from BB- to BB+. Higher credit ratings are desirable because they help to lower a company’s borrowing costs and interest payments. “Our fortress balance sheet and low break-even point are helping us succeed even in uncertain economic times, so we can stay focused on building great products and driving profitable growth around the world,” GM CFO Dan Ammann said in a statement.
Ford, Chrysler talks UAW President Bob King has said he will use the contract with GM as a framework for discussions at Ford and Chrysler, where talks are ongoing, and has said that winning more U.S. jobs for autoworkers is a top priority. Ford has been in labor talks with the UAW for a new four-year agreement since the last week of July. The company’s current contract was scheduled to expire on Sept. 14, but was indefinitely extended. King and UAW Vice President Jimmy Settles have been involved in contract talks at Ford that have gone late into the evening for three consecutive days. The UAW has told its members that it is now closing in on a deal with Ford and is optimistic it can reach a new agreement by the end of this week. “Some of our subcommittees have finalized their language and are being closed out,” said Tony Vultaggio, president of UAW Local 228 in Sterling Heights, Mich., and a member of the UAW’s bargaining committee, in a phone message for members late Wednesday. “This is certainly good progress.”
Matt Rainey / New York Times News Service
Jorge Rodriguez installs a Bluetooth system on a Toyota vehicle at a port production line at Port Newark in New Jersey. Toyota’s 185 employees at the facility work to install optional features in millions of vehicles to be shipped up and down the Eastern Seaboard.
Far from the factory, adding final touches By Ken Belson New York Times News Service
PORT NEWARK, N.J. — To travelers landing at Newark Liberty International Airport, the vast asphalt fields of vehicles on the ground below look like so many livestock pens. Staged in these open-air waiting rooms are thousands of cars and trucks that will shortly be hauled to dealerships up and down the Eastern Seaboard. What can’t be seen from the air are the dockside finishing schools that apply the final touches to half a million vehicles that pass through each year. Here — as at other seaports — dedicated facilities owned by individual automakers, as well as giant multibrand processing centers, shepherd autos arriving from overseas and ready them for buyers. It’s not just a quick wash and wax. Within these nondescript buildings at the edge of Newark Bay, inspections are done, repairs are made, and hundreds of accessories, from satellite radios to alloy wheels to roof racks, are installed. Take, for example, the sprawling 250-acre operation of FAPS, which has the contracts for makers including Ferrari, Honda, Mazda, Nissan and Volvo. The company, which moved to Newark 55 years ago from New York, established itself repairing the damage done when imported cars were still hoisted off the ship by cranes. Today its services still include body repairs (although cars are now driven from the ship’s hold) but it also does the accessory installations and manages distribution logistics.
“Everything is now plug-and-play. No splicing wires like we did years ago.” — Nelson Noda, team leader at Toyota’s Newark facility Toyota’s 98-acre operation at Newark’s port is something of a scaled-down assembly plant, although the work — adding a range of so-called port-installed options into 21 different models — is done largely by hand using simple tools, not by industrial robots controlled by computers. About 185 employees work in Toyota’s carwash, quality control center and five production shops here. By adding items like floormats and GPS systems at its distribution centers instead of at its factories, Toyota gives customers a chance to tinker with their orders until just two days before the vehicles dock in Newark. And it gives dealers a way to stand apart from their competitors. “We want to tailor the vehicle to what the customer wants,” said Bill Barrett, the national logistics manager at the Newark location. “We build the car they want.” The facility, which Toyota has operated for more than two decades, serves as a way station for up to 12,500 cars at a time that arrive by ship from Japan. Nearly every Toyota, Lexus and Scion built in Japan and destined for sale from Virginia to Maine passes through the facility. In a typical week, two shiploads of Toyotas arrive, although since the March tsunami slowed production, the pace has slowed to one ship a week. The process
of customizing the roughly 3,000 vehicles that arrive on each ship starts the day before it docks in Newark. That’s when John Hagel, who runs the driving team, determines how many longshoremen and drivers will be needed to get the vehicles to their parking spots, which are assigned by the accessories to be added. One day last month, for instance, it took about 100 drivers eight hours to unload a ship that had made the four-week trip from Tahara, Japan, through the Panama Canal. Once parked, the vehicles are inspected; any damaged in transit go to the body shop. Only one vehicle that arrived on that boat in August needed work, Barrett said. Next, the bar codes on the shipping manifests, which include a list of accessories to be added, are scanned. Lexus vehicles, which receive more attention than Toyotas and Scions, are also driven on a bumpy track to check for squeaks and rattles. This month, Toyota’s production returned to pre-tsunami levels. That means more to do for Nelson Noda’s team of about a dozen workers, whose job is to install electronics, including alarms, satellite radios and remote starters. The work is done as the cars move down the middle of a building about the size of a football field. Employees at the work stations to the left and right complete a variety of tasks. One worker spent about 30 minutes installing a Bluetooth hands-free system under the steering column of a red Prius. He needed just a few tools to complete his task and test the system. “Everything is now plug-andplay,” Noda said. “No splicing wires like we did years ago.”
Ford said to discuss adding 10,000 U.S. jobs By Keith Naughton, John Lippert and Tim Higgins Bloomberg News
SOUTHFIELD, Mich. — Ford is discussing adding as many as 10,000 jobs in the United States in negotiations with the United Auto Workers union on a new fouryear contract, according to three people familiar with the talks. The job-creation discussion is part of high-level negotiations between Ford and UAW President Bob King over wages, benefits, and employment gains in the new contract and is still subject to change, said the people, who asked not to be identified revealing internal deliberations. As many as 4,000 of those jobs may come from Ford shifting production of the Fusion midsize sedan to the United States from Mexico, one of the people said. The UAW may reach an agreement this week on a contract covering Ford’s 41,000 workers, Joel Goddard, co-chairman of the union’s bargaining committee said in a recorded message Monday. Ford, which earned $4.95 billion in the first half of
the year, is seeking to lower labor costs in the new contract. New hires are paid about half as much as senior workers. “Jobs have been a central goal of the union in this round of negotiations,” said Harley Shaiken, a labor professor at the University of California at Berkeley. “Ford, which is the most advanced in its recovery, is a natural for this kind of job creation.” General Motors agreed to add or retain 6,400 jobs in a tentative agreement it reached with the UAW on Sept. 16. GM’s 48,500 hourly workers ratified that contract with 65 percent of production workers and 63 percent of skilled-trades workers voting for it, the union said Wednesday.
‘Obama stepped in’ “Two years ago, GM and Chrysler were hanging by a thread when President Obama stepped in and invested federal funds to help turn the companies and the U.S. auto industry around, protecting the auto supplier base and keeping good-pay-
ing jobs in America,” King said in a statement. Ford avoided the bankruptcies and bailouts that befell GM and Chrysler. Ford now produces the Fusion at a factory in Hermosillo, Mexico, which employs 3,335 workers, according to the automaker’s website.
Top seller Sales of the Fusion in the U.S., where it is Ford’s top-selling car, rose 16 percent this year to 168,929 models through August. Last year, Ford sold 219,219 Fusions in the U.S., according to researcher Autodata of Woodcliff Lake, N.J. King met Tuesday with John Fleming, Ford’s chief of manufacturing and labor affairs, to discuss new work the automaker may be willing to put into U.S. plants, one of the people said. King shifted to Dearborn, Mich.based Ford last week after talks faltered with Fiat-controlled Chrysler, which said it extended its contract to Oct. 19. “We have accelerated our
talks,” Goddard, the union’s Ford bargaining committee co-chairman, said in a telephone recording late Sept. 26. “We are optimistically hopeful we will have good news for our membership by the end of the week.” Marcey Evans, a Ford spokeswoman, declined to comment. “We’re not commenting on the details of talks,” said Michele Martin, a UAW spokeswoman. King is “confident that we are on track to secure an economic package that our membership deserves,” Anderson Robinson, recording secretary of the union’s Ford bargaining committee, said in a recorded message Tuesday. He added that King and UAW Vice President Jimmy Settles met “for several hours” with Ford bargainers yesterday. Hiring entry-level workers would help Ford lower its labor costs because they start at about $14 an hour, half what senior employees make, Shaiken said. Ford has said it has fewer than 100 entry-level workers among its hourly workforce, the fewest of the U.S. automakers.
THE BULLETIN • Friday, September 30, 2011 B3