Ford at a Major Crossroads

I hinted at it here, but it is now abundantly clear to me, that Ford will ultimately have to dump the UAW and become a non-union shop (or a different union shop) for its long term survival.  Until now, the UAW presence at Ford was simply the same parasitic itch that bedeviled its competitors.  You couldn't compete on costs, but then again neither could they (GM and Chrysler that is), so you competed with product or marketing (rebates, financing, etc.) and, frankly, xenophobia.  Making as good a car cheaper was not an option.  That was left to Toyota and Honda.

But now the UAW owns your competitors.  Guys inside your shop, making your product - that which determines your reputation in the marketplace - are brothers in arms with your mortal enemies.  Think this is no big deal?  What happens when thousands of Americans, through rational skepticism or outright revulsion, start buying Fords much to the detriment of GM and Chrysler?  Well, the government will subsidize GM and Chrysler products, but, of course, the government will be late to the game.  What will happen first when the UAW gets wind that Ford is smoking GM and Chrysler in sales?   Do you think maybe that some UAW guys at Ford won't be told by union bigshots to slow things down at Ford, or forget to drive a few rivets per car, or pass a few cars that ought to fail a quality control check before they roll off the factory floor?  Industrial sabotage is a very real possibility (please spare me the monumental bullshit that Ford's UAW workers are consummately professional - get your  bloody head out of the sand).  Actually it may not even get that far.  Before Ford even has a chance to beat GM in sales, I can imagine the UAW launching a campaign to bring Ford down from the inside as of...right now.  

But hey, for shits and giggles, let's make the highly imprudent assumption that Ford's UAW workers will show up at work and make Ford's cars to the best of their abilities with not an ounce of subversive intent based on UAW loyalty.  What about contract time?  When Ford's contract with the UAW comes up for re-negotiation, how will the union act knowing that Ford is the only car company that realistically faces the threat of a crippling strike?  (If you think that GM and Chrysler still face the threat of a strike, please click away from my blog immediately, as you are too stupid to read my output.)   As the only car company in America that faces the catastrophic risk of a full-scale work stoppage, any marketplace advantage that Ford can build up between now and then stands to be decimated in a strike.  The UAW's "strike fund" would be a lethal weapon to wait Ford out while GM and Chrysler are still producing cars.  Starting today, GM and Chrysler workers are already paying into a kitty to subsidize striking Ford workers.

There is simply no analysis by which you can deem Ford's relationship with the UAW as compatible with its long term survival, let alone success.  Ford will have to become a non-UAW shop, perhaps a non-union shop, if it is to survive.  The convulsive changes in the US auto industry are not complete by any stretch.  Ford has a strategic decision on its hands like it has never seen.  Avoiding a government bailout will prove a cakewalk compared to deciding how to deal with a workforce whose ultimate allegiance is to the owners of its competitors.  This much I know.

What is murkier to see is how Ford deals with this existential problem.  Ford may or may not be able to deal with this successfully on its own and may need the help and union-resisting heft of a foreign automaker to make it happen.  Ford is big in trucks and has some decent small car technology but no real small car credibility these days.  Who is rock solid in small cars but nowhere in trucks?  Honda.  A Ford/Honda merger could be one route to jettisoning the UAW,  enhancing credibility in the marketplace, and maintaining the heft to manufacture cheaply and weather downturns. Or Alan Mulally could pull it off all on his own.  As Master Yoda would say, "Very hard to see, the future is."