Amid Tesla's 'disruption,' a defense of franchised dealer network

Bill Ford says UAW's Gettelfinger deserves more credit 'for helping save Ford'

Amid Tesla's 'disruption,' a defense of franchised dealer network

Bill Ford: "When we got into a really tough period, I sat down with Ron and I said, 'You have to help me save the Ford Motor Co.'"
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Ford Motor Co. Executive Chairman Bill Ford Jr. today credited the UAW for helping to “save” the automaker and stood by the track record of Ford’s dealer network as Tesla Motors pushes its direct-sales model.

Ford said in a live interview on CNBC’s “Squawk Box” that the UAW worked closely with his company to help avoid bankruptcy and a government bailout.

“When our times were darkest in the '07, '08, '09 time frame, the UAW helped our industry get back on its feet, helped Ford get back on its feet,” Ford said. “Ron Gettelfinger, the former president of the United Auto Workers, doesn't get enough credit for helping save Ford.”

"When we got into a really tough period, I sat down with Ron and I said, 'You have to help me save the Ford Motor Co.’”

Saving Ford meant union concessions, which included giving up vacation time, cost-of-living adjustments and Christmas bonuses. Overtime pay was altered to be paid after 40 hours, instead of an eight-hour day, and break time was cut a minute per hour.

The company negotiated with the UAW to implement a two-tier pay system to hire more entry-level workers and create retiree health care funds to be managed by a UAW trust fund. This allowed Ford to lower labor costs per employee to $58 per hour, or $17 less per hour than in 2007. Ford said those savings narrowed the labor cost gap with its foreign competitors to $8 per hour from $27 per hour.

As for Tesla, Ford said he is very interested in the company and its direct-sales model.

“Anytime you have disruption in an industry, it's very interesting,” Ford said. “Tesla came in with a different business model and they came in with a point of view on technology.”

The chairman said the franchised dealer network has done well for Ford.

"I think that model really works," he said. "The real question is what's the best way to serve the customer? Because ultimately ... our dealers have many years of knowing the customer experience and treating them well.”

As for his company’s technology efforts, Ford said, “One of the things we've done at Ford, that I have long advocated, is to push the envelope on technology. And so during the dark days for us, we made two big bets which were really not at all where Ford was -- we said we wanted to be the fuel economy leader and the technology leader. Both of which were weaknesses for us.

“Here we sit a few years later and we've largely achieved that. I'm always interested in what a competitor is doing.”

You can reach Sean Gagnier at sgagnier@crain.com.


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