2002 Ford Focus Se Sedan 4-door 2.0l on 2040-cars

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Rising aluminum costs cut into Ford's profit

When Ford reports fourth-quarter results on Wednesday afternoon, it is expected to fret that rising metals costs have cut into profits, even as rivals say they have the problem under control. Aluminum prices have risen 20 percent in the last year and nearly 11 percent since Dec. 11. Steel prices have risen just over 9 percent in the last year. Ford uses more aluminum in its vehicles than its rivals. Aluminum is lighter but far more expensive than steel, closing at $2,229 per tonne on Tuesday. U.S. steel futures closed at $677 per ton (0.91 metric tonnes). Republican U.S. President Donald Trump's administration is weighing whether to impose tariffs on imported steel and aluminum, which could push prices even higher. Ford gave a disappointing earnings estimate for 2017 and 2018 last week, saying the higher costs for steel, aluminum and other metals, as well as currency volatility, could cost the company $1.6 billion in 2018. Ford shares took a dive after the announcement. Ford Chief Financial Officer Bob Shanks told analysts at a conference in Detroit last week that while the company benefited from low commodity prices in 2016, rising steel prices were now the main cause of higher costs, followed by aluminum. Shanks said the automaker at times relies on foreign currencies as a "natural hedge" for some commodities but those are now going in the opposite direction, so they are not working. A Ford spokesman added that the automaker also uses a mix of contracts, hedges and indexed buying. Industry analysts point to the spike in aluminum versus steel prices as a plausible reason for Ford's problems, especially since it uses far more of the expensive metal than other major automakers. "When you look at Ford in the context of the other automakers, aluminum drives a lot of their volume and I think that is the cause" of their rising costs, said Jeff Schuster, senior vice president of forecasting at auto consultancy LMC Automotive. Other major automakers say rising commodity costs are not much of a problem. At last week's Detroit auto show, Fiat Chrysler Automobiles NV's Chief Executive Officer Sergio Marchionne reiterated its earnings guidance for 2018 and held forth on a number of topics, but did not mention metals prices. General Motors Co gave a well-received profit outlook last week and did not mention the subject. "We view changes in raw material costs as something that is manageable," a GM spokesman said in an email.

Fiat boss Elkann being mentored by... Bill Ford?

Fiat Chairman John Elkann has been turning to an unusual source for advice on the car business. While speaking during an interview with The Detroit News, Elkann said he often asks Bill Ford Jr. for advice on how to proceed with the turnaround at Chrysler. "It's great to have the opportunity to share this with someone like Bill, who has experienced many things and gone through many things ... especially linked to Detroit." Elkann said.
As the Agnelli family heir, Elkann has inherited a long and fruitful friendship with the Ford family. While Giovanni Agnelli built his first Fiat four years before Henry Ford created his first vehicle, it was Ford that showed Agnelli the benefits of mass production and helped pave the way for what would become the Fiat empire.
Giovanni's grandson, Gianni, helped mentor Bill Ford when he was elected chairman of Ford Motor Company. Now, Ford is returning the favor by helping Elkann navigate the automotive industry's tumultuous waters.

Here's what the UAW will be angling for in next year's contract negotiations

The United Auto Workers union is about to enter a new round of negotiations with the Detroit Three automakers, and this time, the focus is on the end of the two-tier wage system. Introduced in 2007, the two-tier wage system was enacted to allow General Motors, Ford and Chrysler to categorize its hourly employees under two categories: Tier 1 for veteran employees with full rights and benefits, and Tier 2 for short-term or entry-level employees compensated under a different schedule. The idea was that the system would permit the automakers to invest more in their plants and hire new employees as part of their respective recovery plans without being saddled with all the costs associated with hiring full-time employees. Now that the automakers are (more or less) back on their proverbial feet, however, the UAW wants to see an end to the two-tier system, and will likely make that a center-point of its negotiations next year to replace the current arrangement that is scheduled to end in September 2015. Not all members of the UAW will necessarily be interested in ending the two-tier system, however. According to The Detroit News, some Tier 1 workers may be more interested in negotiating a raise in their hourly rate – something which they haven't received in almost a decade. Tier 2 workers, meanwhile, may be more motivated to keep the tiered system in place, as their arrangement includes provisions for profit-sharing payments that have seen the automakers pay out billions to so-called short-term employees in lump-sum payments. Reconciling the two competing demands from two categories of union members and presenting a united front in negotiations may prove the biggest challenge for the UAW's new president, Dennis Williams. And with the right to strike – something which was suspended during the last round of negotiations in 2011 – the union has a bigger bargaining chip in its pocket.