Ford CEO Jim Farley appeared in a CNBC interview on September 15, 2023 on the UAW strike and its impact on makers and workers. It’s a master class in management mis-direction and shoddy interviewing on the part of the "press." Here's a link to the interview at 2:55.
THE QUESTION: Quickly put in some perspective... The offer that they have, that they’re demanding (there’s that word...), relative to where you are right now, how much damage would that do the bottom line if you were to say, sure, we’ll give you forty percent?
THE ANSWER: If we signed up for the UAW’s request, instead of making money and distributing $75,000 in profit sharing the last ten years (is that $75,000 PER YEAR or $7,500 each year?), we would have lost $15 billion dollars and gone bankrupt by now. The average pay would be nearly $300,000 dollars fully fringed for a 4-day work week. (Per employee?) Per union worker. Our average tenured teacher makes $66,000 a year. Our military, our firemen make mid fifty thousand. This is four, five, SIX times what they make. There’s no way we can be sustainable as a company...
Okay, STOP.
Do you see what he did?
The QUESTION was, from your CURRENT financial position looking FORWARD, what impact will a forty percent wage increase have on the company?
The ANSWER went back to the point of the original concessions after the 2008 meltdown and exrapolated TODAY’s wage plan atop Ford’s position over a DECADE ago. “THEN-Ford” absolutely couldn’t handle wage hikes of that degree, WHICH IS WHY THE UNION DIDN’T GET THEM. That’s why SENIOR workers have eaten a lower wage hike regime for 10+ years. That’s why ENTRY workers have been completely screwed by Ford and their senior union brethren by hiring into a wage structure that tops out at FIFTY PERCENT of the senior scale, putting them behind for their earning lifetime.
“NOW-Ford” is in a better financial position and GOING FORWARD, should be able to afford to correct the pay gap injected into wage scales years ago and correct for the 36 months of drastically higher inflation that shrunk those already-atrophied wages even more over the COVID meltdown and recovery.
Note the additional management jujitsu Farley subliminally snuck into the conversation about auto worker wages versus other historically underpaid workers – teachers, military, firemen… Given those vital functions are being so completely screwed on wages, it would be unfair to pay auto workers more… That’s the subliminal point he’s making. That’s the subliminal point nearly all executives make. There are so many classes of workers exploited for low wages, it would be “unfair” to correct them one group at a time cuz one group would get ahead of another. That’s not an argument for keeping the group currently negotiating down, that’s an argument for raising them all up. He even had the nerve to cite pay multiples between these other professions and auto workers. Do you really want to argue the pay inequity multiple angle, when CEOs are making 200x to 300x times average workers?
And his figure of $75,000 in profit sharing over the last ten years? That’s cumulative. Here are the numbers for the past few years:
2018 – $7500
2019 – $7600
2020 – $6600
2021 – $3625
2022 – $7377
2023 – $9176
For a worker with 2080 hours of compensation per year, these profit sharing checks at Ford are worth about $4.11/hour in a good year. (As an alternate data point, GM’s profit share paid in 2023 was $12,750.)
Farley slipped another significant bit of mathematical slight of hand into the interview as well.
While attempting to stoke resentment of auto workers via comparisons to wages of teachers, firemen and military types, Farley raised the prospect of auto workers earning up to $300,000 per year. Whaaaaaa?
Any discussion dropping in numbers like that is inherently dishonest. Let’s do some math...
The top union wage rate at Ford is $33/hour. $33/hour over a 40 hour week and 52 weeks a year only equates to $68,640. Ford is stating top tier workers could earn up to $98,000 under ITS proposal. That obviously includes the negotiated profit sharing payment and the imputed value of healthcare benefits. CEO Farley is throwing out references about auto workers making up to $300,000. This is a bogus, rigged discussion in a hall of fun-house mirrors. Apples and oranges are being discussed.
When the rest of us have conversations about careers and SALARIES, we all mentally benchmark any salary figure against a typical 40 hour week. If I make $120,000 per year and you make $89,000, we both come away with a relatively accurate first impression that I am being compensated at a higher rate than you. If one of the jobs includes huge management bonuses or commissions, those factors get folded in as well. If one job is hourly and one is "management" and management might be expected to work far beyond 40 hours in exchange for those bonuses, that also gets referenced in the discussion.
When a automotive executive is negotiating a new contract atop an existing contract that caps out at $33/hour and references HOURLY workers making $300,000 per year, he’s not talking about a worker working 40 hours a week. He’s talking about a worker making $68,640 in regular wages and the balance ($231,360) from profit sharing and overtime. We know profit sharing typically comes in around $7500 per Ford’s own numbers. Profit sharing is solely based on company profits, not hours worked. That means that employee is earning $223,860 from overtime. That’s $223,860 / 33 / 2 = 3391 extra hours. That’s a total of 5471 hours or 105 hours/week… EVERY WEEK OF THE YEAR.
That’s a worst-case order of magnitude estimate but it illustrates the level of exploitation involved in making the dollar amounts executives throw out in these conversations. That’s a huge impact on the quality of life of the worker, both at the workplace and in their homelife, which at that point is nearly non-existant. That’s not an apples and apples comparison to make.
And that’s another sign of exploitation on the part of automakers. Working overtime a few weeks throughout the year is one thing. Working overtime nearly EVERY week because paying time and a half or double-time for an extra twenty hours a week is cheaper than hiring more workers has been a core part of the business model. Less training expense, lower healthcare costs.... All of those savings go straight to the company's bottom line. But having someone work even 50-60 hours nearly EVERY week to make up for the fact they are starting below $17.00/hour or have worked for 20 years and are only making $33/hour but need more to keep up is not equitable.
The "journalist" Phil Lebeau conducting this "interview" is really a glorified stenographer / cheerleader. This type of interview doesn’t help CNBC’s supposed audience of investors. It’s just an outsourced public relations event disguised as a newscast with as much integrity as PR Newswire.
WTH
