Ford ramps up for the Taurus SHO

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Ford is getting ready to produce the 2010 Taurus SHO, and the engines will be built in the Cleveland area.

Ford Motor Co. will restart its Cleveland Engine Plant No. 1 in Brook Park this spring, putting its flagship engine into the 58-year-old facility.

“To be part of Ford’s future, we’re thrilled to death,” said Jan Allman, site manager for Ford’s campus in Brook Park.

Engine Plant No. 1, which was idled nearly two years ago, will get the engine that Ford has called a key to its future. However, for the next year or two at least, the engine will go into only a few specialty products. That means low volumes, so Ford won’t need a lot of people to produce it.

When Ford idled Engine Plant No. 1, it employed nearly 600 workers on two shifts. When the plant reopens in the spring, it will require only 250 workers on one shift.

The new SHO made its debut at the Chicago Auto Show.

The reborn SHO–the favorite of enthusiasts everywhere since it first was introduced on the first-generation Taurus–completes the new Taurus lineup with twin turbos, a tuned suspension, and some of the visual flair that made the original hotted-up Taurus a hit when it took its bow in 1989.

Over the course of ten years, Ford sold about 100,000 Taurus SHO sedans, most with a Yamaha-made V-6 engine, some with V-8s built by Yamaha. This time around, Ford’s brought the engine work in-house, with a twin-turbo edition of the 3.5-liter V-6 that’s taking a place in Ford products like the same-sized six over at Nissan. All that power shunts through all-wheel drive and a six-speed, paddle-shifted automatic.

With reasonable confidence, Ford says the new SHO should reignite interest in the big four-door. “The new Taurus SHO delivers on the authentic sleeper sedan formula but adds all-new luxury-appointments, convenience features and technologies to an unsurpassed balance of power and fuel economy,” said Mark Fields, Ford’s president of The Americas, in a release. “This new sport derivative answers enthusiasts’ calls for a premium Ford flagship sedan with even more attitude.”

While the 2010 Taurus carries a mid-size price tag of $25,995, the new Taurus SHO checks in at a BMW-like $37,995. How will that go over with Ford fans? We’ll find out this summer when the new SHO goes on sale.

This is a great move for Ford, as the new SHO looks great.

Will Tesla get a government loan?

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Will Tesla get its loan? It’s not clear at this point.

Tesla Motors said its long-awaited $450 million loan from the federal government could come as soon as this summer, a crucial factor in its plans to build an electric-car factory in California.

“I am excited to report that the Department of Energy informed Tesla last week that they expect to disburse funds … within four or five months,” Elon Musk, Tesla’s chief executive and chairman, wrote in a newsletter distributed to customers Wednesday.

Tesla, based in San Carlos, stopped short of saying its loan application had been approved. Indeed, an Energy Department spokeswoman said Wednesday that her agency “has made no final decisions for specific applications for the auto-loan program.”

Still, Tesla is optimistic the department will approve its request for money from the $25 billion loan program to retool U.S. factories to make more fuel-efficient cars and trucks, said Diarmuid O’Connell, the company’s director of corporate development. Tesla has asked for $350 million to retrofit a factory to assemble its Model S electric sedan and $100 million for its battery-supply business.

“We have a high degree of confidence,” O’Connell said. For one thing, he said, Tesla has asked for a small amount compared with the Detroit Three automakers, which have requested $5 billion or more each.

Of the 75 companies that requested funds under the program, only 26, including Tesla, were told that their applications were “substantially complete,” he said.

I’d like to see them get it. The technology is impessive, and Musk hasn’t been shy about putting his own money behind the venture. BusinessWeek explains that Tesla needs to convince the government that it has a viable strategy.

Eager to build a sedan, Musk is pinning his hopes on the U.S. Energy Dept. The DOE is offering two kinds of credit lines: one for companies working on alternative energy projects and another for carmakers developing green vehicles. Automakers may apply for both kinds of credit, which they can access as projects hit key milestones.

To qualify for DOE money, Musk needs to prove Tesla is viable. “We’ll be profitable in five months,” he says. He also needs to raise tens of millions of dollars in matching funds. In what some industry watchers deem an act of desperation, Musk aims to ask potential buyers of the new sedan to pay a big chunk of the $50,000 sticker price up front. Yet the car won’t be ready until 2011—and only if the government gives him credit. Musk acknowledges customers would put “their money at risk.” He also has been trying to get Roadster owners and buyers to fork over $12,000 for a future replacement battery—even though the one in their cars is supposed to last well into the next decade.

Tesla is making other changes to get money fast. The company has scrapped plans for a brand-new factory in San Jose, Calif., opting instead to look for an old, idle industrial site where it could build a factory to make Model S cars and batteries. Tesla needs government loans for both projects, and loan applications that intend to use existing facilities get preference from the DOE. So Tesla may get money faster that way, if it gets approved. The company says it is negotiating deals for some industrial property for both sites and may have news soon.

Companies like GM have the advantage of scale, but Tesla’s all-electric sedan could be a sensation.

Pontiac will be a “focused niche brand”

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The GM restructuring plan will kill off Saturn and demote Pontiac.

And on Tuesday, when General Motors asked the federal government for more bailout money, it also announced a reorganization plan that included demoting Pontiac to a “focused niche brand,” signaling that its lineup of vehicles would shrink and that it would no longer be a separate division.

To industry analysts and Pontiac’s longtime fans, the downgrade provides a case study of the product missteps that helped put G.M. in its precarious state, and a reminder of the dangers in straying from a successful formula.

“When you deviate too far from it, that’s when you run into trouble as a brand and a company,” said Jack R. Nerad, executive editorial director at Kelley Blue Book, whose 1968 Firebird made him feel “as cool as I could be.”

More than any other G.M. brand, Pontiac stood for performance, speed and sex appeal. Its crosstown rivals followed with similar muscle cars, giving Detroit bragging rights over the cars that Japanese automakers were selling based on quality and reliability.

Though still G.M.’s third-best-selling division, behind Chevrolet and GMC, Pontiac’s sales peaked in 1984, when it sold almost 850,000 vehicles, roughly four times as many as it sold last year.

G.M.’s chief executive, Rick Wagoner, said the company’s decision to concentrate primarily on Cadillac, Chevrolet, Buick and GMC left the company with a “comprehensive portfolio.”

By many accounts, Pontiac started to falter when G.M. pursued a cost-saving strategy of providing the same cars to different divisions.

No kidding. It’s stunning that GM needs an economic catastrophe to admit to obvious truths.

This is the best thing for GM, and for Pontiac. Now, they can focus on cool cars, and maybe even recapture some of the muscle car glory of the brand’s past.

Obama’s car guy

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The Washington Post has an interesting profile of the man appointed by Barack Obama to assist Treasury Secretary Geithner in overseeing the auto bailout.

Algoma Steel was in trouble in the early 1990s.

The company, which employed thousands of unionized workers in Sault Ste. Marie, just across the Canadian border from Michigan, was headed toward bankruptcy and needed a major restructuring to survive. Massive layoffs seemed inevitable.

An American whiz kid in his mid-30s — bright, profane and passionate — helped negotiate a deal that not only saved jobs, but broke new ground in Canadian labor circles. Ron Bloom told creditors that Algoma’s union workers were willing to take a nearly 20 percent pay cut to save the company. But they deserved something in return: an ownership stake.

In the end, that’s exactly what they got.

“Unions were usually deal takers; Ron helped make the union the deal maker in this case,” said Ken Delaney, who worked with Bloom on the deal and now works for the top steelworkers union official in Canada. “It took some courage, and it took some persuasiveness.”

Delaney said Bloom was a relentless advocate for the unions during the negotiations.

“He was brave and self-assured, and an excellent debater,” he said. “He’s extremely smart. He’s very persistent and persuasive. And he’s quite creative.”

Now 53, Bloom climbed into his weathered Ford Taurus at 4 a.m. yesterday and drove from Pittsburgh to Washington to begin a new job that will demand all of those qualities: Senior adviser in the Treasury Department for U.S. auto industry restructuring. He will serve as a sort of point man on a presidential task force assigned to help overhaul troubled domestic automakers as they face a March 31 deadline to complete plans for a turnaround.

Saturn may bite the dust

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The GM restructuring plan is now expected to be rather bold, and many are predicting that the Saturn brand will not survive.

“I haven’t heard about what is in General Motors’ plan in detail, but it looks like it will be more maximum than minimum. In other words, it will be quite aggressive, and I don’t know whether this will include plant closings or elimination of brands,” said David Cole, head of the Institute for Automotive Research in Ann Arbor, Mich.

Meanwhile, Bob Lutz, who is slated to retire as GM’s vice president of product development, told the Automotive News that Saturn likely would not survive the restructuring plan.

“My personal favorite would be to see Saturn survive and prosper. But frankly, the reality is that that is probably not going to be the outcome,” Mr. Lutz said. Neither he, nor other GM officials could be reached for comment on Saturn’s future.

“We spent a huge bundle of money in giving Saturn an absolutely no-excuses product lineup, top to bottom. They had a better and fresher lineup than any GM division, and the sales just never materialized. So we have to act on that. It’s our duty,” Mr. Lutz told Automotive News.

Working against the idea of axing Saturn is the enormous amount of money that would have to be spent to settle with dealers and the potential lawsuits from them that would probably follow. That happened with Oldsmobile.

Rob Cochran of No. 1 Cochran in Monroeville and Robinson said he held out hope that Saturn would continue as a brand.

“I know that Saturn is … exploring a lot of options. The dealers met last month in New Orleans and there were three or four options on the table,” Mr. Cochran said. “We are waiting to see what those alternatives are.”

He added, “Mr. Lutz is famous — or depending on your viewpoint, infamous — for just winging it. He’s a great product person, but a challenge from a PR standpoint.”

Saab is expected to survive, as the Swedish government will likely invest billions to make sure Saab and Volvo remain viable, though details are not yet clear.

GM and UAW negotiations revolve around retiree health care trust

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This should be a pretty eventful week in the auto industry.

The terms of the federal loans set “targets” for concessions, largely from debt-holders and the United Auto Workers union, but concession talks have made little progress with just a couple of days left before the initial deadline.

Negotiations between GM and the UAW broke off Friday night but resumed Sunday, still focusing on exchanging the company’s cash payments into a union-run retiree health care trust for GM stock, according to a person briefed on the talks who didn’t want to be identified because the bargaining is private.

GM and UAW officials declined comment.

GM and Chrysler do not need to have everything nailed down for Tuesday’s progress reports, but the companies are expected to detail concessions along with plant closures, the potential elimination of brands and thousands of job cuts.

After Tuesday there will be several weeks of intense negotiations ahead of a March 31 deadline for the final versions of the plans.

Back to the future

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For years, the Big Three automakers fought efforts in Congress to increase mileage standards. Now we’re all paying the price.

Given the gas price shock last summer and the current economic crisis, Ford is rediscovering some old techniques to help them improve gas mileage in its vehicles.

As fuel-economy standards get tougher, auto companies are peering into a future where next-generation electric vehicles and advanced hybrids beckon. But these days, Ford Motor executives have one eye on the future and one on the past. Ford is dusting off a host of old ideas for boosting gas mileage and slashing emissions. Some of these concepts were dreamed up decades ago, deployed in lots of small European cars, and vigorously promoted by environmentalists. But in Detroit, the technology has mostly sat on the shelf.

Not anymore. Ford now emphasizes fuel economy across its whole lineup. And for its 2011 Explorer the company is making prominent use of such “retro” green technology as lighter-weight steel body parts and “direct injection” engine technology. This technique, which dates to the 1940s, feeds gas and air straight into the engine cylinder instead of premixing it, resulting in a more efficient fuel burn. Together, the technologies could allow the new Explorer to reach highway fuel economy of 30 miles per gallon, upstaging Toyota’s Highlander hybrid, which gets 25 mpg. “There is a lot we can do to get meaningful fuel-economy improvements without going all the way into electrics,” says Ford’s global product development chief, Derrick Kuzak.

It’s about time.

Lithium-ion car batteries

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With the potential emergence of plug-in hybrids and electric cars, many expect them to be powered by lithium-ion cells, and it will be interesting to see if American producers can compete with Asian companies.

Should Uncle Sam provide billions in loans and grants to a promising but unproven business? Or should the government wait for the market to sort things out before it backs a U.S. company? The risk is that by then another major industry could go the way of memory chips, digital displays, the first solar panels, and the original lithium-ion batteries used in notebook PCs and cell phones. American scientists, funded by federal dollars, were at the forefront of each of those. Yet the industries—and the high-paying manufacturing jobs that go with them—quickly ended up in Asia. U.S. labor costs and taxes drove many operations abroad, but often industries fled simply because Asian governments, banks, and companies were more willing than Americans to risk big capital investments.

This time federal help could be on the way. Battery makers are expected to get some of the $25 billion set aside last year under Washington’s Advanced Technology Vehicle Manufacturing Program to speed the commercialization of green cars. EnerDel, a subsidiary of Ener1, has applied for a loan to build a plant capable of making 600,000 batteries a year. Rival A123 of Watertown, Mass., wants $1.8 billion to build a car-battery factory in Michigan. Under the $790 billion stimulus package under debate in Congress, U.S. lithium-ion makers also could compete for $2 billion in grants to fund research and development and manufacturing.

The Obama administration is determined to assist the development of next-generation cars in the United States, and Obama has said he wants to see them built here. The new stimulus package and the programs referred to above will be just the beginning. We can expect significant government support as many view plug-in vehicles and electric cars as critical to our future economic security. It lessens our dependence on foreign oil and can help to save domestic manufacturing.

Hyundai gets agressive in the U.S.

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Hyundai has begun a major marketing push in the United States with increased sales and the weakening Korean won.

U.S. car sales plunged to a 27-year low in January, dragging down Detroit’s Shrunken Three and even mighty Toyota Motor (TM). But one automaker has bucked the trend: Hyundai Motor. The Korean company, whose name was once synonymous with cheap, logged a 14% sales gain in what was a dismal month for almost every other carmaker.

It’s too soon to say whether that marks the start of a trend that could see Hyundai emerge from the shadow of its larger Japanese rivals, Toyota and Honda Motor (HMC). For one thing, the jump owes much to Hyundai’s 22% drop in sales in January 2008. And the company has piled on the discounts. Incentives on its Sonata sedan, Santa Fe SUV, and other models average $2,611 per vehicle—about triple those of a year ago. Faced with bloated inventory at its single U.S. factory in Montgomery, Ala., Hyundai has scaled back production there and is unloading cars on rental-car agencies: Nearly 30% of the 24,500 vehicles it sold in January went to such fleet buyers at virtually no profit.

Hyundai can afford to sell its cars on the cheap, at least for a while. Its balance sheet is far healthier than those of its Detroit peers. And it’s getting a big lift from the weak won. The Korean currency has dropped by nearly a third against the dollar in the past year, so Hyundai pockets more cash from each car it sells in the U.S. Toyota and Honda, on the other hand, are seeing their earnings wiped out by a yen that is hovering at a 13-year high. Brokerage Korea Investment & Securities figures more than half of Hyundai’s projected $1.5 billion profit in 2009 will come from the favorable exchange rate. “The currency swing has been a godsend for Hyundai,” says Park Kyung Min, chief executive of Seoul fund manager Hangaram Investment Management.

As the other auto companies have reigned in advertising, Hyundai is devoting ore resources to marketing, evn buying ads during the Super Bowl and the Academy Awards.

GM will threaten bankruptcy if it doesn’t get more aid

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The auto bailout helped to keep GM and Chrysler on life support, but GM will make it clear in it’s plan to be filed this week with the government that more money will be needed in order to avert bankruptcy.

General Motors Corp. will offer the government the choice of giving it billions more in bailout money or seeing it file for bankruptcy when it presents a restructuring plan next week, according to a report published Saturday.

The online edition of The Wall Street Journal, citing unnamed sources, said the competing choices present a dilemma for the Obama administration, which may fear seeing the industrial icon carmaker fall into bankruptcy and cut more jobs if it’s refused more aid.

The government has already committed $13.4 billion to GM as part of a federally-funded bailout. The automaker is expected to include its call for more funds in a restructuring plan it’s required to submit to the Treasury Department by Tuesday, though the company isn’t expected to include a dollar amount, according to the Wall Street Journal report.

However, Treasury Department officials believe GM needs at least $5 billion more in loans to keep operating beyond the first quarter, according to the report.

The key will be the plan laid out by GM. Will it have real concessions from bondholders and the union?

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