U.S.A.:Ford warranty fight brews
By Mark Truby / The Detroit News
DEARBORN -- Ford Motor Co. is facing a backlash from dealers and mechanics upset over planned cuts in reimbursements for warranty repairs.
Ford, which is in the midst of a corporatewide cost-cutting push, has told dealers it is reviewing the amount of time it should take mechanics at Ford, Lincoln and Mercury dealerships to complete specific repair jobs covered under warranty.
Ford separately told dealers that it would scale back customer service programs on its luxury Lincoln brand.
Under the broader warranty work review, Ford is developing and testing faster repair processes for specific repairs, which will allow the company to reimburse dealers for fewer labor hours. The changes are expected to be rolled out over the next year.
Ford is risking a repeat of an uproar caused in 1998 and 1999, the last time it overhauled the so-called warranty labor-time standards. The reductions infuriated dealers and mechanics who depend on revenue generated from warranty repairs.
"Dealers are not happy Ford is looking at labor times again," said Tom Murphy, owner of Northeast Lincoln Mercury in Philadelphia and chairman of the Lincoln Mercury dealer council. "It's a very contentious issue."
Such battles between major automakers and their dealer-service networks often take place during down times in the industry. Ford has experienced an especially contentious relationship with its dealers in recent years, in part because of the automaker's short-lived foray into retailing by buying dealerships outright.
Dealers contend the diminished warranty reimbursements will not only hurt their business but make it difficult to attract and keep competent automotive technicians.
Some angry Ford technicians are leading a push to unionize mechanics to fight warranty labor time changes and other issues.
"It's getting to the point where many of us don't want to do warranty work," said Mark Ward, a technician working at a Ford dealership in Eufaula, Okla. "It's not worth it."
Ward is a co-founder of the Web site flatratetech.com, which has become a sounding board for concerned car mechanics.
Ford spokesman Glenn Ray said the company is seeking to become more efficient but will listen to specific complaints.
"We believe our current labor rates are fair and were reached through validated research," Ray said.
The issue came to a head during meetings in Dearborn in mid-June between Ford officials, dealers and technicians. According to people in attendance, the meeting became heated when Ford outlined its plans for revised labor times.
Mechanics openly challenged Ford officials' contention, for example, that a Taurus sedan's steering rack could be replaced and realigned in 1.3 hours, rather than the four hours the automaker currently allows.
Ford officials said warranty reduction efforts were necessary to close the gap with the likes of Toyota Motor Co.p., which spends $300 less per car on warranty costs than Ford, according to meeting minutes obtained by The Detroit News.
The company "must reduce warranty cost to continue investing in the business," the minutes said.
Ford pays dealers about $70 an hour for warranty work. Dealers then pay mechanics a percentage of that fee based on the job and the mechanic's level of experience and training.
Dealers are particularly sensitive to changes to warranty payments because the improved quality of cars and trucks has led to a decline in repair work. Ford has said its warranty spending is down 20 percent this year, largely because of quality advances.
Garland, Texas, dealer Jerry Reynolds said another major revision of warranty labor rates could cause a severe backlash among dealers and technicians.
"The cuts they made in 1999 were very serious," he said. "If they do it again, I don't know what will happen, but it won't be good."
In a related cost-reduction effort, Ford is scaling back two customer service programs designed to improve owner loyalty at its luxury Lincoln brand.
According to an e-mail sent to dealers Friday, the Lincoln Commitment and Lincoln Complimentary Maintainence Program were significantly revised for the 2004 model year.
* Lincoln owners will receive complimentary oil changes, tire rotations and inspections for one year or 12,000 miles, down from three years, 36,000 miles. Parts such as wiper blades, spark plugs and engine belts will not be replaced.
n Emergency roadside assistance will be limited to four years and 50,000 miles. Through 2003, there had been no mileage limit.
n Emergency travel reimbursement, destination assistance and trip planning service have been eliminated from the program.
n The Lincoln Commitment package is no longer transferable to other owners.
Spokesman Todd Nissen said Lincoln's customer service program remains competitive with other luxury brands.
"It was a situation where we could still offer a pretty generous program and save money."
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....