Ford Cuts Back on Warranty Repairs

[Stephen]

Ford repair pay angers mechanics
They say cutbacks for warranty work may hurt consumers

Less time to make repairs
Ford Motor Co. has rankled dealers and mechanics by cutting the number of labor hours it reimburses dealerships for certain warranty repairs. Here is a partial list of the changes:
Repair Labor hours reimbursed

(Vehicle) Previously Now
Transmission replacement 7.0 5.0
(Taurus 3.0 engine)
Instrument Panel replacement 3.7 2.2
(Taurus)
Engine replacement 8.6 6.9
(Lincoln Navigator)
Engine replacement 10.0 6.0
(Mercury Cougar)
Timing chain replacement 6.4 4.7
Transmission replacement 6.7 3.2
(Ford Windstar)
Water pump replacement 3.2 0.9
(Mercury Mystique)


Source: Automotive technicians
By Mark Truby / The Detroit News

DEARBORN -- Ford Motor Co. is facing a backlash from dealers and mechanics upset over reductions in reimbursements for warranty repairs.
Mechanics nationwide, communicating mainly over the Internet, are considering staging a job walkoff or going to court to fight the cutbacks by Ford.
The controversy threatens to aggravate already strained relations between the Dearborn-based company and its dealers. The diminished reimbursements, dealers contend, are cutting into profits and making it difficult to attract and keep competent automotive technicians.
"It's a slap in our face," said Chris Peters, a transmission specialist at Fairlane Ford in Dearborn. "Our paychecks can be dramatically reduced. It's the kind of thing that could make a lot of guys want to leave."
Like its competitors, Ford is aggressively attempting to reduce warranty costs. Such savings ultimately could be passed on to consumers in terms of lower new car prices. But dealers and mechanics warn the cutbacks could result in hastily done and shoddy repairs.
The service bay dispute is comparable to the controversy over managed health care in which insurance companies reimburse doctors and hospitals a flat rate for prescribed medical procedures. In some cases, the insurers refuse to pay for certain treatments.
Similarly, Ford two years ago initiated a comprehensive review of the amount of time a typical mechanic should take to complete specific repair jobs. Factoring the use of power tools and diagnostic equipment, Ford determined that it had been paying for excessive labor time on hundreds of jobs -- from transmission repairs to engine replacements.
"We know there is going to be consternation with this," said Frank Ligone, a Ford technical operations manager who helps develop the warranty service times. "The question is: Are the times accurate and do they have integrity? We think they do. If we say it can be done in an hour, it should be able to be done in an hour."
Ligone also noted that Ford reviews the time alloted for any job if five or more mechanics appeal.
Ford and most other automakers pay dealerships between $60 and $70 per hour for warranty repairs. Dealers then pay mechanics a percentage of that fee based on the job and the mechanic's level of experience and training.
Warranty repairs are a huge expense for automakers. About 35 percent of all repairs made at dealerships across the country are covered by manufacturer's warranties. Those repairs cost automakers about $12 billion a year, estimates Joe Grant, president of J. & L. Warranty Pros of Auburn, Mich., which helps auto dealerships collect warranty reimbursements.
And nearly half of all dealer profits come from their service and parts operations.
Less money in paycheck
Mechanics contend that although some of new times are fair, others are unrealistic. And the net effect is less money in their paycheck at a time when the auto industry is making record profits.
"Qualified technicians used to be able to meet or even beat the times after doing the repair several times and figuring out a better way," said Jeremy Sharples, a computer and electronics technician for a Ford dealership in New London, Conn. "Now the technician has no hope of even breaking even. It's no fun working 40 or 50 hours and producing 30."
Ford, for example, reduced the amount of labor time it pays for the removal and reinstallation of a Lincoln Navigator engine from 8.6 hours to 6.9. This means Ford pays the dealership about $110 less for the repair. Typically, the reduction is absorbed fairly evenly between the dealership and the mechanic.
Mechanics and dealers acknowledge that some repair jobs could be completed in less than the original times alloted by Ford. On other occasions, they say, it takes two hours to diagnose a problem that is slotted as a 30-minute repair.
"There has always been a fudge factor," said Russ Milne, owner of Russ Milne Ford in Macomb Township. "They are used to making $40 and they are making $30. Ford says they were overpaid; they don't think so. But whether they were overpaid or not they are still losing 10 bucks. Given the upswing in the economy it's pretty discouraging."
Mechanics will leave
With Ford continually reducing allowed repair times in recent months, mechanics have been discussing the possibility of a nationwide work stoppage. Much of communication takes place on the Internet, where sites launched by Ford technicians such as flatratetech.com have become electronic meeting halls.
"A lot of the people coming in now are in favor of a walkout, but I don't think it's a good idea," said Sharples, the mechanic in New London, Conn. "We could end up hurting ourselves. We really need Ford to understand this is hurting them, too."
A more likely scenario, say dealers and mechanics, is that more and more mechanics will leave to work at other dealerships and independent garages or leave the field altogether.
Mechanics have been in short supply for years. The modern mechanic is far from the popular stereotype of grease monkeys with black fingernails and oily rags dangling from their back pockets.
Motor vehicles have become extraordinarily sophisticated machines that rely on complex electronic systems to run properly. A mechanic must be grounded in math and computer science and undergo near-constant training to keep in step with the industry. A highly trained mechanic can make between $50,000 and $70,000. Even so, thousands are leaving the auto repair field every year.
The U.S. Bureau of Labor Statistics estimates nationwide a shortage of 60,000 mechanics.
Viewed against that backdrop, Ford's decision to reduce warranty payouts could drive away more mechanics, according to some industry watchers.
"They're going to be cutting their own throats because the dealers won't be able to hire qualified technicians," said Brad Summers, who owns Summers Dealer Services in Grayling, Mich., which negotiates warranty reimbursements for dealers. "It's going to be a very tight labor market in the near future."
Incentives may not work
Ford's national dealer council has held discussions with the company about the warranty changes and their potential effect on attracting and retaining good mechanics, said Jerry Reynolds, chairman of the dealer council and owner of Prestige Ford in Garland, Texas.
"It's a very big deal. We are very concerned about (it) because it's so difficult to find good techs. And this could make matters worse."
Ford and the dealer council have been discussing creating an incentive program that would reward the best technicians with bonuses, Reynolds said.
Ford is in the process of implementing a program called Blue Oval Certified that is designed to reward dealerships with high customer satisfaction rates. One goal of the program is to improve the overall performance of dealer service centers.
Mechanics claim the cutbacks will undercut these efforts.
"If they really wanted to improve customer care, they wouldn't drive the most qualified technicians out of the business," said Sharples, the mechanic from New London, Conn. "Ford is killing themselves by doing this because if you have pulse and a wrench these days, you get hired. That's not something that someone who spent $40,000 on a vehicles particularly wants to hear."

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What do we all think about this? I think its just another example of Ford cutting costs in the wrong places, and putting customer service on the back burner again.

 

[Char]

I do thing it is ridiculous, especially since you can't get decent service now! However, I sure wish I made that kind of money!!!!!!!!!!!!!!! We'll pay people more money to fix our cars than we'll pay people to educate our children.

 

[Rick]

The best way to reduce warranty costs is to build a quality vehicle in the first place. New vehicles shouldn't need their transmissions repaired or the instrument panels replaced.

 

[Stephen]

Char, Thats pretty sad isn't it?

Rick, I agree. Doesn't look like Ford sees it that way though. They'd rather cut back on how professionally those problems are fixed. Classic Ford.

 

[mattadams]

It is kind of embarassing to be watching the news constantly and see what Ford vehicles are being recalled for THIS time... it presents either two options, either Ford is making lower quality vehicles to start with, or its the same quality, the other manufacturors either aren't recalling their products or the recalls aren't on the news constantly. As I recall if you look at the list of TSB's for recall work on the 97 F-150, there were several hundred items that you'd think FOrd just didn't test, INCLUDING lug nuts that had the wrong coating and were falling off. Lug nuts ARENT rocket science here, they've been making them since they've been making cars. Granted some of the TSB's were for trivial repairs, but some of them youd think theyd test and so forth. I had my 98 (only vehicle I've ever had that had a dealer warranty) into the dealer about 4 times before I sold it and bought the explorer, and while I've heard of warranty issues with other manufacturors, usually its not the lemon type that a few people have received, where their new car spends more time at the Ford dealership then in their driveway. Not a good signal to send. SOme new vehicles, ford spends more fixing stuff then they probably got from the original cost of the vehicle, and then they often times have to replace them after a certain amount of repairs due to the lemon law.

 

[The Godfather]

Well I'm kind of split.

I know that most repairs involve the mechanic drinking pop, smoking a cig, talking, all billed to the customer. It took the dealer 3 hours to replace the weather stripping on our Taurus. They took the panel off and everything. But I know I could have done it in about an hour. 3.2 hours for a water pump? Give me a break. I'm no mechanic but I think I could do it in 2.

I think they should cut back a bit but not as much. .9 hours for a water pump is kind of close. You do want to give the mechanic time to do a good job and check everything. I also see this as one more way for Ford to cut costs and fill they're pockets. They say they'll cut prices? Since when have you ever seen a company lower prices on a car. They seem to have a $1000 increase every year. $27,000 for an Explorer is waaaaaaay too much. The new ones (sorry for anybody who bought one) I think are junk. And as stated before, why can't a company just build a quality vehicle to begin with. Don't those morons know that they'd save money in the long run by spending just a little more on parts?

BTW I'm selling my Ford stock tomorrow because I'm really POed on the way this company is doing business. I hope someone from Ford reads this, I'd rather drive a JEEP than a new Ford.

 

[Stephen]

Its like I've said many times, I like Ford vehicles, but I hate Ford as a company, and hate doing business with them. It has to be one of the worst companies in the industry when it comes to putting the customer first.

 

[Peter Weber]

I'm in agreement with Godfather. Most of the time that is allowed for repairs (warranty work or time allowed for repairs based on the shop manual rate) has quite a bit of padding. This allows a good mechanic to make a few extra bucks. He gets paid the time specified in the shop manual. The shop of course charges the customer (or the manufacturer if it's warranty work) and has 10 billable hours in an 8 hour day (kind of like lawyers ).
A couple weeks ago I had the driver side rearview mirror replaced on my BMW. I had an appointment so I planned dropping of the car and waiting for it. How long can it take to replace a mirror? I thought a half hour should do it and that much again to do the paper work and get the car washed. Since it's 20 miles to the dealer, I figured it's not worthwhile to get a ride back home and probably just turn around to go back to pick the car.
I thought I'll just kill an hour or so checking out the new X5 (BMW'S SUV) and maybe an M5 that had come in and go next door to check out the latest Porsche Boxter S.
Well, the service adviser tells me the repair is listed at 1.7 hours, so it'll be at least 2 hours. I figured, what the heck, I'm in an auto mall that sells 42 different makes (supposedly the largest group of dealers in the world), I can kill 2 hours.
About 1 1/4 hours later when I came out of the showroom, the service adviser tells me my car is ready. Good news, right? Well, the bill showed labor of 1.7 hours. Since it was under warranty, I wasn't charged, but I bet you BMW was charged 1.7 hours labor for at the most an hour of work performed.
My wife used to work for a dealership (no names will be mentioned) and has 1st person knowledge of things that you guys don't want to know (thank God for the statue of limitions).

 

[Stephen]

Oh I know the kind of BS they pull. I had a flat on my old Cadillac STS once, I called roadside to come change it for me. I was sitting in the car while the guy worked on the right front tire. He came to the window and asked me if I would be following him to the Cadillac dealer (the next exit off the beltway) or whether I would be waiting to have the tire replaced. I told him that I might as well just put it in now, get a rental, and pick it up the next day. He went back to his work then poof, the A/C goes out. Right on cue he popped up and I rolled the window down. He asks if my A/C just went out. I said, well what do you know, it did. He suggested that I have that taken care of while my Cadillac was in the shop. Wow, what a great idea, and so convenient the A/C compressor goes bad (BTW, the compressor was directly atop the right front wheel well, the one with the flat) When I picked my car up the next day on the bill was some $600 of warranty work, to be billed to Cadillac. I'll bet you anything he disabled that compressor when he realized it wouldn't inconvenience me, and billed some free work for his dealer. It went out 30 seconds after he asked what my plans were. Interesting...

 

[TJ]

I agree with Rick. The best way to reduce warranty costs is to have less warranty repairs. Why can't Ford match Toyota or Honda with respect to frequency of repair statistics?

 

[Stephen]

There's no reason why they can't. If Honda or Toyota can build a car for $20,000 that will run forever, look good forever with moderate care, and have more expensive plastics inside than the most expensive Lincoln, Ford can. They have access to ALL the things Japanese makers do. There is no reason why my Lexus should feel so superior to a Lincoln or Cadillac, when the top Cadillac is almost as expensive. Problem is, no American automaker has bumped up their material quality. You drive my Explorer, and then go drive an identical 2000 Limited, mine feels more expensive and more solid. The plastic that makes up the dashboard is cheaper, the beautiful (one of the best materials on the market, anywhere) black soft plastic that covers my center stack and console that feels so expensive is now hard, cheap black plastic on the Explorer. On the Limited its now god-awful fake wood trim. They didn't even care enough to make it shiny! Is this moving forward Ford Motor Company? No way in hell. Problem is, all the American companies see is dollar signs. I drove a new Ford Focus a while back, fun, well engineered car. You know what ruined it? The interior was pure garbage. Come on Ford, do you expect anyone to take you seriously? We need to make America the automotive center of the world again. I may sound like a hypocrit for turning my back, and going with Lexus for my business car, but I was just fed up. Here I was spending $50,000 for Cadillacs, when a $20,000 Corolla is built better. Its sad.

 

[The Godfather]

I agree with you about the caddies. I used to work at a detail shop and drove them frequently. They in no way warrant a $50,000 price tag. The body panels dont even line up. I'd pay $30,000 at the most, even then a BMW 3 series starts at $26k. Pretty good considering a Taurus costs $24k. I drove an Linc LS6 and they can in no way can compete with BMW and Benz. American cars, especially GM can not compete with the imports. The Contour and Gen 3 Taurus are pretty solid cars. Counting mine, my familly has 6 Gen 3 Tauruses..or would it be Tauri. The Gen 4 Taurus feels cheaper compaired to the older one. I really hope they can turn things around or a lot of people are going to be losing their jobs.

 

[Stephen]

I leased a 95 Cadillac STS for three years before the Lexus. It was a very poorly designed car, no map pockets, cupholders broke within 10,000 miles, factory moonroof leaked. When I turned it in after 60,000 miles, the leather had cracked, the leather on the gearshift knob had worn off! This car had EXCELLENT care taken of it too. It creaked and rattled, awful. My Lexus now has 53,000 miles on it. it rides, looks, and feels like new. Not one rattle, not one worn looking interior part. I'm VERY VERY VERY impressed. I drove a Lincoln LS, I agree with you too. For one, there's the fake wood, and there's plenty.