The United Auto Workers union has rejected Ford Motor Company’s proposed contract changes that would have cut their labor costs. Ford hasn’t given up hope, and will continue to look for ways to change the union work rules and plans to build certain models in the union plants.
If Ford cannot find ways to cut expenses, they may consider relocating some production facilities to lower-cost overseas markets. In the meantime, the automaker will continue to negotiate with the union in an attempt to remain competitive in the United States.
The UAW has already conceded to similar changes for automakers General Motors Co. and Chrysler Group LLC, which were approved by the union’s leadership. The concessions, however, were voted down by regular union members and were not ratified.
Even though Ford has been doing relatively well, it and other automakers in the U.S. are struggling in the current world economic climate.
Ford had asked for the same contract from the unions as GM and Chrysler were able to negotiate; it included a ban on strikes for six years and some other work rules that would have significantly reduced the automaker’s labor costs. The setback was even more surprising considering that the UAW usually gives the Big Three automakers similar terms. Some UAW leaders say that a no-strike clause is too great a concession to give the auto giant which announced a $1.3 profit during the third quarter of this year.
Harley Shaiken, a professor at UC Berkeley who specializing in labor issues, says, “This was a tough sell from the beginning. Ford was caught in between doing better and advertising that, and the UAW already giving Ford concessions.”
There may be repercussions due to the union’s failure to agree to the concessions. Ford’s U.S. production of the Transit Connect commercial van (which is currently being imported from Turkey) may be postponed as a result. Ford’s ability to hire full-time employees in the U.S. could also be affected. The contract would have allowed for the switching over of some temporary workers to full-time status, with a freeze in pay. They would be hired under the relatively new two-tier wage system approved in 2007, but they would have much better job security due to their full-time status.
Ford says it will continue its union negotiations under the leadership of Joe Hinrichs, VP for global manufacturing and labor affairs.
It was reported last Saturday that the Canadian Auto Workers ratified a similar but separate labor deal with Ford that greatly reduced the automaker’s cut labor costs and is patterned along the same guidelines as previous agreements reached with Chrysler and GM.