For years, Ford Motor Company has enjoyed an amicable relationship with the United Auto Workers union, but that relationship may become strained as the number two automaker in the U.S. seeks to reduce labor costs.
Representatives for the automaker are meeting with union officials this week to discuss additional concessions on strike provisions, work rules and wages for new UAW employees.
In March of this year, Ford’s union workers agreed to revise their 2007 contract to include concessions aimed at helping the automaker reduce costs and avoid having to accept federal aid. The UAW’s local union officials now say that their membership is not interested in accepting further reductions.
Gary Walkowicz is a bargaining committee member for the United Autoworkers Local 600 union who represents workers at Ford’s truck plant in Dearborn, Michigan. Walkowicz says, “Once you open the door, it just doesn’t stop. They keep coming back for more.” Wlakowicz says he is opposed to offering any further concessions and is not surprised Ford has asked for more.
In comparison to concessions agreed to by the unions, Chrysler and GM hourly workers cut deeper than those agreed to by its Ford employees in order to prevent those companies from going under. Expedited restructuring proceedings kept GM and Chrysler from having to let thousands of UAW workers go and the union approved their revised contracts prior to their bankruptcy filings.
Ford’s CEO, Alan Mulally, says that its attempts to gain further concessions from the UAW is simply an attempt to reach parity with Detroit’s other automakers and says that Ford will “not be disadvantaged” in regard to labor costs.
Some UAW officials have said that their workers have expressed concern that Ford would seek further reductions in recent months.
Officials for Ford have declined to comment on the details of their meetings with the UAW bargaining committee but have stressed that its relationship with the union remains strong.
Marcey Evans, a spokesperson for the automaker, said, “There are numerous examples of the company and the union working together to find solutions and improve our competitiveness.” Evans went on to say, “We fully expect our constructive relationship with the UAW will continue into the future.”
The UAW vice president for Ford workers, Bob King, said, “Our members have done a tremendous amount to make Ford viable.” He would not comment on whether his membership is open to further concessions.
Adding to the frustration of UAW workers is the fact that Ford reported a $2.3 billion profit during the second quarter of this year due in part to its cost cutting efforts. In July, the automaker’s sales rose by 2.4%, and its Focus and Escape models were reportedly among the top sellers during the Cash for Clunkers program. Furthermore, Ford expects that August sales figures will be better than those during the same month last year.
Professor Gary Chaison, who teaches labor relations at Clark University in Worcester, Massachusetts, says, “Everything looks favorable for Ford. This means it’s difficult for them now to suddenly claim poverty.” He adds, “It can very easily strain their relationship with the UAW.”
In March of this year, 59% of the UAW’s production workers and 58% of its skilled trades workers approved modifications to their contracts with Ford; however, two of its local unions rejected the move.
The contract modifications eliminated cost-of-living raises and performance bonuses for 2009 and 2010. Also eliminated was the controversial jobs bank which paid laid off workers the majority of their normal pay even after unemployment benefits ran out. According to Ford, the concessions would create an annual cost reduction of $500 million. Ford estimated that half of the savings would result from cuts in bonuses and benefits with indirect savings coming from revisions to workers’ health benefits and reductions in the amounts paid to a UAW-managed trust for retired union members.
The UAW approved concessions in its contract with General Motors that are expected to save the automaker between $1.2 billion and $1.3 billion annually.
Typically, UAW contracts are designed in such a way that weaker companies are required to offer its members the same deals as stronger, more viable companies. Now Ford, which is in a stronger financial position than either GM or Chrysler is seeking the same concessions granted those weaker companies.
Gary Chaison says that Ford must convince the UAW that it needs the additional concessions in order to remain viable. He says that both Ford and the UAW must engage in what he calls a “delicate dance of mutual admiration” in order to salvage their long-standing relationship.
He says, “Ford has to make a case without pushing too hard, or appearing as if they’re trying to take advantage of the union and its members.” As for the UAW, he says, “Workers at Ford realize their company is in better shape and don’t want to ruin it by being inflexible. The UAW can’t be closed to the discussions, but it can be skeptical.”
He also said that Ford’s attempt to gain a second round of concessions this soon after receiving the first round is “unprecedented”. He says, “These are not normal talks. This is all new territory.” In the end, however, he is optimistic that a compromise will be reached. “I don’t think anyone wants a fight,” he says,”These are people that know at the end of the day they’re both going to be around.”