Ford-UAW Agreement Combines Job Security and Flexible Work Rules
Ford and the United Auto Workers agreed Thursday on a three-year contract that guarantees the jobs of most of Ford’s 104,000 UAW workers in return for the support of union leaders for more flexible work rules.
The contract, which must be approved by union members, also would boost wages, pensions and other benefits. Workers would get a modest 3% pay increase this year and 3% lump-sum bonuses in 1988 and 1989.
“We have a good agreement. Truly, we broke a lot of new ground on job security. The agreement fully meets the needs of Ford workers and UAW workers elsewhere,” said Stephen Yokich, a UAW vice president. Yokich announced the settlement in the absence of UAW President Owen Bieber, who was hospitalized for a stomach ailment.
Ford President Harold (Red) Poling, speaking to reporters at a festive joint news conference with UAW officials after an uninterrupted 28-hour bargaining session, said: “We think we can live with it quite well. I think Wall Street can, too.”
Under Thursday’s pact, Ford would set a guaranteed number of jobs for each plant. Layoffs would be prohibited, except on a temporary basis if an economic downturn combined with a slump in Ford sales.
The job protection package, which also includes a moratorium on plant closings, would be the first of its kind in the U.S. auto industry. The terms of the agreement would be in effect for the three-year life of the contract.
Ford’s contract agreement may be bad news for cross-town rival General Motors, where bargaining will resume in earnest after the Ford contract is ratified.
“This is going to guarantee a strike at GM unless one side caves in,” said Michael Luckey, an analyst for Shearson Lehman Bros. “It’s an absolute given that GM won’t buy a plant closing ban, and they would probably find the economics of the deal too costly.”
Yokich of the UAW said he believes that the UAW could win a similar contract at GM, but the world’s largest auto maker has already announced a series of plant closings and cutbacks that would not be allowed under an agreement like Ford’s.
The Ford agreement “marks a giant strike forward in our ongoing effort to secure the jobs of our members while making stable employment levels a routine part of doing business in this country,” Yokich and Bieber said in a statement.
The statement said the contract would “lock in current levels at all units in all locations and will prevent layoff for virtually any reason except carefully defined volume reductions linked to market conditions.”
The agreement now must be approved by the union’s 23-member executive board and its 200-worker Ford bargaining council and then ratified by the rank-and-file members. Voting is to begin within 10 days.
Peter Pestillo, the Ford vice president who oversaw company negotiators, said “the agreement proves we can work together.”
Pestillo had said when negotiations began that both sides could attain their goals.
Job security was the union’s No. 1 goal in auto talks this year, while Ford sought to retain a degree of flexibility. Under the contract, the national union leadership would be required to urge its locals to accept plant-level contracts reducing the number of job classifications and loosening work rules. Job classifications limit the types of jobs a worker can do, while work rules regulate how and when specific tasks are done.
Greater Leeway
Montgomery Securities auto analyst Ronald Glantz said it would be too early to say what the real cost of the new Ford contract will be because it is unclear what the company can achieve in additional productivity.
“Since Ford is using a lot of overtime, with higher productivity they can afford to go to only a little overtime,” Glantz said.
Under the contract, Ford would be required to recall laid-off workers in proportion to the amount its production increased after a slump. It also would have to pay a penalty into a worker retraining fund for each hour of overtime a UAW employee worked.
The number of guaranteed jobs could be reduced by one job for each two workers who left the payroll through attrition.
After an economic recovery, Ford would not be allowed to leave workers on layoff by failing to increase its U.S. production of parts or cars and instead buying those items from other American companies or foreign sources.
The union said the agreement to preserve at least the current number of UAW jobs at Ford would “act as a powerful incentive for Ford to maintain or increase production at its U.S. facilities, since the company will be obligated to maintain full payrolls . . . as long as their products are selling at a consistent or increasing rate.”
PACT HIGHLIGHTS
A 3% wage increase this year and 3% lump-sum bonus payments in 1988 and 1989.
A guaranteed number of jobs at each Ford plant, roughly at current levels, but to be reduced by attrition.
No layoffs except as agreed on if auto sales drop.
No plant closings and stronger restrictions on sending work overseas or to outside firms.
