UAW-Ford Pact Will Maintain the Status Quo : Labor: Tentative three-year contract carries modest wage hikes, no big changes in health care or job security.
The tentative labor contract reached late Wednesday between the United Auto Workers union and Ford Motor Co. maintains the status quo, with no major changes in health care coverage or job and income guarantees for workers.
The new three-year contract, reached after a 40-hour bargaining session, provides modest wage increases, increased pension benefits for retirees and lower initial pay for new hires.
It also continues full medical coverage for hourly workers and keeps in place generous job and income security provisions that provide nearly full pay for laid-off workers for the life of the contract.
“The UAW held firm on major principles and compromised a little on dollars and cents,” said Harley Shaiken, a visiting labor professor at UC Berkeley. “It amounts to an important victory for the UAW.”
The pact must be approved by the 200-member bargaining council before going to Ford’s 96,000 UAW members for ratification. The union will then try to hammer out similar contracts with Chrysler Corp. and General Motors Corp.
Some provisions could be difficult for GM to swallow, and the troubled auto maker may seek concessions. But some analysts feel the contract with Ford was made with an eye toward helping GM.
Details of the contract were not disclosed by UAW and Ford officials, but some specifics leaked out Thursday through local union representatives and labor experts.
Ford sought to force workers to pick up a portion of their health care costs through deductibles or co-payments, but the UAW resisted, saying workers would strike over that issue.
The company, which earned $1.35 billion in the first half of 1993 and has gained market share, decided not to force the issue. Rather, it is banking on relief from President Clinton’s planned health care reform package.
The Administration is proposing to shift the health care cost of early retirees of big companies to regional alliances. Such a program would greatly aid the auto makers, whose work forces are aging.
Ford also agreed to keep intact its job and income security fund. The $1.6-billion kitty provides laid-off workers with full pay for 36 weeks and 95% of base pay thereafter. It also limits layoffs during sales slumps.
Regarding wages, workers will receive a 3% increase the first year and lump-sum payments equal to 2% of annual wages in the second and third years. UAW workers at Ford now make an average of $17 an hour.
While holding fast on health care and job security, the union agreed to a lower pay scale for new employees. New hires will initially be paid 75% of full pay and reach parity in three years, sources said. New workers currently start at 85% of full pay and reach parity in 18 months.
But in a concession to the union, Ford agreed to provide new workers with full medical coverage after six months, instead of the current 18 months.
The compromise allows the company to lower its wage costs, particularly as it replaces retiring workers with younger ones, yet provides a way for the union to avoid a permanent two-tier wage system.
Still, some union members strongly oppose the provision. “I don’t like the lower pay scale,” said E.A. Bundorf, a Local 182 union representative at Ford’s Livonia, Mich., transmission plant. “I will vote against it.”
Pension benefits for workers with more than 30 years of service are being increased 17% to $2,100 a month, sources said. The increased payments are designed to encourage older workers to retire early. More than 20% of Ford’s work force could retire in the next three years, industry officials estimate.
David Garrity, an analyst with McDonald & Co., said the pension inducement could be difficult for Chrysler and GM to match. Chrysler’s pension fund has a shortfall of $3.35 billion, and GM’s shortfall could hit $19 billion by the end of the year.
But David Cole, executive director of the University of Michigan’s Office for the Study of Automotive Transportation, said the provision could help GM, which wants to reduce its 266,000 hourly work force by about 40,000 in the next several years.
“I think that is intended to help GM,” he said. “It will facilitate early retirements.”
Jack Hall, Ford’s chief negotiator, said Wednesday night that Ford expects its work force will be the same in 1996 as it is now. The statement was interpreted by some experts as an acknowledgment that Ford has agreed to replace any worker who quits or retires. But Ford apparently did not agree to additional hiring, as the union had hoped.
Terms of the Deal
The terms of the contract settlement between the UAW and Ford have not been disclosed, but sources said the tentative agreement includes these key elements:
* A continuation of full health care coverage to current workers. New workers receive full health care benefits within six months instead of the current 18 months.
* New hires will be paid 75% of full pay and reach full pay within three years. They now begin at 85% of full pay and reach parity in 18 months.
* Preservation of Ford’s job and income security fund that provides laid-off workers full pay for up to 36 weeks. After that, they are guaranteed 95% of take-home pay for the life of the contract.
* Workers will receive a 3% wage increase in the first year and lump-sum payments equal to 2% of annual wages in the second and third years.
* For workers retiring after 30 years, monthly pension payments increase 17% by the end of the three-year contract. Monthly payments that are now $1,800 will increase to $2,100 by 1996.
