Ford’s UAW Workers Refuse to Accept Concessions

By Chris Haak

11.01.2009

As part of their scramble to avoid bankruptcy earlier this year, both GM and Chrysler were able to wring additional concessions from the UAW beyond what the union had agreed to at the time (in April for Chrysler and in May for GM).  Although the union concessions obviously didn’t stave off bankruptcy for either company, they definitely smoothed both companies’ respective paths through Chapter 11.

The UAW allowed Chrysler and GM to restructure the way their VEBA healthcare trusts were funded so that less of the funding requirement would be in cash and more in equity.  It also allowed the companies to change some job classifications and work rules so that management would have flexibility to assign workers to wherever they were needed in a plant, rather than the specific job classifications that the UAW has historically been fond of.  The agreement also features a wage freeze for entry-level workers.  Finally, GM and Chrysler secured a limited no-strike pledge from the union over the duration of the agreement.  The no-strike pledge is significant – considering that a strike is the biggest leverage that a union can wield in negotiations with management – but is also limited in scope.  It only applies to disagreements over wage and benefit increases, and sends those matters to binding arbitration instead.

So now, Ford has seen itself as disadvantaged by the fact that its crosstown rivals now have gotten a better deal from the union than it has, and has come to the UAW asking for a similar arrangement.  In return for all of the goodies that the UAW gave to GM and Chrysler, Ford is offering a $1,000 signing bonus, plus product commitments that will “add or save” 7,000 jobs.

It’s apparently the no-strike language that is bothering Ford workers the most in this situation.  According to some UAW members that spoke with the Detroit Free Press, Ford has never asked for a no-strike clause before.  It’s perfectly reasonable to me that they would, however, since its competitors were able to get one.  It seems that Ford is a victim of its own [relative] success; the company not only successfully has dodged Chapter 11 (at least so far) as well as a US government bailout, but has also been able to paint itself in a different light than GM and Chrysler have been able to.  Ford has better quality scores than GM and Chrysler, no bailout stigma, a m Chief media-friendly Chief Executive, and a bevy of new products on the way in the next year or two.

In spite of having a tentative agreement in place with UAW leadership, when the agreement was put forth to the union’s membership for a ratification vote, it was voted down.  In fact, in many plants, it wasn’t even really close.  Workers at Ford’s Dearborn Truck Plant (which builds the F-150 shown to the right) voted the pact down 93 percent to 7 percent and those at Louisville Assembly Plant and Kentucky Truck Plant voted it down 84 percent to 16 percent voted no.  Tthe Romeo Engine Plant also voted it down, by a margin of 53 percent to 47 percent.  Comments such as “we’ve given enough already,” “Ford is doing better than GM and Chrysler so doesn’t need the same concessions” were commonly quoted in the media.

Regardless of Ford’s relative health, this is still not a healthy company.  Ford seems to have stronger management at the top than GM and Chrysler did/do have, but also spent much of the past several years hemorrhaging cash.  Really, the main reason that Ford didn’t need US government aid was that the company famously had the foresight to mortgage nearly all of its assets to fund its turnaround prior to the collapse of credit markets.

The UAW appears to be back to its legendary old tricks with this move.  The powerful union had been weakened – and it clearly has been, with the concessions that it did accept, plus the loss of tens of thousands of members over the past several years of layoffs and buyouts.  Many also thought that the union had turned a new leaf with its eventual willingness to accept concessions starting with the master agreement in late 2007 as well as later concessions.  But with this move, it appears that the union’s leadership is aware of the big picture, but the brotherhood itself is not showing as much solidarity as it probably should.  While the rejection of the interim agreement preserves the UAW’s Ford membership’s ability to strike, it also blows up the UAW’s chance for true pattern bargaining among GM, Ford, and Chrysler in 2011 when the national agreements have expired.  If the companies aren’t operating with the same pattern now, it’s tough for the union to argue that it’s negotiating with all three companies from the same stance.

Finally, by rejecting the tentative agreement, the UAW lost product commitments and job guarantees that, in the words of the president of UAW Local 600 – which represents workers at the Dearborn Truck Plant that rejected the agreement 93 percent to 7 percent – it would have “created or protected 7,000 jobs.”  I’m sure that those UAW members who rejected the deal had their reasons for doing so, but from my vantage point, it seems like a somewhat short-sighted decision.  Union leadership has gone on record stating that they would drop the matter if it was rejected by members and would not put it forth for a re-vote.

Meanwhile, north of the border, the CAW has reached a tentative agreement with Ford that matches the concessions given to GM and Chrysler as those companies slid into bankruptcy.  These include freezing wages for the remainder of the contract, freezing cost-of-living adjustments after June 2010, elminating a week of paid vacation, and increased insurance co-pays.  In consideration for the give-backs, Ford offered its Canadian workers additional work at the Windsor, Ontario engine plant, committed to add a new global platform to the Oakville Assembly Plant, also in Ontario sometime after 2012.  The Oakville plant currently builds the Ford Flex and Edge and the Lincoln MKX and MKT.  Also, the Canadian portion of Ford’s North American production would remain at about 10 percent, which is proportional to its sales in Canada.

Of course, the CAW deal must be ratified by members, so it’s entirely possible that their deal could go up in smoke as well.  The CAW finds itself in a bit more of a desperate situation, however, with Ford already closing the St. Thomas, Ontario plant in late 2011 after Lincoln Town Car, Ford Crown Victoria, and Mercury Grand Marquis production draws to a close.  Too, thanks to UAW concessions, the CAW finds itself at a cost disadvantage relative to their US neighbors, which could drive more work south of the border, particularly in harsh times for the auto industry.

The UAW agreement’s defeat is bad news for the UAW in the long term and bad news for Ford.  The only positive for Ford is that the company has multiple options at its disposal for moving forward on the work that it would have given to the UAW.  It can move the work to Mexico, or, if the CAW cooperates, potentially to Canada.  And absent job security provisions that would have been in the proposal, Ford has the flexibility to cut headcount as necessary to keep its costs in line.  In late 2011 when the UAW is bargaining with Ford, I fully expect that Ford will try to get terms on par with what GM and Chrysler is already working under.  In other words, pattern bargaining may not work out in the UAW’s favor this time around.  I believe that the union’s leadership understands that, but it appears that its members do not.

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