CFL News
September 12, 2011

Ford, UAW talks could set tone for workers in all industries

As the clock ticks towards the expiration of the United Auto Workers and Ford contract at midnight Wednesday, local Ford workers say they want to see a deal that rewards them for helping in the company’s financial turnaround.

Source: Chicago Sun-Times

By Francine Knowles

As the clock ticks towards the expiration of the United Auto Workers and Ford contract at midnight Wednesday, local Ford workers say they want to see a deal that rewards them for helping in the company’s financial turnaround.

Meanwhile labor and industry experts say much is riding on the outcome of negotiations for both Ford and the union. And some contend workers in and outside the auto industry may have a stake in what emerges from the talks, which are also under way at General Motors and Chrysler.

“More money, a raise definitely,” is what 24-year-old Robert Washington, who works at Ford’s Torrence Avenue assembly plant, said he wants to see in the contract.

Washington installs seat belts on Ford vehicles and is among nearly 2,700 workers at the plant. Ford also employs 900 workers at its South Side Chicago stamping plant.

Because of past contract concessions agreed to by the union that established a two-tier wage system, Washington and entry level workers are now paid roughly half the $32.84 average base hourly wage traditional veteran Ford workers make. Washington is classified as a long-term supplemental temporary worker, not a permanent employee, and he and others in his situation at Ford say they’d like to become traditional employees and see the wage gap narrowed.

“I’m looking for something to kind of build off of,” said one 37-year-old Ford Chicago assembly plant worker, who wanted to remain anonymous and who is paid at the lower rate.

“It’s causing a split in the union,” one 16-year veteran, who also declined to provide her name, said of the two tier system. “If someone is doing the same job you’re doing and they’re making half, eventually, they’re going to get mad about it.”

She said among the areas the new contract should address is transitioning lower-wage workers to permanent full-time workers and boosting their pay until they reach the same level as long-time employees.

“Maybe every six months they get a raise, every nine months, until they reach our pay. I think that would be fair.”

She and other workers said they would also like to see the end of concessions agreed to by the union in 2009 that included suspension of cost of living adjustments and Christmas and performance bonuses and changes in how overtime is paid to paying time and a half after 40 hours are worked in a week instead of after eight hours are worked in a day.

“They’re posting all these billions of dollars (in profits),” she said. “The CEOs, they get millions. The money is not going to the people that build the cars.”

Workers at the Chicago assembly plant produce the Lincoln MKS, Ford Taurus and Ford Explorer. They are among roughly 41,000 UAW- represented Ford employees nationally, down from more than 102,000 in 2000 and from 77,453 in 2006.

Ford, which lost $30.2 million from 2006 through 2008 amid the recession and industry downturn, earned $9.3 billion the last two years and paid Ford Chief Executive Officer Alan Mulally $26.5 million this year.

The automakers and the UAW will need to perform a delicate balancing act to reach agreements on new contracts that don’t damage the recovery or long-term competitiveness of a key industry in the U.S. economy and that recognize and reward the role workers have played and continue to play in the industry’s rebound and future success, labor and industry experts say.

Whatever contract emerges isn’t expected to dismantle the two-tier wage structure put in place that has helped the domestic industry reduce its labor costs and become more competitive with non-U.S. automakers. Ford’s labor costs have declined from around $70 an hour in 2006 to $58.12 in 2010, but that still exceeds General Motors at $56 an hour and Chrysler at $49 an hour.

“Ford is trying really hard to get their labor costs in line with the other two (GM and Chrysler),” said Kristin Dziczek, director of the Labor and Industry Group at the Center for Automotive Research. “Their agreement is not that different from Chrysler’s and GM’s,” she said of the current contract. “But their business situation is very different. Ford does not have as many entry level workers as Chrysler or GM. Ford has escalators in their second tier, which means their second tiers are paid an hourly wage that’s higher than the wage that’s paid at GM and Chrysler. Ford has a cap that they can only hire up to 20 percent of their workforce for second tier jobs. GM and Chrysler have no caps in place until 2015.”

She added cost-of-living adjustments that were suspended at Ford likely won’t be coming back in the new contract.

“The company’s indications are they want to resist anything that raises their labor costs,” Dziczek said. “I think they’re not interested in bringing back raises and automatic escalators to the base wage, but they would consider lump sum and enhanced profit sharing. They’re going to look for things that allow them to keep their labor costs competitive and give them parity” with GM and Chrysler.

Ford has likely been pushing in the talks for changes in its profit sharing program, so that instead of tying payouts to workers simply to profits, the payouts would also be tied to such things as quality, costs and cash flow, industry experts note.

The UAW, which has seen its ranks plummet, will want better job security, according to Robert Bruno, a labor professor at the University of Illinois at Chicago.

The union is going to want to see the company “paying rewards for previous concessions made that are likely to be semi-permanent,” he said.” I think the two-tier wage structure may be something they come back to if the industry stays strong through the next bargaining round. But the real investment I think the union wants is bringing work back to facilities in the United States. They’re going to want to see the industry saying we’re going to reopen plants. We’re going to shift some production back to the U.S. We’re going to create new shifts or new lines in different places, adding people to shifts.”

The union also likely is seeking raises, particularly for second-tier workers, Dziczek said.

While Ford workers recently authorized negotiators to call a strike if a fair agreement isn’t reached, a strike isn’t expected. But Ford is the only one of the three domestic autoworkers, where workers could potentially strike. Current contracts at GM and Chrysler prevent a strike.

“The likelihood of a strike is very, very low,” said Dziczek. “As the UAW seeks to organize international producers, having a strike doesn’t look good. That would not help you organize Toyota.”

The stakes are high for the UAW in the talks, Bruno said.

“If they’re not able to bargain incrementally higher levels of financial compensation, job security, retirement and health security as the company shows greater financial capability, then their ability to really represent themselves as an agent of positive change that can really help to promote the American middle class would be seriously challenged,” he said. “There’s a big effort to try and organize the foreign transplants. It will be hard to do if you can’t say to those folks, here’s this middle class that we’re able to provide for you. Here’s how we protect jobs.”

There’s cause for other workers outside the industry to care about the outcome of the talks, Bruno added.

“The auto industry plays a significant role in our overall economy,” he said. “It’s impossible for the American economy to be globally competitive without a strong sector that makes something, and the best paying jobs in this society for people who don’t hold professional rank is in manufacturing. If the UAW and the industry can’t negotiate middle class wages and secure jobs and do that along with being able to build cars that people want, then it puts at risk one of the major ladders into the middle class for working people in this country, and that’s the auto industry. So yeah, it always matters what happens in auto.”