The tentative labor agreement between Ford Motor Co. and the United Auto Workers has intensified differences between Ford and General Motors Co., the two auto industry leaders who customarily stood side-by-side against the union at contract time.
The most obvious difference is the agreement, which awaits ratification by Ford's 170,000 UAW employes.
GM's attempt to reach a similar "emergency" agreement ended in failure last month. As matters stand now, GM can't get a new contract until September, when the current three-year UAW argeement expires. The GM-UAW negotiations this summer and fall are likely to be far tougher than the ones Ford and the UAW just concluded, according to Peter Pestillo, Ford's vice president for labor relations, and Donald Ephlin, the UAW's chief negotiator with Ford.
This could lead to important differences in the attitudes of UAW workers toward Ford and GM. While there is strong UAW opposition to concessions by GM, Ephlin says he is confident Ford's union members will endorse the new tentative contract. The first test comes today at a meeting of the 225-member Ford Council of local union leaders.
Ford's UAW members are being asked to sacrifice, at the most, several hundred dollars a year that they might have received in the future had union negotiators not agreed to a freeze on wage increases and a delay in cost-of-living payments, Ephlin said.
And those "losses" are hypothetical, Ephlin said in an interview. If negotiations had ended in failure last week, the union would have had to bargain with Ford in September, when the old contract expires, and Ford's hand would have been much stronger then, he asserts.
The fact that Ford got an agreement and GM did not was due in part to the dramatically different strategies followed by the two companies in approaching the UAW, Pestillo and Ephlin said.
GM took a home run swing, pressing the UAW for major cuts in fringe benefits that would have reduced GM's production costs substantially. In a precedent-breaking commitment, the company promised to turn over any savings to customers by reducing car prices.
[This offer by GM, on the eve of its negotiations last month, caught Ford by complete surprise even though the leaders of both companies had met to plan a joint negotiating strategy. The surprise has left some raw feelings toward GM, industry officials say.]
Pestillo argues that GM bit off too much. "In my opinion, they hadn't thought it through," he said.
In general, Ford didn't fight to cut back existing wages and benefits. Instead, it sought delays in the current cost-of-living increases and reductions in future basic wage increases. The existing contract provides increases in basic wages and cost-of-living increases.
Thus the savings Ford will realize if the new contract is approved will be significantly less than what GM was seeking. But Pestillo says Ford's position was that it can't recover just by making new reductions in car prices, as GM was promising.
Ford's agreement with the UAW is a direct attempt to improve the quality of Ford cars and trucks by strengthening the ties between the two sides, Pestillo and Ephlin say. Ford's research indicates that 85 percent of new-car buyers are looking for quality first and price second, and that had a great influence on Ford's strategy, Pestillo said.
Just before it sat down with the UAW for the final negotiating round last month, Ford announced an unprecedented offer to provide two years of essentially free maintenance and parts replacement on new Escort and Lynx subcompacts (with the exception of repairs due to accidents or owner neglect). This attempt to win new customers represents a big gamble by Ford that it can build trouble-free subcompacts, and it needed a stronger joint commitment on quality with the UAW to win that bet, Pestillo says.
To get that, Ford has agreed to limit its freedom to close plants and shift business to cheaper, nonunion suppliers in this country and abroad. Ford says that for two years it won't close plants simply to obtain cheaper parts elsewhere. And it has promised guaranteed income payments to senior UAW workers who are laid off in the future equal to half their base pay until age 62 or retirement.