DEARBORN, MICH., JULY 28 -- Ford Motor Co. and the United Auto Workers opened contract talks here today amid union charges that the company is shifting too much work to outside suppliers, both foreign and domestic.
"Ford is becoming more and more a hollow corporation, selling products it does not make," said UAW President Owen Bieber.
The practice of using outside suppliers, called "outsourcing" in the auto industry, is like "building a fine house on sinking sand," said Bieber said. Left unchecked, it could eliminate tens of thousands of jobs in the U.S. auto industry and undermine the American economy, Bieber said.
The union made similar charges yesterday at the beginning of negotiations in nearby Detroit with General Motors Corp., the nation's largest auto maker. Talks at both companies are aimed at replacing labor agreements that expire Sept. 14.
The negotiations will be difficult, union and company officials say. The industry is under siege by foreign manufacturers who -- through imports and foreign-nameplate cars built in the United States -- now control nearly 31 percent of the U.S. auto market.
The rising competition is forcing domestic auto makers to find ways to reduce production costs while offering attractive products. Outsourcing has been an important part of that effort.
But outsourcing has wreaked havoc on the UAW, threatening many of the union's 1.1 million members with unemployment. For that reason, at both GM and Ford, job security will be the main issue on the bargaining table, Bieber said.
The UAW leader said he and his negotiators will seek similar agreements at the two companies to protect jobs. Proposals for shorter work weeks and provisions to limit the growing use of outsourcing will be among the ideas discussed, Bieber said.
But the UAW's attempt to resurrect pattern bargaining, aimed at getting comparable agreements at competing companies, may be fruitless.
Pattern bargaining had its heyday in a bygone era when competition in the U.S. auto industry primarily involved three companies -- GM, Ford and Chrysler Corp. But those companies are quite different today.
Ford, the second-largest auto maker, now makes more money than GM. Ford, for example, earned $1.5 billion in the second quarter of this year, compared with earnings of $980 million for GM.
Ford is operating many of its 85 plants and related facilities in the United States at capacity. GM is shuttering a number of its 210 facilities because of overcapacity caused largely by decreasing sales.
More importantly, Ford receives about 50 percent of its components from outside sources, while GM gets 30 percent of its parts from outside, meaning that GM has to rely more on UAW-made parts, which usually are more expensive, to produce cars and trucks.
Thus, said Alfred S. Warren, vice president for industrial relations at GM, "A UAW agreement at Ford does not necessarily mean that GM will accept the same contract."
Ford officials, too, take a dim view of Bieber's announced plans to seek a pattern. The growth of foreign competition and the increasing differences between domestic car companies means that the UAW can no longer assure that an agreement reached at one company will not adversely affect the competitive posture of another, said Peter J. Pestillo, Ford's vice president for employe relations and external affairs.
About 350,000 GM workers are affected by the current round of bargaining, compared with 104,000 at Ford.