TWO YEARS AGO, when the dollar was sky-high, auto workers' earnings in Japan were two-fifths the American level. In Germany, they were less than two-thirds those of Americans. Now, with the drop in the exchange rates, earnings in the Japanese auto factories are nearly three-quarters, and in Germany they are equal to, those paid here. The swing in currency values has given the American auto makers an enormous opportunity. They no longer carry the burden of large wage differentials that they carried through most of this decade. But to make the most of this turn in their fortunes, the companies and the United Auto Workers have to keep American wages under tight restraint.
Ford's new contract with the UAW does that. Departing from a long tradition, it gives first importance to job security instead of wage increases. In a company that has cut its labor force almost in half over the past decade, security is a compelling issue. Ford and the union have been moving in that direction for some years, but this contract promises a degree of assurance that earlier attempts weren't able to deliver.
In return, the union has offered a new flexibility in work rules. It will be some time before the effect of this part of the agreement becomes clear, since work rules are negotiated plant by plant. But they will greatly influence the actual cost of this contract to Ford. While the security provisions are not going to be inexpensive, the impact on Ford's total labor costs may turn out to be substantially diminished if productivity accelerates.
The next question is whether the Ford contract can serve as a prototype for the UAW in dealing with other companies, most notably General Motors. The difference between those two companies is that Ford has now largely completed the labor reductions that it considered essential, while GM has not. But here again the work rules, and the possibility of relaxing them, may prove a powerful incentive for an unorthodox agreement.
In the days when American automobile manufacturers didn't have to worry about foreign competition, they happily paid high wages, and the whole labor force rode the roller coaster of a highly cyclical industry. Now, in at least one company, the rule is tighter control of wages accompanied by something that begins to look like a pledge of lifetime employment. The Japanese influence evidently isn't limited to the size of the cars