United Auto Workers president Douglas Fraser said yesterday he hopes that a significant reduction in the cost of American cars can be achieved in the current auto industry negotiations, but he said the concessions can't all be on the union's part.
Fraser, interviewed on "This Week With David Brinkley" (ABC, WJLA), indicated that he could accept reductions in labor costs worth somewhere between $100 and $375 a car on the average, if an agreement is reached between the UAW, General Motors Corp. and Ford Motor Co. But he said the union's concessions must be temporary, with a return to the old contract terms if the industry recovers. The union has rejected a proposal by GM that would lower new car costs by about $600, on the average.
Earlier in the same program, Ford Chairman Philip Caldwell confirmed that he and GM Chairman Roger Smith had privately agreed on a joint negotiating strategy, only to have GM abruptly change it without first telling Ford. The issue was GM's agreement with the UAW last week to return all labor-costs savings directly to consumers through lower auto prices, an announcement that reportedly left Caldwell infuriated. Caldwell said that while Ford won't make the same binding commitment, its prices will remain "competitive" with GM's.
Fraser agreed that significant price reductions are necessary to boost auto sales, now at the lowest levels in 20 years.
"A hundred dollars won't help," said Fraser. "It has to be a figure that makes the prices of the car much more attractive than they are now.
"But we're not the only ones that are in this game. All the salaried personnel from Mr. Smith on down have to make sacrifices," he said, specifying the high six-figure salaries earned by the top executives. "The parts suppliers should make sacrifices," he added. In short, Fraser suggested, the UAW wants a package of cost reductions patterned after the Chrysler Corp. plan--which included concessions by white collar employes and suppliers. But even with lower prices, he doesn't expect a strong recovery in auto sales until a year from now.
The labor concessions to Chrysler amount to about $3 an hour, or $375 per car, assuming 125 hours of labor on a typical new car. Fraser said any agreement with Ford or GM wouldn't exceed that. "I can assure you after these negotiations are over . . . Chrysler will still have a labor-cost advantage," Fraser said.
Caldwell, responding to a report in the Detroit Free Press, acknowledged that he and Smith had held an unannounced strategy meeting to coordinate their negotiating position with the UAW. The meeting was legal, Caldwell said. "We had counsel present. . . . Nothing was talked about except those things which are perfectly legal under the labor laws."
Then, two days later, came the startling agreement by GM and the UAW to apply all labor-costs savings to price cuts.
The Free Press said Caldwell was infuriated and called Smith to complain. Asked about that, Caldwell said, "I did call Roger Smith afterwards and he told me at that time he had decided to change directions."
Caldwell said, however, that he didn't feel betrayed. "This is a very competitive industry," Caldwell remarked. Smith said last week that he kept the price-cut decision to himself for fear that an advance discussion of that matter with Ford could have violated antitrust laws.
Some auto industry analysts observed that GM is in much better financial position to make the price-cutting pledge than is Ford, and Caldwell lent support to that view yesterday. Some of the reduction in labor costs must be retained by the company, which faces huge investments in modernizing plants and bringing out new models, Caldwell said. "If there are no profits there really can never be a healthy industry, and therefore no jobs."
Despite Ford's losses, expected to be $1.1 billion this year, the company won't need government assistance, Caldwell said. "We plan to bail ourselves out. . . . There is no comparison between Ford and Chrysler."