THE PROGRESS of the Ford labor contract negotiations is a profoundly hopeful sign for both the automobile industry and its employees. Perhaps it's not too grand to say that it is a good sign for the American economy as well. The question from the beginning has been whether the industry--both the companies and the union--had become entrenched in habits acquired through long years of success to the point of fatal inflexibility. Had the American auto makers become dinosaurs?
The Ford renegotiation, if the union's membership takes its leaders' advice and accepts it, will be strong evidence of an ability and a will to adapt. It's a somber kind of good news since, for the union, it means retreating on contractual benefits won in many years of arduous work. It has happened only because Ford has been suffering financial losses-- $2.5 billion over the past two years--on a scale threatening the survival of the company. One-third of Ford's labor force has already been laid off.
Both the United Auto Workers and Ford have approached this extraordinary agreement in the uneasy knowledge that their industry is not merely going through another recession. This time it's different. The American auto companies once had the enormous American market to themselves. They could afford very high wages as long as they all paid the same rates, and a strong union saw to it that they did. The real change is the rise of foreign competition.
Imports don't threaten the American standard of living. But imports certainly challenge wages in those vulnerable industries where, as in the case of autos, labor costs have outrun productivity.
Necessity has now impelled Ford to accept a series of interesting proposals that are new to the auto companies--profit sharing, and an experiment with lifetime employment. That's what made the agreement possible. Similar negotiations between the UAW and the industry's leader, General Motors, collapsed last month because the company's financial position remains much stronger than Ford's and neither side felt itself under the same pressure to reach settlement. But the future of the American automobile industry now probably depends essentially on General Motors. In its plants, labor costs are still rising automatically under contracts signed in sunnier weather. Compensation for GM's production workers, including the fringe benefits, now averages over $20 an hour. A great deal now depends on GM's ability to get the UAW's cooperation in controlling its wage costs, before the company has fallen into the same degree of danger as Ford.