New Ford Model

Henry Ford II, after reading the steel fact finders' report, said in effect to his executives: "There's no reason why we should have this shoved down our throats. Let's take the lead on pensions." Last week Ford's Vice President John Bugas offered Walter Reuther an 8 3/4 -c--an-hour, company-financed pension.

The offer ended negotiations which had been going on for almost 100 days. Reuther happily accepted. By all indications, so would Ford workers when they voted on the proposal. By winning peace, Ford had won a lead in his increasingly competitive industry. By winning the contract, Reuther had gained a weapon to use against Chrysler and G.M.

Next day, B. F. Goodrich offered 16,000 rubber workers a 10-c--an-hour pension and insurance program. The Goodrich offer supplemented a small program already in force--one to which workers contributed. The rubber workers' union accepted and the workers ended a month-old strike. Then the International Harvester Co. offered 65,000 employees a 10-c--an-hour welfare package--on condition that workers also kick in something.

Good for Everybody. Those three offers embraced just about all the variations on the principle over which the steel industry was deadlocked. Apparently both industry and labor could be persuaded to modify their stands on the question of employee contributions. The real test was whether the plans would work out in practice.

At a quick glance, they seemed to be good propositions for everybody. Ford's mandatory payments of 8 3/4-c--an-hour a worker would go into a fund administered by an insurance company, would supplement the 1 1/4-c--an-hour insurance program already in effect. After 30 years of service at age 65, workers would be paid enough out of the fund to give them a $100-a-month pension, counting in their Social Security. As Social Security increased, Ford's part of the obligation would decrease. Ford could count on a lessening of its labor turnover; workers could look forward to a more secure old age.

But the Ford model required some careful looking over. It was not so much a matter of principles as practicalities. U.S. workers in the end might not like the idea as much as their leaders thought they should.

No Alternative. Except in some special cases, a worker lost all his credit in the company-financed pension fund unless he stayed with the company until he was 65 (or 60, if he had 30 years' service). If he quit his job before that (e.g., after 20 years' service), he was left with nothing but his Social Security.

Management, for its part, would be saddled with another large fixed charge. As the Ford contract was written, management would have a continuing reason for wanting more, not less, Government-financed, old age insurance.

Future negotiators might be able to answer some of the problems raised by the Ford plan. But the basic pattern had been set. Trying to avoid a fourth round of wage rises, U.S. industry had no alternative but to agree to the large, new experiment in one way or another and hope for the best.

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