Rough Bargaining Ahead

By Gordon Bock

"Ford is supposed to be a hotbed of good ideas," said Owen Bieber, president of the United Auto Workers. "We're going to give them the opportunity to demonstrate that the same is true in the labor-relations arena." Bieber's 1.1 < million-member union thereupon served notice last week, well before its labor contract expires on Sept. 14, that the No. 2 U.S. automaker would be the U.A.W.'s priority target in seeking a new three-year pact. The designation was meant to put increased bargaining pressure on the target company, a pattern that in years past meant a settlement with Ford would quickly be applied to GM and Chrysler as well. But that is no longer the case: bargaining this year could be the most complicated -- and perhaps the roughest -- in quite some time.

One reason for the storm warnings is the U.A.W.'s main demand: job security. The autoworkers (average hourly wage: $13.50) are aware that low-cost foreign imports and Japanese-owned U.S. assembly plants make impossible any significant pay hikes by American carmakers. Instead, the union is focusing on the Big Three's shrinking share of the $200 billion U.S. auto market (currently about 70%) and the growing use of foreign suppliers to cut costs. The companies are trying to save money by trimming their domestic labor force, and the U.A.W. has lost more than 400,000 members since 1979. The union's aim, Bieber says, is to make "stable domestic employment a part of how these companies do business."

Bieber may have little trouble getting Ford and its 104,000 U.A.W. employees to reach an accord. The company passed much bigger rival GM in profits last year ($3.3 billion vs. $2.9 billion) largely on the basis of cutbacks begun in 1980 that cost some 50,000 workers their jobs. With that painful exercise over, Ford's profits are expected to be just as good or better this year. Meantime, the company's domestic-market share climbed from 18.2% last year to 20.1% in July, and some Ford plants are humming along at more than 100% of normal capacity. Facing such rosy prospects, Stanley Surma, Ford's director of labor relations, vowed that the firm would "come out with a job-security plan that addresses the concerns of the employees." The term strike, he added, was a "bad word."

Maybe not at GM, where the U.A.W. contract expires along with Ford's. (Chrysler's domestic U.A.W. contract does not expire until next year. But some 70,000 Canadian workers whose contracts with all three automakers expire this month picked the No. 3 company last week as their strike target.) On the contrary, GM Chairman Roger Smith said last week, "I don't know of anyone in the world who can give you a 100% job guarantee if you are in a cyclical industry."

At GM the cycle is still headed down: the 71-year-old company saw its domestic market share drop to 37.5% in July, from 41.1% in 1986. Last year's $2.9 billion earnings were 26% lower than those in 1985. Finally recognizing that its vaunted $40 billion investment in high technology would not reduce overhead as much as had been hoped, GM turned to more direct cost cutting and indefinitely laid off 50,000 hourly workers. The 335,000 union members who remain at GM are convinced that the austerity process is not finished, and that a job-security contract may thus be impossible to obtain. If so, the U.A.W. may be hitting the bricks.

With reporting by B. Russell Leavitt/Detroit