One Down, Tougher One to Go

By Janice Castro

Nothing like it had ever happened in the long history of auto negotiations. The contract between Ford and the United Auto Workers expired last Monday at midnight, and the company's 104,000 union members would ordinarily have gone out on strike. But the clock was stopped, and the two sides, tantalizingly close to an agreement, went on talking. Finally, after a 28-hour marathon bargaining session that ended about 60 hours beyond the original strike deadline, settlement came on Thursday morning. U.A.W. President Owen Bieber was not around for the handshakes; the strain of the negotiations had sent him to a Detroit hospital on Tuesday night with stomach pains. But he kept in touch with the talks by phone, and his deputy, U.A.W. Vice President Stephen Yokich, proclaimed the union's view of the outcome. "We have a good agreement," he said. "Truly, we broke a lot of new ground."

The proposed three-year contract contains job-security provisions that will give workers unprecedented protection against layoffs. The pact, which is expected to be handily ratified by the U.A.W. rank and file, also includes improved pension and health benefits, along with a first-year 3% wage hike. (The base pay of the average Ford union worker is now $13.42 an hour.) In the second and third years of the contract, the employees would receive 3% bonus payments.

Ford was in a position to be generous. Its 1986 profits ($3.3 billion on sales of $63 billion) surpassed General Motors' earnings ($2.9 billion from sales of $103 billion) for the first time since 1924. Said Ford President Harold Poling, who took part in the negotiations: "We believe we can live quite well with this agreement."

But struggling GM probably cannot. Bieber, who was released from the hospital late in the week, will demand from GM a deal similar to the Ford package in negotiations that begin this week. GM's contract with the U.A.W. also expired last week, but the union shrewdly decided to settle first with cash-rich Ford.

While No. 3 Chrysler does not face negotiations with its U.S. workers until next year, the company got a scare last week when its contract with the Canadian Auto Workers union ran out. Some 10,000 employees in Chrysler's four plants in Ontario went on strike, stopping production of such hot-selling models as the Dodge Caravan and Plymouth Voyager vans. The impact rippled across the border, idling 1,400 workers at Chrysler's plant in Belvidere, Ill., where most production was shut down for lack of Canadian-made parts, and 500 additional employees at a stamping plant operated by the firm in Warren, Mich. The Canadian union ended its walkout after four days, when Chrysler agreed to index the pensions of future retirees to inflation, up to an annual rate of 6%. The top rate will be 5% for current pensioners. Union leaders hope that the provision will encourage older workers to retire, helping preserve the jobs of younger workers.

Job security was the main focus of Ford's negotiations with the U.A.W., and the company made historic promises. Under the plan, Ford agreed to maintain the current number of jobs at each of its 89 plants and pledged not to lay off workers for any reason except a sharp slump in car sales resulting from an economic downturn. That means, for example, that Ford could not drop workers merely to increase automation or shift production of cars and parts overseas. Ford will be allowed to reduce its labor force by attrition -- retirement, illness and the like -- but the company agreed to hire one new worker for every two who leave for such reasons.

In return for more job security, the U.A.W. will cooperate with Ford at the plant level by cutting away the thicket of traditional work rules and restrictive job classifications that impede productivity. In general, the union agreed to allow more Japanese-style teamwork. The Big Three automakers realize that efficiency gains are essential to meeting the challenge of foreign competitors, which built 28.2% of the 11.4 million cars sold in the U.S. last year, up from 14.8% a decade ago. Even if Congress imposed quotas on auto imports, Japanese companies could still augment their production capacity in the U.S. Honda last week announced a $561 million expansion of its American operations, including a new $380 million auto assembly plant near Marysville, Ohio. Surprisingly, Honda said it would become the first Japanese company to export its U.S.-built products to Japan and Europe, and plans to ship out 70,000 cars a year by 1991. Apparent reason: the appreciation of the yen has helped make autoworker wage rates in the U.S. roughly comparable with those prevailing in Japan.

The company with the most to lose from foreign competition is undoubtedly GM. Its share of U.S. auto sales has already dipped from 46% to 37.6% (vs. a current share of 20.3% for No. 2 Ford) since 1980. In the face of faltering sales, GM, which plans to close nine of its more than 150 plants by 1989, cannot afford to offer the U.A.W. the same kind of job-security guarantees that Ford did. Yet the union's GM members are not ready to become second-class autoworkers. In short, the chances of a U.A.W.-GM settlement without a long and painful strike look slim.

With reporting by B. Russell Leavitt/Detroit