Aug. 24 (Bloomberg) -- Ford Motor Co. faces a Sept. 15 hearing on a complaint by the United Auto Workers that salaried employees didn’t sacrifice as much as hourly workers, said two people familiar with the matter.
The hearing before an independent arbitrator is scheduled for the day after Ford’s contract expires with its 41,000 U.S. hourly workers, said the people, who asked not to be identified revealing details of the grievance process. More than 35,000 Ford workers, who gave up pay increases and bonuses, signed the grievance last year after the company reinstated raises, tuition assistance and 401(k) matches for white-collar employees.
The union’s “equality of sacrifice” grievance has become a topic at the bargaining table with Ford, said one of the people. Ford is seeking to reduce labor costs while the UAW tries to recover what workers gave up to help U.S. automakers survive. UAW President Bob King has said members must be rewarded for concessions of $7,000 to $30,000 each since 2005.
“It’s going to be difficult to get anything else done with this hanging over the Ford talks,” Kristin Dziczek, labor analyst at the Center for Automotive Research in Ann Arbor, Michigan, said yesterday in an interview. “It will be tough to get a contract ratified if this is not resolved first.”
Union leaders discussed the equality of sacrifice grievance and its connection to contract talks at a meeting in Chicago last week, said Gary Walkowicz, a bargaining committeeman with UAW Local 600 in Dearborn, Michigan, who attended the session.
“A lot of workers have been talking about this, it really has become a big issue,” Walkowicz said yesterday in a telephone interview. Ford Chief Executive Officer Alan Mulally’s “exorbitant and excessive pay has people upset and feeling they are owed something by the company.”
Ford, the only major U.S. automaker to avoid bankruptcy, rewarded Mulally in March with $56.6 million in stock for leading the company’s turnaround. In addition, his 2010 compensation rose 48 percent to $26.5 million. King has called Mulally’s stock award “morally wrong” and “outrageous.”
John Stoll, a spokesman for Dearborn-based Ford, declined to comment on the matter. Michele Martin, a spokeswoman for the Detroit-based union, didn’t immediately respond to a request for comment.
Lawyers for both sides are trying to settle the grievance before it goes to an independent arbitrator, said one of the people. Workers want to receive a payment from the company to settle the dispute, the person said.
“This is part and parcel of what the Ford workers are looking for in these negotiations,” Dziczek said. “On the back of this grievance, there’s a whole lot of discontent with executive pay.”
To help Ford, General Motors Co. and Chrysler Group LLC survive, UAW workers at the three companies surrendered raises, bonuses and cost-of-living adjustments. The union also agreed to a two-tier wage system, in which new hires earn about $14 an hour, half the amount paid to senior production workers.
Ford gave hourly workers profit-sharing checks averaging $5,000 this year after it earned $6.56 billion in 2010, the most in 11 years. Ford reported net income of $4.95 billion in this year’s first half. The company lost $30.1 billion from 2006 through 2008, as the economy crashed and fuel prices soared.
The arbitration hearing is scheduled to last two days, Sept. 15 and Sept. 16, the people said.
Negotiators for both sides will seek to avoid having that hearing and try to find a way to resolve the grievance at the bargaining table, Harley Shaiken, a professor of labor relations at the University of California at Berkeley, said yesterday.
“The issue of equality of sacrifice underscores some of the important economic issues at the table,” Shaiken said. “Both sides differ over what equality of sacrifice means. But the company is very aware that it is pivotal not just in dollars and cents, but as a morale issue.”
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