Ford's UAW Agreement in Jeopardy After Defeats at Big Plants

  • Rank-and-file at large factories reject deal by wide margins
  • Union says 52% of workers have voted against proposed accord

Ford Motor Co.’s proposed four-year U.S. labor contract is in danger of being voted down, which would mark the second rejection of a Detroit Three pact in the past three months as union members demand greater payback for helping the companies survive the recession.

At least three-quarters of ballots are in, with 52 percent voting no, Jimmy Settles, the United Auto Workers vice president in charge of talks with Ford, said Wednesday at a news conference in Dearborn, Michigan. The contract, which includes across-the-board wage increases, may still pass, he said. Balloting will end Friday, with results released the next day.

With vehicle sales booming and automakers making billions, expectations are high among workers to win back the concessions they granted to keep the companies alive over the past eight years. Veteran workers went almost a decade without raises, while new hires started at half the wages of senior staff.

Workers at Fiat Chrysler Automobiles NV turned down the first contract offer in September, sending UAW negotiators back to the bargaining table for a sweeter deal that was then accepted by a 3-to-1 margin.

High Expectations

“Workers had very high expectations going into this, unbelievably high," said Kristin Dziczek, director of the labor and industry group at the Center for Automotive Research in Ann Arbor, Michigan. "They felt if they’re not going to get back the concessions they gave up now, when will they get them back? We’re in a different world now.”

Rising wages in the U.S. auto industry add to evidence that a strengthening labor market will prompt Federal Reserve policy makers to raise the benchmark lending rate in December. The Labor Department’s gauge of average hourly earnings for jobs of all categories posted a 2.5 percent gain in October after years of stagnating near 2 percent. That’s the best reading since 2009.

The American auto industry faces new challenges, Dziczek said. The U.S. now has the highest labor costs in North America and auto companies are increasingly showing a willingness to move production to Mexico, she said. The UAW also doesn’t have the clout it once did because as the Detroit Three have diminished through the decades, so has the union’s membership and power.

“I understand the feeling that if you’re not going to get it back at the top of the market, when will you get it back?” Dziczek said. “The global reality weighs a little bit bigger now.”

Not Buying

Workers aren’t buying that argument. They feel the deals struck by their UAW leaders don’t repay their sacrifice. By a nearly 2-to-1 margin, Ford workers rejected the proposed pact at two light-truck factories in Louisville, Kentucky, and an F-150 plant near Kansas City, Missouri. Two engine factories in Ohio also turned it down.

At General Motors Co., a proposed pact hangs in limbo because skilled-trades workers turned it down even as production workers approved it. The UAW set a Nov. 20 deadline to resolve the GM deal.

Imploring Workers

At an unusual press conference in a Ford local union hall, Settles implored workers to vote in favor of the deal or risk losing raises, bonuses and a commitment from the company to invest $9 billion in factory upgrades and expansions that will create or preserve 8,500 jobs in the U.S.

“When you go back to the table, everything is off the table,” Settles said at Local 600, which represents about 8,200 workers, including 4,300 who build the F-150 pickup, Ford’s top-selling, most-profitable model. “I’m concerned about that. It worries me.”

The proposed contract provides a path for newer workers to climb to senior wages of about $29 an hour over an eight-year period. Those so-called second-tier workers previously topped out just above $19 an hour.

The contract includes $10,000 in bonuses upon ratification. Wage increases of $10,633, plus a variety of bonuses and guaranteed payouts boosted the average Ford production worker’s pay by $32,513 over the life of the contract, according to the union. Skilled-trades workers’ total compensation grew an average of $35,098 over four years, the union said. Those calculations don’t include profit-sharing, which totaled more than $30,000 a worker during the past four years.

“If we thought there was another dollar on the table, we would have got it the first time,” Local 600 President Bernie Ricke said at the news conference.

Ford rose 2.2 percent to $14.46 in New York. The shares are down 6.7 percent this year.

Replacement Workers

When Ford workers appeared to be rejecting a contract four years ago, Settles told them the UAW would authorize a strike if the deal was turned down. He also said the company could hire replacement workers to try to break the union. After that warning, worker sentiment toward the deal changed and it was ratified by a 63 percent margin.

If workers were to go out on strike this time, Ford would have the right to hire replacement workers because the walkout would be over economic issues, Settles said. He added that the union wants to avoid a strike.

Leading up to negotiations this year, UAW President Dennis Williams and Settles repeatedly promised workers that this round of talks represented “our time” to recover what had been given up to help the company through the downturn.

Not 1965

Ricke declined to comment on whether that approach may have raised unrealistic expectations. Instead, he said workers, especially more than 20,000 new hires over the last four years, need to understand that the UAW and American automakers don’t rule the road as they once did.

“We used to have 97 percent of the market and now we’ve got 47 percent, so it’s not like it was,” Ricke said. “There’s pent-up frustration because we went through a very bad economic time and now they see the company making billions. But there’s a delicate balance. At the end of the day, you can get $50 an hour, but it you don’t have a job, it doesn’t mean anything.”

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