UAW Turns Focus to New Ford Contract

The United Auto Workers union reached an agreement with Chrysler on a new labor contract after a brief walkout by assembly-line workers Wednesday. The union will now try to reach a new agreement with Ford.

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It will not be business as usual at GM and Chrysler. With each new labor contract this fall, the U.S. automakers are bringing costs closer in line with foreign competitors such as Toyota and Honda. And they're doing so with the help of the United Auto Workers, a union that seems more focused on its own survival than on protecting past gains.

Coming up, we'll talk about the recent strikes and whether the tactic has had as much power as it once did.

First, NPR's Frank Langfitt reports.

FRANK LANGFITT: In yesterday's tentative contract, Chrysler got many of the things it says it needs to compete in the global marketplace. Like General Motors before it, Chrysler would be able to shift responsibility for retiree health care to the union. The company would also be able to hire thousands of new workers at lower wages. Chrysler pays 30 to 35 dollars more per hour in wages and benefit than its foreign competition. Analysts say the new contract could significantly narrow that gap.

Aaron Bragman works for Global Insight, a financial research firm.

AARON BRAGMAN: Well, I think that eliminating health care liabilities for the balance sheet is a really big step in getting what they need. They may not have everything that they need just yet, but I think that it's really taken a large step forward.

LANGFITT: Bragman says one reason GM and Chrysler are getting concessions is Ron Gettelfinger. He's president of the United Auto Workers. And he's seen as more pragmatic than some past leaders.

In recent weeks, Gettelfinger has been willing to trade away certain benefits for guaranteed work for his members.

BRAGMAN: Well, it seems that Mr. Gettelfinger - he's got a business degree. He's an extremely intelligent person. And going in to these talks, we understand that he's actually contracted with two different financial adviser firms to come in and help the UAW understand exactly where these automakers are in terms of their health and exactly what the UAW will need to give in order to secure that automaker's future.

LANGFITT: That sense of giving up some things to keep what you have is filtering down to ordinary workers.

Rod Hartsfield is 46 years old. He works at the Chrysler stamping plant in Sterling Heights, a Detroit suburb. He spoke outside his local union hall yesterday.

ROD HARTSFIELD: You know, job security is the biggest thing, you know? Of course, we want to be able to look off for those who've gone before us with our retirees, and the pensions and health care. What equally important is to know that we're going to have a job, you know, in the coming future, you know, so that we can provide for our families and be able to maintain our standard of living.

LANGFITT: But with car companies getting many of the concessions they want, they may now face more pressure to perform on product, quality and marketing. For years, the Detroit firm said generous union contracts kept them from competing with lower-cost foreign firms.

Dennis Virag runs an auto-consulting firm in an Ann Arbor. He says in the future, that argument may not hold.

DENNIS VIRAG: With the new settlements, the Big Three have no one to blame in the future. They are taking that all on their own shoulders right now.

LANGFITT: The union reached its deal with Chrysler yesterday afternoon. It came after a mysterious six-hour strike. The union hasn't said why it walked out. But one official said today it came down to employment. He said the union forced the company to protect jobs in parts-related operations. Next up at the negotiating table is Ford. Financially, it's the weakest of the Detroit Three. The company is in deep debt. Dennis Virag expects Ford will be asking the union for an even better deal.

VIRAG: They're going to be asking for major concessions. You know, certainly, they're going to look to get at least what General Motors and Chrysler have gotten. Ford, certainly, when you look at their market share declines, when you look at their reorganization effort, has very little that they could offer in terms of job security. Whatever they do offer may only be as good as the papers it's written on.

LANGFITT: Union members could begin voting on the Chrysler contract next week. The union has not said when it will approach Ford.

Frank Langfitt, NPR News, Detroit.

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UAW Deals with Chrysler, GM Set Stage for Ford

Chart of Major Work Stoppages, 1947-2006 i i

National strikes have become rare, largely because of the waning influence of labor unions. There were just 20 strikes and lockouts involving more than 1,000 people last year. That compares with 470 a little more than a half-century ago, according to the Bureau of Labor Statistics. hide caption

itoggle caption
Chart of Major Work Stoppages, 1947-2006

National strikes have become rare, largely because of the waning influence of labor unions. There were just 20 strikes and lockouts involving more than 1,000 people last year. That compares with 470 a little more than a half-century ago, according to the Bureau of Labor Statistics.

Now that the United Auto Workers union has reached a tentative deal on a new contract with Chrysler, ending a six-hour strike, the talks move on to Ford — the weakest among the so-called Big Three U.S. automakers. These firms are trying to cut their labor costs in order to compete more effectively against foreign rivals. The automakers, and the unions, face great uncertainty in coming years. Here is a look at the issues—and what's at stake.

Did both sides get what they wanted from these recent negotiations?

Mostly, yes. Chrysler got lower labor costs, especially when it comes to newly hired workers. The union won some guarantees of job security, though not as extensive as what the union got from GM.

The Chrysler strike only lasted six hours. The GM strike wasn't much longer—only two days. Why are these strikes so short?

Because neither side—the union or the automaker—can afford a protracted strike. A long strike—more than a week or two—would cripple the union. Its "war chest"—the money it has on hand to pay striking workers — is a fraction of what it was in years past, due to dwindling membership. The automakers, meanwhile, have lost ground to foreign competitors and don't have the coffers needed to endure a long strike. That's why some analysts are calling these brief work stoppages "Hollywood strikes"— more show than substance.

How significant is the fact that the union has agreed to a two-tiered wage structure?

Very. Workers in other industries have already swallowed these kinds of concessions, albeit reluctantly. The UAW had hoped to avoid such a fate. Now that it has agreed to pay newly hired workers less, "the union runs the risk of becoming a retirement club," says Jefferson Cowie, a professor of labor studies at Cornell University. "Once the older generation retires, it becomes a whole new ball game."

Chrysler is now privately owned. How did that fact affect the negotiations?

Some analysts believe that Chrysler, which Germany's Daimler sold to the private firm Cerberus in May, took a tougher bargaining position than it might have if it were still a publicly traded company, since it is less concerned with the public relations fallout from a strike. "When you don't have a bunch of nervous shareholders looking over your shoulder, you're going to be a little tougher in negotiations," says David Healy, an analyst with Burnham Securities.

Next up are the UAW negotiations with Ford. Are the stakes high in those talks?

Absolutely. The principle of "pattern bargaining" still holds. That's where the negotiations with one automaker set the pattern for future talks. In this case, General Motors and Chrysler have both struck deals with the union in which they have given promises of job security in exchange for lower wages (for newly hired workers.) But the union has shown a willingness to hold short strikes to press the automakers, and Ford is in no position to be pressed. Among the Big Three, Ford is in the worst financial shape. It lost $12.6 billion last year. A strike, even a relatively short one, could put Ford—and the union—in peril.

Now that Chrysler and General Motors have agreed to new contracts with the union, are they in a better position to compete against their foreign rivals?

Yes, but only up to a point. Chrysler and GM will now have lower overall labor costs, making them more competitive with "foreign transplants"—Japanese and European automakers who manufacture their cars in the U.S. These companies have younger, non-unionized work forces, so their labor costs tend to be lower than that of the Big Three. Of course, cheaper labor costs alone will not reverse Detroit's fortunes; U.S. automakers also need to improve the quality of their products and their image among consumers. But "these new contracts will certainly help them compete," says analyst Healy.

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