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Ford's Restructuring Plan and the UAW

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Ford's Restructuring Plan and the UAW


Ford's Restructuring Plan and the UAW

Ford's Restructuring Plan and the UAW

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Micheline Maynard, Detroit bureau chief for The New York Times, talks about what Ford Motor Co.'s restructuring plan means for workers. The contract Ford has with the United Auto Workers union stipulates mass payouts, early retirement and continued hourly wage for laid-off workers.


So while Ford is slashing up to 30,000 jobs, that does not mean all those workers will automatically head to the unemployment office. Ford's contract with the United Auto Workers includes certain job security measures that protect employees even when they're laid off. For an explanation, we turn to Micheline Maynard. She's the Detroit bureau chief for The New York Times and she joins us now. So, Micheline, what does it mean to be fired or laid off under the UAW contract?

MICHELINE MAYNARD: Well, under the terms of the UAW contract, no one actually is fired. Under the contract, auto companies have to keep their plants idled until the end of the contract. In this case it will expire in the fall of 2007. So they can't actually shut everything down, close the doors and sell the property. They actually have to negotiate a plant closing in the national contract talks. So while people are laid off from these idled plants, they'll actually receive about 90 percent of their pay, and they'll get full benefits. So it's actually very favorable coverage.

NORRIS: So, and does that apply to all of the employees in these plants?

MAYNARD: Well, it does not apply to the salaried employees. Once the plants close, unless there's another job inside Ford, the salaried employees essentially just either can retire or they lose their jobs completely.

NORRIS: But for the employees on the line, they essentially will keep drawing a paycheck even though they're not working.

MAYNARD: That's right. And this is the job protection that goes back to the 1990 contract talks between General Motors and the UAW. And, at the time, Iraq had just invaded Kuwait, and General Motors did not want to take a strike. This was one of the UAW's top demands for job security, and, at the time, nobody ever thought the industry would get in as much trouble as it has gotten, and so General Motors agreed to this. And because there's something called pattern bargaining in the UAW, the other car companies accepted it as well.

NORRIS: How much do these employees earn?

MAYNARD: They earn about $27 an hour in straight pay. They also get cost-of-living allowances, and then if you fold the cost of their benefits in on top, it's about $67 a worker.

NORRIS: And they would earn 90 percent of that while in idle status.

MAYNARD: They would earn about 90 percent of that, so that would roughly be, you know, $55 to $60 an hour.

NORRIS: So I'm trying to understand why Ford would do something like this. I don't understand where the cost savings would be.

MAYNARD: The eventual cost savings comes at the end of the contract, when they are able to close these plants permanently and take these workers off their payrolls. In just straight pay, a UAW member earns upwards of about $65,000 a year, but then when you fold in the cost of benefits, it's over $100,000 per worker. So at some point, those costs do drop off the system, but there will be an immediate cost to Ford for actually announcing these plant closings.

NORRIS: And what do these workers do with that time? Do they recalibrate their job prospects?

MAYNARD: There are all kinds of retraining programs for these folks. People take classes. A lot of people go and get computer training. Some folks are home. Some folks are at their vacation homes, on their boats. You know, it's terrible to face the prospect that your job will be going away in a year and a half or in two years, but on the other hand they get paid until then, and then when they retire, they still get almost fully paid health care, and they'll have a pension. So it's sort of a soft landing.

NORRIS: So it sounds like if you just read the headline on this story, 30,000 jobs cut by Ford, you don't get the whole story.

MAYNARD: You don't. And I think the UAW has done really an admirable job in getting wonderful benefits for its workers that nobody else has in the economy. The other flip side of that, though, is that there are fewer and fewer and fewer of these kinds of jobs.

NORRIS: Micheline Maynard, thanks so much.

MAYNARD: Thank you very much.

NORRIS: Micheline Maynard is the Detroit bureau chief for The New York Times.

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