Share this story
Close X
Switch to Desktop Site

Beyond the Ford contract

The historic contract just ratified between the Ford Motor Company and the United Automobile Workers is merely the first step in what will now have to be an intelligent and all-out effort to ensure the future well-being of Ford and in fact the entire US auto industry. By exchanging wage and benefit concessions for increased job security, both Ford and the union have in effect bought ''time'' for the scrappy No. 2 US car manufacturer. Ford's losses for 1980 and 1981 exceeded $2.5 billion. Thus, by entering into an agreement that could possibly save Ford as much as $1 billion in labor costs through late 1984, the company will have a unique opportunity to shore up its weak financial position and to develop new products.

As part of its long-range planning, Ford is committing up to $3 billion to develop its 1983 model line, including a new downsized pickup truck. The company is also breaking tradition by dropping the wraps on its '83 line, even though most of the cars will not be found in auto showrooms until fall at the earliest. But by these moves, coupled with the new auto contract, Ford executives are showing the type of creative management that many longtime observers of the industry insist will be necessary if Detroit is to turn itself around. That lack of farsighted management - throughout the industry - has been one of the major contributors to the industry's current woes.

About these ads

Unfortunately, given Ford's tenuous financial position, the new UAW concessions are not expected to translate into lower sticker prices. The agreement also keeps several plants in operation that might best have been closed, thus helping to keep overall production costs up. Yet, until Ford and the US car industry can manage to offset the $1,000 or so price advantage enjoyed by Japanese cars, buyers are expected to continue to be cautious. The current rebate program has not proven to be the lure that manufacturers had expected to boost sales.

Still, the new Ford pact is an important milestone for the industry if for no other reason than that it represents movement away from confrontation and towards cooperation between management and labor. Chrysler employees have also made significant concessions as part of the federal government's loan guarantee program. Thus, the way is now open for General Motors and the UAW to return to the bargaining table and attempt to work out an agreement of their own. A GM-UAW contract will admittedly be more difficult to reach, since GM has permanently shuttered five parts plants and temporarily closed two assembly plants since talks broke off in late January. But for both GM and the union the current industry-wide sales slump should be proof enough that Detroit's future can only be assured by a heady mix of cooperation - and wise manangement.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.