Ford-UAW pact seen as important step, but problems still lie ahead
Ford Motor Company's new labor contract will put a big dent in its operating costs over the next 31 months, but the country's No. 2 automaker still faces monumental problems in a deeply depressed industry.
Ratified by a 3-to-1 vote of union members, the agreement with the United Auto Workers (UAW) - reached six months early - will save Ford at least $600 million and perhaps as much as $1 billion before the contract signed March 1 runs out in September 1984.
Company and UAW officials at the signing ceremonies in Detroit talked optimistically about the ''historic'' settlement as an important step toward better times for Ford and its employees. More realistically, a Ford turnaround is by no means assured by its new pact with the UAW.
Ford must show a marked improvement in sales figures in 1982 to regain firmer economic footing. The new UAW pact does not guarantee that. The reductions in Ford's labor costs are not expected to show up as lower sticker prices on cars. The company is expected to use its savings to reinforce its financial position weakened by $2.5 billion in losses over the past two years and to buy time to develop new products.
The agreement guarantees Ford neither profits nor a competitive advantage in price over its domestic or foreign rivals. It therefore does not promise any long-term solution to the company's underlying problems, according to some analysts.
It does give Ford badly needed support until the car market picks up again. Peter J. Pestillo, Ford's vice-president for labor relations, and other corporate officials made clear from the start of the talks with UAW that this was the company's major objective.
Developing new products ordinarily costs Ford about $4 billion a year. Without the concessions negotiated with UAW, putting this amount of money into products for the 1984 market would have been a serious problem. It is much less of one now.
Labor costs over the first year of the new contract will rise only about 2.5 percent, with other costs shifted into 1983 and 1984, years when the auto industry looks for significantly improved business. Over all, the labor cost increases over 31 months will be about 17 percent - if 8 percent a year inflation is assumed.
Ford workers voted 43,683 to 15,933 to accept the new contract in light voting. The agreement covers about 170,000 workers, 55,000 of whom have been laid off.
Douglas A. Fraser, president of the union, and other officials said that early returns that indicated a heavy vote of approval had kept many members from voting. Other union members had a different explanation: Many auto unionists, they say, were reluctant to vote for a contract with ''giveaways'' but were not so strongly opposed that they voted against it; they merely abstained. This was particularly true of the 55,000 workers on layoff, they add, who will not benefit from the new contract's job guarantees.