Bargaining time in Detroit
FORD is No. 1 when it comes to bargaining strategy for the United Auto Workers union. The UAW has announced that Ford, rather than General Motors, will be its target in current national contract talks. And for good reasons: Ford is posting solid profits. It has low inventories. It has streamlined its workforce. Now, for those folks unfamiliar with the intricacies of Detroit's bargaining sessions, the objective - at least from the side of organized labor - is to wrap up a contract as quickly as possible. That means targeting a firm that can best afford increased wages or benefits resulting from a new contract, or, conversely, a firm that would be most eager to avoid a strike. Under both circumstances, Ford best fits the bill. Chrysler is not involved in the current bargaining since its contract expires in 1988.
The primary UAW objective is job security. Union leaders argue that the most productive workforce is the most job-stable workforce, assured, as much as market conditions will allow, of future work. And, in fact, job experts say there is a strong argument for job stability, as underscored by Japan's car industry. In Japan, industrial workers, such as in autos, tend to stay with a particular firm for many years, if not for all of their work experience. As a quid pro quo for job stability, the workers are expected to give the firm undisputed loyalty and high productivity.
Although Ford is still the second largest US automaker, behind GM, it heads the class in terms of financial ledgers. Last year Ford earned some $3.3 billion to GM's $2.95 billion. For the first half of this year, Ford is again out front. And Ford has a hefty overall cash surplus as well.
GM officials, and some GM workers, are upset at the UAW's decision to target Ford. GM argues that its situation warrants a type of contract different from what the union will likely get from Ford. GM makes up to 70 percent of its own parts, compared to about 50 percent for Ford. It has far more plants, some of which may have to be closed. It has far more workers than Ford.
All that said, the UAW will still go after Ford first. It would be far better for Ford and the UAW to reached a package, presumably before the Sept. 14 bargaining deadline, than to face a strike. And the UAW, for its part, surely must realize that Ford is in a better position to settle precisely because it has downsized its work force over the past several years. General Motors will need some latitude on plant closings and restructuring. Yet that need not be inconsistent with reaching concessions on job security, since many positions could presumably be cut through attrition, rather than layoffs.
In October, the current expansion will enter its 59th month - the longest recorded recovery in peacetime. Wrapping up an agreement as quickly as possible - to help keep the recovery going - makes better sense than a costly strike, which could only work against the current economic momentum. The obvious advantage of economic growth is that it puts money in people's pockets and enables consumers to buy a new car. That's something Detroit needs to remember as it proceeds with its talks.