Auto workers face tough contract fight with GM. Beleaguered car maker says it can't afford to give what prospering Ford gave
When negotiators for the United Auto Workers return to the bargaining table at General Motors today, they face much tougher going than they did in talks with the Ford Motor Company. Although forced to extend their deadline by more than two days, officials for Ford and the UAW were able to reach a contract settlement without a strike. This week, Ford's 104,000-member rank-and-file will begin voting on the new three-year contract.
By all indications, they will give overwhelming approval to the package, which includes a first-year wage hike, second- and third-year bonuses, improvements in Ford's pension and profit-sharing programs, and perhaps most important a $500-million job security provision.
``It will go over real good with our membership,'' says Orville Spencer, president of UAW Local 36, which represents workers at the huge Wixom Assembly Plant outside Detroit.
UAW leaders have been hoping the Ford settlement would serve as a model that GM would not be able to turn down, either. ``It'll fit,'' says Donald Ephlin, the UAW vice-president who will be in charge of negotiations at General Motors. ``You have to tailor it a little to GM's specific problems, but I don't see any reason it can't be put together.''
But in recent weeks, top officials at the No. 1 carmaker have insisted they need to have an agreement tailored to their own needs. Specifically, GM is going to seek a reduction in pay and will defend its intentions to sharply scale back its operations.
``There are going to be a lot of T's and I's different in our contract than Ford's because we're structured so much differently,'' says General Motors Chairman Roger Smith.
Just how much different are conditions of the nation's two largest car makers? While Ford is clearly on the upswing these days, GM is suffering one of the worst slumps in its corporate history.
Ford outearned General Motors last year for the first time since 1924, and its January-through-June profits this year totaled $3 billion versus $1.9 billion for much-larger GM. Ford's market share has jumped from 18.2 percent in 1986 to 20.1 percent so far this year, while GM's share of the overall US new car market dropped from 41.0 percent to 37.3 percent.
Partly as a result of these sales trends, Ford's factories are running at 115 percent of capacity, while GM's plants are operating at 77 percent.
GM's problems are magnified by losses of more than $1 billion a year on its component operations, the plants that build 70 percent of the parts used in its cars and trucks. (By comparison, Ford builds less than 50 percent of its components.) General Motors plans to close more than a dozen assembly and component plants, and it has loudly hinted it could close many more if it does not get the contract it seeks from the UAW.
GM officials argue that they are only planning to do what Ford has already accomplished.
They note that Ford scrapped many of its money-losing component and assembly plants during the deep recession of the early 1980s, when the UAW was in no position to object. As a result, Ford's hourly work force has been trimmed by a third since 1979, while GM's union rank-and-file is down barely 20 percent.
Despite the differences between the UAW and GM positions, union leaders insist they will be able to bend GM to their way of thinking. But they are alone in their enthusiasm.
Ronald Glantz, automotive analyst for Montgomery Securities in San Francisco, says he believes the two sides are in for a long confrontation. ``General Motors will have a minimum of a three-week strike, even if they like the contract,'' he says, because the carmaker is so overstocked with unsold inventory.
Mr. Glantz believes GM will use the opportunity to shut down its assembly lines without having to pay workers the special unemployment benefits. As for a worst-case scenario, Glantz says, ``You could see a 10- or 12-week strike if this contract were as bad as it appears to be on its face for General Motors.''