Ford's pact with UAW pressures GM's talks Terms of contract would strain rival

Automakers

September 18, 1996|By Ted Shelsby | Ted Shelsby,SUN STAFF

Dale Brickner yesterday summed up the tentative agreement between Ford Motor Co. and the United Auto Workers this way: It is General Motors who will pay.

Brickner, the associate director of Michigan State University's School of Labor and Industrial Relations, believes, like some other industry observers, that it will "be a pretty rough row for GM to hoe" if the terms of the contract are applied to General Motors Corp.

Some say that unless the union gives ground on the key issue of requiring the automakers to maintain 95 percent of their current jobs over the life of the three-year pact, it could force GM into a strike situation.

"There is no question about it," said Harry J. Holzer, professor of economics at Michigan State, "if GM accepts the Ford pact it will put them at a competitive disadvantage."

He added: "This might be a good contract for Ford, but it's not a good contract for GM."

General Motors has the highest vehicle production costs in the industry, according to James Harbour, president of Troy, Mich.-based Harbour & Associates Inc., an automotive research company.

GM's costs of assembling vehicles, engines and transmissions and the stamping of body parts, are 24.8 percent higher than Ford's, Harbour said.

GM employs more than half of the Big Three's 387,000 workers covered by the UAW's national contract, including about 3,100 employees at a van assembly plant in Baltimore. It also uses 17 percent more workers per vehicle assembled than Ford.

According to Holzer, Ford was more aggressive in cutting the size of its work force in the 1980s than was General Motors.

"Now GM wants to reduce its employments level," said Holzer, who expects the nation's largest automaker is looking to eliminate between 40,000 and 70,000 jobs.

"GM feels this is very important to their livelihood," said Holzer. "They are under more pressure to downsize now, and the Ford agreement would but GM in a real bind."

When push comes to shove, there are some in the industry who think the union will blink first.

"General Motors is in a different category than Ford, and the UAW will recognize that and adjust an agreement accordingly," said Michael Flynn, associate director of the University of Michigan's Office for the Study of Automotive Transportation.

But there was no hint of compromise on the part of the union Monday night when a tentative settlement with Ford was reached.

During a news briefing, UAW President Stephen Yokich said: "We were going after an agreement that all companies could live with, and that's where we are."

GM angered the UAW last week when it stated in a proposal to unions "that guaranteed levels of employment will not work." The company proposed, instead, that current workers be guaranteed steady income until they retire, but that the union's membership be allowed to shrink drastically after that.

Ford's agreement to maintain 95 percent of its workers gives the union the muscle needed to prevent outsourcing, the industry's term for buying parts from low-cost, usually non-union, outside suppliers.

This also hurts GM a lot more than it does Ford or Chrysler Corp. As a rule of thumb, said David Healy, an auto analyst with Burnham Securities, GM makes 70 percent of its parts and buys 30 percent on the outside. Ford, however, buys 50 percent of its parts from outside suppliers and Chrysler buys 30 percent on the outside.

There is room for compromise and with GM in the midst of an aggressive campaign to try to grab a bigger slice of the U.S. auto market by introducing 14 new vehicles over the next year, it may be willing to give and take to avoid a costly strike.

"The Ford agreement doesn't represent a poison pill for General Motors," said Flynn. The two sides might not be as far apart as it seems.

"An agreement requiring GM to maintain 95 percent of its workers might be hard to swallow," said Flynn, "but they may be able to swallow something as high as high as 85 percent or 90 percent. I don't think it is an undoable."

Another way of getting around the problem, he said, would involve the replacement of workers as they retire. "If the requirement is to replace one of every three at Ford, the union might agree to replacing one of every five at GM. There is room to be flexible."

GM will accept most of the terms of the Ford contract, said Healy. "The sticking points will be outsourcing and job security," he said. "These are different issues at GM than at Ford."

Pub Date: 9/18/96

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