Ford-UAW Contract Bolsters Job Security

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Ford-UAW contract bolsters job security

Well before the start of negotiations between the United Auto Workers (UAW) and General Motors Corp. (GM) and Ford Motor Co., the parties indicated that their general goals would again be heavily influenced by conditions that have prevailed in the automobile industry since the beginning of the decade. On management's side, there has been the increasing competition in the domestic market from foreign companies which have more recently set up vehicle and parts production plants in the United States. To counter the generally lower costs of the foreign companies, Ford, GM, and Chrylser Corp. have closed marginal plans, modernized plants, moved from internal production of vehicle parts toward purchases from lower cost outside suppliers, pressed the UAW for moderate wage and benefit terms and cost-reducing changes in work rules and job assignments, and increased employee involvement in improving quality. On the union side, bargaining focused on countering the cut in jobs resulting from the companies' efforts to compete more effectively.

The 1987 negotiations, which began in July at both Ford and GM, were further complicated by a major competitive difference between the two companies, raising the possibility that they would break from the tradition of essentially identical agreements that has prevailed since the 1950's. The difference is the higher degree of vertical integration at GM, which produces 70 percent of the parts it uses, compared with about 50 percent at Ford. GM said this gave Ford a cost advantage because parts purchased from outside suppliers are generally less costly than those manufactured internally. Early in 1987, GM announced plans to alleviate the disparity by shifting about 10 percent of its parts production to outside suppliers. At the start of the contract negotiations, GM moved to further reduce the difference by proposing that employees receive performance bonuses linked to the quantity and quality of the output of their particular plant, with employees in parts plants being eligible for smaller maximum amounts than workers in assembly plants. This proposal was rejected by the union.

After bargaining simultaneously with both companies for about a month, the UAW, at the end of August, suspended negotiations with GM and focused on Ford, in accord with the union's usual "divide and conquer' strategy.

Prior to the mid-September contract expiration and scheduled strike date, Ford and the union had agreed, in principle, on a new job security program, easing the pressure on negotiators, who continued talking until they reached a peaceful settlement.

According to the UAW, the new Guaranteed Employment Numbers (GEN) job security program "moves well beyond' the Protected Employee Program adopted in 1984. Union officials said the new program will "maintain current job levels at all units in all locations and will prevent layoffs for virtually any reason except carefully-defined volume reductions linked to market conditions.' If employees are laid off because of volume reductions, Ford must recall them in proportion to any subsequent restoration of production before it can resort to overtime work. Ford is also permitted to lay off workers because of acts of God and other conditions beyond the company's control; the sale of operations as an ongoing business; and in cases where the workers have been assigned or recalled to temporary jobs.

The job security plan is scheduled to begin by January 1, 1988, backed by a $500 million Ford commitment. It provides for the number of "protected' employees at each plant to be increased when employees on the payroll at the effective date of the contract attain 1 year of seniority; when employees hired or rehired after the effective date of the contract attain 24 months of service; or when laid-off employees are recalled and receive pay for at least 26 weeks in any 52 consecutive weeks (this does not include employees recalled to meet the existing GEN requirements). …