Auto/Economy
11:06 am
Wed October 5, 2011

Ford and the UAW

There’s a fair amount of grumbling in union ranks over the new four-year contract the United Auto Workers reached with Ford.

Some workers are unhappy that they failed to gain back concessions, and that there is nothing new for the retirees, who overwhelmingly outnumber those still working on the line.

Ford workers also thought they deserved more than those at GM and Chrysler, mainly because their automaker was the only one not to declare bankruptcy. They get a little more, but not much.

Yet it is hard to imagine the workers not ratifying this deal.  There are some sweeteners: for those who have worked for the company at least a year, a six thousand dollar bonus for signing the contract, a thousand more than General Motors workers get.

Ford workers also get what seems to be a slightly better profit-sharing deal. Once, all autoworkers got an automatic COLA, or cost-of-living adjustment based on inflation. That’s gone now, but they do get “inflation protection” money; six thousand a year for Ford workers to five thousand a year for those at GM.

The automaker also agreed to create nearly six thousand new jobs. Plus for the first time in years, the workers are not being asked for still more concessions -- at least not as overtly as before.

Yet this contract is revolutionary in a subtle way. It does make permanent some of the radical concessions workers agreed to when their companies were in real danger of going out of business.

Previous generations of UAW leaders would never have dreamed of a two-tier wage scale. The whole philosophy of the union was equal pay for equal work. But when the carmakers were struggling for survival, the unions agreed that they could pay entry-level workers much less.

At the time, many in the UAW felt that this was an unwelcome, but necessary concession that would disappear once the automakers were back on their feet. But not only has the two-tiered wage system not disappeared, it has now been institutionalized.

True, Ford’s entry-level workers will get a significant raise over the life of this contract to more than nineteen dollars an hour four years from now. But that still amounts to barely forty thousand dollars a year, a sum sure to be weakened by inflation.  And you can’t raise a family and buy many new cars on that. If this trend continues, it will mean a significant long-term shift in the economic status of autoworkers, with corresponding long-term social effects. Still, the auto companies need to be competitive.

Phil Nussel, the managing editor of Automotive News online, the industry bible, told me “The Detroit Three used to need to sell fifteen million units a year to make money. Now, they can be profitable at eleven million.” That saved the industry, he said.

Still, we would do well to remember that this is an industry that employs far fewer workers than a decade ago. Ford, GM, and  Chrysler workers are facing a future that will never be as rich as it once was. But there are tens of thousands of former auto workers who, as it now stands, have no jobs and no future at all.

And I think we all need to think about what becomes of them.