Do I detect a bit of payback in this story? The UAW rank-and-file rejected a renegotiated contract from Ford intended to bring themselves into parity with GM and Chrysler, as has long been the practice for the Detroit automakers. In doing so, the workers also rejected the counsel of their own union, which had endorsed the new contract. Ford will have to operate at a disadvantage for the next two years in terms of compensation as a result:
Ford Motor Co. workers have overwhelmingly rejected contract changes that would have allowed the automaker to cut labor costs, leaving Ford at a disadvantage to its Detroit rivals as it continues its struggle to return to profitability.
The United Auto Workers union had given local unions until Monday to complete voting. But a person briefed on the voting said Saturday that the contract changes have been rejected by large margins. The person asked not to be named because the UAW hasn’t announced the results yet.
The UAW and Ford agreed to the contract changes several weeks ago, but Ford workers needed to ratify them. Ford has 41,000 UAW-represented workers.
Two large union locals in Kentucky and Ford’s home city of Dearborn rejected the contract Friday, sealing its fate. Those unions together represent 13,000 Ford workers. Exact tallies weren’t available, but at least 12 UAW locals representing about 27,500 workers so far have vetoed the deal, many overwhelmingly. Only about four locals with a total of 7,000 members favored the pact.
The national UAW position makes this a little more intriguing. Reader Geoff A thinks that this has been a Kabuki dance all along, and that the UAW approval of the contract was just a wink to the workers, giving the rejection a veneer of authentic grass-roots reaction. However, the UAW didn’t have to agree to renegotiate in the first place. Ford’s contract runs through 2011, and will remain in effect after this vote.
The UAW has used its leverage in Detroit to ensure parity between manufacturers, which is why Ford wanted to come back to the table. The unions had to give concessions during the bailouts in order to gain big chunks of GM and Chrysler, which didn’t happen with Ford. If Ford has a competitive cost problem with its compensation, it also has at least a little bit of a competitive labor advantage, although that hardly balances out or works in Ford’s favor.
Why did workers reject the pact? In part, they didn’t see much from management in contributions:
Rocky Comito, president of UAW Local 862 in Louisville, said Friday that workers felt they were being asked to sacrifice more than the company’s executives. Ford CEO Alan Mulally made $17.7 million last year, although that was down 22 percent from the year before.
“Some want to see management give more at the upper level,” Comito said.
Nevertheless, the rejection will almost certainly mean more cutbacks at Ford, especially if the economy doesn’t ramp up. This could be a very public example of cutting off one’s nose to spite one’s face.