AFSCME 3357-HOF'S BLOG

Ford Contract Approved by Landslide
The Union was in a Giving Mood

Ford's UAW locals quietly and nearly uniformly approved the recently-negotiated collective bargaining agreement. About 78% of voting members approved the contract.

Surprisingly, the Ford agreement passed much more easily than recent contracts at General Motors and Chrysler even though the Ford workers are giving up significantly more than their comrades who work for the other automakers.

The Detroit News finally shook loose some of the details on the contract and posted them in Thursday's edition. Like the GM deal, the Ford contract includes a retiree healthcare VEBA (trust). The deal also includes a 2-tier wage scale. The Ford deal apparently includes UAW carrots for job creation and retention and much more flexibility on work rules and job classifications.

The VEBA: Unlike GM, Ford did not pony up a large amount of new cash to fund the plan. Ford will get rid of $23.7 billion in liabilities with a $13.6 billion trust. New money contributions will only be about $3 billion. Six billion will come from notes issued by Ford, in other words, IOUs, and the remainder will consist of assets already pegged to retiree healthcare. If the Detroit News article and my 1 AM math are correct, only $7.6 billion of the VEBA, about a third of the entire actuarial liability will be backed by real cash assets, and because the VEBA won't be fully operational until 2009, the money doesn't have to be contributed now. I think Wimpy said it best: "I will gladly repay you Tuesday for a hamburger today."

The Wage Scale: Up to 20% of Ford's workforce can be made up of lower-tier workers who start at $14.20 per hour. In addition, Ford can hire "in-sourced" workers at the lower wage without counting toward the 20% cap. UAW Workers other than the lowest 20% will not get a "baseline" wage increase. The article is silent about bonuses.

Job Security: Ford agreed to keep open 5 facilities that were scheduled to be closed in Ford's "Way Forward" plan. Also Ford agreed not to build a "low cost" North American (read that - Mexican) facility during the contract. Ford agreed to invest in flexible manufacturing for its existing facilities. The UAW is doing its part in that area by agreeing to reduce skilled labor job classifications from 350 to 22.

In summary, the UAW gave about as much as you could expect it to give. It's now up to Ford management to cure its tendency to mis-spend product development and marketing resources and stop dumping money into black holes like Jaguar.