Ford Death Watch 38: Wiggle Room

So Ford and the United Auto Workers (UAW) have hammered-out a new deal. Our fave sage Daniel Howes over at The Detroit News hailed the tentative agreement with the usual rhetoric: new paradigms, inflection points, fresh thinking, transformation and general bullishness. Yes, well, as over ten thousand Chrysler union workers recently discovered, there’s many a pink slip between the cup and the lip. Make no mistake: there are details bedeviling this Ford agreement. And the union rank and file are heading into the ratification process with their eyes wide open.

Obviously, job guarantees are job one as far as Ford’s UAW members are concerned. Post-Chrysler bloodbath, UAW president Ron Gettelfinger declared that he didn't know the Three-Headed Dog's chew toy would lay off some twelve thousand workers immediately after his members ratified their contract, and mumbled something about recovering lost shifts when “other products” arrive. Whether Big Ron’s lying or not doesn’t matter. If he didn’t know, he should have. If he did, he should have told his members. Meanwhile, Ford’s UAW members can be heard muttering “fool me once…”

Let’s be clear (even if the union isn’t): the new Ford contract does not, can not include iron-clad job guarantees. Post partum, Gettelfinger pointed to a two-page list of specific product and investment commitments to 19 Ford facilities and declared "This is one of our proudest moments right here in our negotiations." The papers in hand were an executive summary; the document the UAW boss will submit to his members for their consideration. Could the actual contract afford Ford the opportunity to do a Chrysler, trim model deadwood and cut shifts/factories? Well, duh.

Any union member laboring under the impression that Ford will keep building its current product line-up at the current pace at its current factories even as it sheds market share, burns cash and heads for Chapter 11 is dictionary delusional. One way or another, everything’s going over the side of this sinking ship: blue collar workers, white collar workers, plants, shift, models, brands, the lot. If Ford agreed to a contract with an iron-clad guarantee to maintain even three-quarters of its UAW workforce, you wouldn’t call that document a contract. You’d call it a suicide note.

UAW Supremo Ron Gettelfinger knows this. But rather than read his members the riot act and send the most vulnerable to the lifeboats (again), he’s chosen to pretend that Ford is on an even keel. In fact, Big Ron's minions have negotiated a seat on Ford’s Manufacturing Operating Committee, the ever-so-successful secret society that makes decisions about Ford’s future products. Like that’s going to help secure anything other than Big Ron’s power within the union.

But wait! There’s less! The contract has other “issues.”

In truth, the automakers’ multi-billion dollar payments into the union-controlled (i.e. lootable) VEBA health care superfund have been the engine of the UAW’s capitulation. GM and Chrysler got something of a discount on the deal (cash in vs. expected members’ health care liabilities). But Ford got a genuine bargain; they’re “contributing” just $13.2b (from God knows where) into the union-run “trust” to cover the Ford UAW members’ estimated $22b liability. In other words, Ford’s paying 60 cents on the dollar.

But union members don’t pay 60 cent dollars down at the doctor’s office. How will the UAW make up the difference between what they’re getting from Ford and what it costs to keep their Ford members healthy? Well, either they’ll invest the VEBA money wisely (as trade unions always do) and increase their members’ nest egg by 40 percent just in time for their old age or… they won’t. In that case, UAW members will face larger co-pays, health care cut backs, restricted doctor choice, etc. Occam’s razor anyone?

To soften this [s]inevitable[/s] hit on union members’ health care, as part of the agreement, the Blue Oval Boyz have agreed to spend the money they WOULD HAVE given to the VEBA on modernizing their factories by transforming them into flexible manufacturing facilities (multiple vehicles, one factory). The clear implication: the UAW took a hit for the team to “help” Ford invest in securing UAW jobs.

First, this assumes that flexible manufacturing is the key to FoMoCo’s future. Ford doesn’t even have ONE mega-hot product– never mind multiple variations (and let’s not talk about the company’s miserable history of badge engineering). Second, it assumes Ford has the money. If it does, it belongs to someone else; the company is mortgaged up to its logo. And third, it assumes that Ford’s signed an iron-clad guarantee in this regard. What are the chances?

More to the point, what are the chances the Ford rank and file will ratify this new contract– or at least get close enough to ratification that the UAW can throw the vote? It’s hard to say. But this is not a done deal.