Ford Death Watch 38: Wiggle Room

Robert Farago
by Robert Farago

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 inevitable 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.

Robert Farago
Robert Farago

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  • Jdv Jdv on Nov 08, 2007

    Name: jdv | E-mail: | IP:

    Robert Farago:
    “The union management couldn’t care less about The Big 2.8’s survival, or their members’ best interests. They’ve got the Mother of All Payoffs: a $50b plus union-controlled health care fund.”

    I think the union bosses (and rank and file) have shown they care very much care about the health of the automakers in the fact that they made huge concessions. Things that are detrimental to the union. Like loss of jobs.

    Much of that detriment to the union is inevitable. But where I see the union doing the best they can, you see them as naive and unaware some may be laid off. You give neither the union management, nor the rank and file any credit at all recognizing the current environment. This aint 1970 anymore. Maybe they’ve changed. And maybe you just haven’t noticed yet.

  • Stuntnun Stuntnun on Nov 13, 2007

    "Ford doesn’t even have ONE mega-hot product–" ford and mazda have a few(hydrogen/battery/gas rx-8) ,wish i had the money to buy ford stock it may go a little lower but i think theyve shuttered enough plants to be very profitable in the future,mazda really seems to be the savior for them. check out the redesigned mazda 6 that gives you an idea of what the fusion and clones will look like ,im guessing they will be selling some cars if it handles as well as the original mazda 6-

  • Varezhka The biggest underlying issue of Mitsubishi Motors was that for most of its history the commercial vehicles division was where all the profit was being made, subsidizing the passenger vehicle division losses. Just like Isuzu.And because it was a runt of a giant conglomerate who mainly operated B2G and B2B, it never got the attention it needed to really succeed. So when Daimler came in early 2000s and took away the money making Mitsubishi-Fuso commercial division, it was screwed.Right now it's living off of its legacy user base in SE Asia, while its new parent Nissan is sucking away at its remaining engineering expertise in EV and kei cars. I'd love to see the upcoming US market Delica, so crossing fingers they will last that long.
  • ToolGuy A deep-dive of the TTAC Podcast Archives gleans some valuable insight here.
  • Tassos I heard the same clueless, bigoted BULLSHEET about the Chinese brands, 40 years ago about the Japanese Brands, and more recently about the Koreans.If the Japanese and the Koreans have succeeded in the US market, at the expense of losers such as Fiat, Alfa, Peugeot, and the Domestics,there is ZERO DOUBT in my mind, that if the Chinese want to succeed here, THEY WILL. No matter what one or two bigots do about it.PS try to distinguish between the hard working CHINESE PEOPLE and their GOVERNMENT once in your miserable lives.
  • 28-Cars-Later I guess Santa showed up with bales of cash for Mitsu this past Christmas.
  • Lou_BC I was looking at an extended warranty for my truck. The F&I guy was trying to sell me on the idea by telling me how his wife's Cadillac had 2 infotainment failures costing $4,600 dollars each and how it was very common in all of their products. These idiots can't build a reliable vehicle and they want me to trust them with the vehicle "taking over" for me.