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Published: Tuesday, 10/18/2011

UAW-Ford contract now appears likely to be approved

BLOOMBERG NEWS

Ford Motor Co. may have dodged its first nationwide strike in 35 years and secured labor peace while the United Auto Workers adds thousands of new members.

UAW members at Ford went from voting 53 percent against the proposed contract for initial union locals last week to 62 percent in favor early this week. The union said 14,845 members at Ford had cast ballots in favor of the labor deal while 9,076 voted against. Ford’s 40,600 U.S. hourly workers will conclude balloting Wednesday.

The latest voting results “improve the likelihood of passage, as remaining plants would have to be over 80 percent opposed,” said Brian Johnson, an analyst at Barclays Capital. “Contract ratification now looks likely — opening up the way to a potential rating agency upgrade and dividend.”

Voting by the only Toledo-area Ford union local, at the company’s engine plant in Lima, Ohio, is scheduled for Tuesday.

The UAW was preparing for its first national strike at Ford since 1976. It would have cost Ford $273 million a day in lost revenue and $71 million in daily variable profit, Mr. Johnson said. Even bigger, he said, would have been the loss of reputation for failing to reinvent U.S. auto competitiveness. Workers at General Motors Co. ratified their new accord last month.

“I was surprised there wasn’t a negative reaction to Ford and GM’s rich contracts, but instead investors saw them as part of a bright new day in Detroit,” said Mr. Johnson, who estimates the deal will add $70 million annually to Ford’s labor costs. “Ford still has the highest-per-hour cost, as Chrysler started lower and GM likely benefits from greater skilled-trades attrition.”

Ford workers initially saw the contract as not nearly rich enough, said Gary Walkowicz, a union official with UAW Local 600 in Dearborn, Mich., who led a “Vote No” campaign. They were angry it didn’t include raises for senior workers or restore cost-of-living pay increases members gave up to help the automaker survive, he said.

Ford’s offer of 12,000 new jobs, $6.2 billion in factory upgrades, and work brought in from Mexico and Asia appears to have won over the majority of workers, said Harley Shaiken, labor professor at the University of California at Berkeley.

“Sure you have workers who are angry and wish they could have gotten more,” Mr. Shaiken said. “But what had been underestimated is how the jobs created in this contract reinforce the job security of existing workers.”

UAW President Bob King made the centerpiece of UAW contracts this year the jobs they create, including 6,400 at GM and 2,100 at Chrysler Group LLC.

Union leaders have said they expect voting at Fiat SpA-controlled Chrysler’s to be done this month.

Adding members is crucial for the UAW. Its membership has fallen from 1.5 million in 1979 to 376,612 last year.

“The conventional wisdom was that manufacturing in this country was dead and gone,” Mr. Shaiken said. “But Bob King has created jobs while also hanging on to health-care benefits and pensions for senior workers and getting a 20 percent raise for entry-level workers. That’s a pretty impressive achievement in this economy.”



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