There's less than a week to go before the bargaining deadline on new contracts between the United Auto Workers and Detroit automakers, and the usual drumbeats of discontent are rising. Talks at General Motors are progressing, but the two sides are said to be far apart at Chrysler and Ford Motor.
Last week, UAW members at Ford plants voted 97% in favor of authorizing a strike should negotiations fail to produce an agreement by Sept. 14, when the current contract expires. (Workers at GM and Chrysler don't get to make such a threat because the union agreed to a no-strike clause in 2009 to help the two automakers recover from bankruptcy.)
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It all makes for good drama, but a strike authorization really doesn't mean anything. It's just another tool the union can use as leverage at the bargaining table.
I think the chances for a strike at Ford are nil, for reasons that I'll explain later. But that doesn't mean the company doesn't have a labor problem. Unlike GM and Chrysler, which were lucky to survive bankruptcy (thanks to Uncle Sam), Ford is seen in a different light by many. Because it "didn't take the money," Ford is perceived to be in better shape financially. Hourly workers figure their sacrifices helped Ford avoid bankruptcy and now they want to recoup some of the wages and benefits they gave up in recent years.
Management has an entirely different view, of course. Despite $6.6 billion in net profit in 2010 and $4.9 billion through the first half of 2011, Ford says the company still has an $8-an-hour U.S. labor cost gap with competitors like Toyota, Hyundai and Kia, so it wants to squeeze even more savings out of the next contract.
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UAW President Bob King is a pragmatist and has said many times that the union wants to be a partner to the automakers and that it won't make demands that would leave them at a competitive disadvantage. But his members at Ford, in particular, are feeling militant. Last year, they dealt King an embarrassing blow when they refused to ratify a proposed deal that mirrored union concessions at GM and Chrysler. Ford, they said, could afford to pay.
Clearly the two sides are not on the same page.
It doesn't help that Ford's board of directors gave chief executive Alan Mulally a 48% raise in 2010, to $26.5 million, and rewarded him with another $56.6 million in stock last March. Nobody, including King, would argue that Mulally hasn't done an admirable job leading Ford's turnaround since 2006. But the CEO's pay is excessive, argues King. "I don't know anybody who's worth that much," he told journalists earlier this year. (Frankly, I think I agree with him.)
Ford is quick to point out that the bulk of Mulally's compensation — all but $1.5 billion — is performance-based, and he has done a stellar job leading the company through an unprecedented industry crisis. But King thinks it's "morally wrong" for Mulally to be paid so much when some hourly Ford workers are earning $14 or $15 an hour and the union gave up pay increases and bonuses to help Ford survive.
When it comes to shared sacrifice, the union has another gripe, too. More than 35,000 of Ford's 41,000 factory workers signed a grievance last year after Ford reinstated raises, tuition assistance and 401(k) matches for white-collar workers. An arbitration hearing on that complaint is scheduled, coincidentally, for Sept. 15, a day after the bargaining deadline.