Union Obstinance Resurfaces for Mulally as UAW Vetoes Concessions for Ford
By Michelle Krebs November 2, 2009Alan Mulally might have reckoned he left union discord behind when he left aerospace giant 
Boeing Co. to become Ford Motor Co.'s president and CEO in 2006. But this weekend's resounding dismissal of Ford's desired concessions from the United Auto Workers union may set the tone for ongoing tension between Ford and its union similar to that Mulally became accustomed to at Boeing.
Although nationwide voting will not be official until 
sometime today, the UAW already was conceding its rank-and-file workers had widely rejected a Ford proposal of contract concessions that would equate to those the UAW earlier this year granted General Motors Co. and Chrysler Group LLC, both of which tripped through hasty Chapter 11 bankruptcies this summer.
This despite the fact UAW counterparts at the Canadian Autoworkers Union approved the concessions.
Ford felt justified in expecting an amended labor agreement that would put the company on equal footing with the new contracts now in place at GM and Chrysler. Union members, meanwhile, seemingly have taken into account the almost daily headlines of Ford's resurgence and the likelihood the company will report a third-quarter operating profit this week.
Union members also may have tired of the long-running atmosphere of expected givebacks to Detroit's struggling automakers. The UAW just restructured its labor agreement with Ford in March.
This time, Ford sought a cap on wages for new hires and a lengthy no-strike commitment, as well as certain job-classification and health-benefit modifications. The deal was intended to bring Ford's contract with the UAW to parity with those the UAW granted to Ford's Detroit rivals.
CEO's Seen This Movie Before
For Mulally, who is trying to lead Ford out of the auto industry's deepest slide in 40 years, one that also is coinciding with an epic U.S. economic decline, the situation must come with a high degree of disconcerting déjà vu.
Mulally was with Boeing for 37 years and when he left was executive vice president and president and CEO of the company's Commercial Airplanes unit. Boeing for the better part of the past decade has played one side of a rancorous and often combative relationship with its primary labor union, the International Association of Machinists. In 2005, about a year prior to Mulally's departure for Ford, Boeing and the IAW - representing about 18,000 workers in Boeing's hometown of Seattle, Washington, as well as in Oregon and Kansas - locked in a bitter clash in which the union called a month-long strike, shutting down production lines for the company's mainline 737, 747, 767 and 777 commercial jetliners.
Both sides reported their positions were widely divergent, with Mulally at one point saying the difference amounted to more than $1 billion. The strike ended largely because the airline industry was surging, Boeing's order book was bulging and it pragmatically acceded to the union - a situation at least broadly similar to Ford's current standing as the healthiest of Detroit's automakers and with many industry analysts projecting a gradual but steady increase of auto sales from which Ford appears well-positioned to benefit.
Macro Trends
The UAW membership apparently feels it's given enough, particularly to an auto industry that's already asked for - and been given - a lot lately. Moreover, the union has endured the loss of tens of thousands of members as the Detroit Three automakers have radically downsized in the past two years.
Meanwhile, import automakers have continued to take Detroit's market share and build new transplant operations in the U.S., almost all of which are in non-unionized southern states. The trend is a disturbing one for the UAW and all union supporters, one that also threatens to create a labor divide almost singularly between the largely union-supporting northern states and the south.
As Ford absorbs the UAW's latest message, it is up to the industry and the nation to decide which side's position is more socioeconomically palatable. Business and auto-industry supporters have said the UAW is shortsighted to hamstring a recovering Ford, notwithstanding the fact it seems to be the strongest of the Detroit Three.
Union advocates may seize the UAW's action as a stance it's high time was taken. After already agreeing in March to new wage structures, should the UAW think, after all, of the recent news Ford is considering building its European Kuga crossover in Louisville, Kentucky, and exporting it back the Continent rather than continuing production in Germany? It's easy but too simplistic to point to the dollar's recent slide versus the euro as the sole factor in "outsourcing" to the U.S. vehicle assembly that currently takes place in Germany.
With the number of its rank-and-file decimated and its recent role as the figurative villain for much of went wrong with Detroit, the UAW needs to determine where its strategic retreat must end. With its rejection of Ford's overtures, the UAW - but not its leaders - has drawn the line in the sand. At least as it relates to Ford and at least for now.
Meanwhile, there is a compelling case study for Ford and the UAW underway right now at Mulally's former employer.
After absorbing another financially crippling strike last year by the IAW, Boeing last week dealt out what seems to be retribution for the union's long-hassling ways: it announced a second production line for the 787 jetliner will be tooled in Charleston, South Carolina, in a nonunion facility rather than in a Seattle-area IAW plant.
"This looks very much like a company that's tired of dealing with this union and they've found a way out," an analyst told the Associated Press.
The UAW now must walk a similar line between assuming the moral high ground and instilling in its partner the sense it must find a way out of its union relationships. For a multinational company such as Ford, the "way out" could be found any number of low-wage regions. - Bill Visnic, Senior Contributing Editor
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Hopefully this decision by they UAW rank-and-file does not deem them uncompetitive and send work elsewhere (whether to non-union plants or outside the US). I understand nobody wants to give, but we also want work...and our children to work.
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