Ford UAW Workes Authorize Strike As Contract Deadline Rapidly Approaches

With the September 14 deadline looming on the horizon, Ford auto workers are busy hammering out the details on a new labor agreement with the auto manufacturing giant. Despite the fact that Ford managed to retain a greater percentage of manufacturing workers over the last 3 years than cross-town rivals GM and Chrysler-Fiat, Ford’s UAW workers are angry and feel that they should receive some benefit from the company’s profitability over the last two years.

According to news reports, Ford’s UAW workers believe that their hard work and sacrifice were key to enabling Ford to avoid bankruptcy during the economic crisis of the last few years. While there is definitely some truth in this viewpoint, shrewd management and financial leveraging coupled with good fiscal practices were also large factors in Ford’s ability to survive the sharp economic downturn without government assistance.

Put another way, the fact that Ford has carefully managed labor costs helped them survive…workers get credit for doing good work, but financial responsibility was a major factor too. Yet, here we are a few days away from a deadline and the word “strike” has been uttered. What gives?

Ford Workers Authorize Strike

Despite Ford’s security, stability, and growth during trying times (read 2007 thru today), Ford workers at a number of key plants recently voted to authorize UAW leadership to strike if they are not able to come to an acceptable new agreement with Ford.

At this point, it should be noted that Ford is the only auto manufacturer of the so-called “Big Three” automakers were union workers still retain the ability to strike. General Motors and Chrysler-Fiat UAW workers are unable to strike due to no-strike clauses in their bankruptcy restructuring agreements, and the no strike rule means that GM and Chrysler workers won’t be able to effectively strike until 2015.

Informally, this is called the “Ford didn’t need a federal bailout penalty.” If Ford had asked the U.S. taxpayers for financial assistance, they might not be staring down a possible UAW strike right now.

Yet, to take the other side of this argument for just a moment, Ford’s UAW workers are understandably frustrated that they have not received a cost of living increase or pay raise since 2007. They feel that this is unfair, especially since salaried workers received benefit and salary increases in 2010…not to mention Ford CEO Alan Mullaly’s recent $65 million bonus.

Entry-level wages are also a point of contention. New workers receive between $14 – $16 an hour with senior workers making around $28 an hour as was agreed in a 2007 two-tiered pay structure negotiated by the UAW. This was done in an effort to lower labor costs and make Ford, who was struggling financially at the time, competitive with foreign and non-union shops. Now that Ford is more competitive, newer workers under the lower wage scale want to see their wages increased to match the wages paid to senior workers who were lucky enough to be hired prior to 2007.

Finally, it should be clear that even though there is widespread dissatisfaction among the workers, not all are in favor of the strike. Rumors are that many workers see a strike as potentially endangering jobs and Ford’s ability to stay competitive, so it seems that at least some of Ford’s UAW members understand a strike hurts at least as much as it helps.

Still, why authorize the strike this early in the negotiations? Ford’s workers can likely extract pay raises and a new profit sharing plan without resorting to threats, and if for some reason Ford management wasn’t willing to bargain, the UAW could have had a strike authorization in a matter of hours. The UAW jumped the gun, in my opinion, by getting authorization for a strike last week.

While the likelihood of a strike is low, there are many UAW workers who just don’t care about the why and how of the global auto industry. All they know is that Ford’s salaried workers and senior execs have made a lot of money lately, and that Ford’s corporate profits have been strong. They don’t care about Ford’s remaining $26 billion in debt, the way that the auto industry’s winners and losers can change rapidly, or the fact that nearly 10% of America is unemployed.

All these workers seem to care about is using a strike as leverage to “get theirs,” and based on the fact that strike authorization was approved quickly and easily, it seems like these workers have a strong voice inside the UAW.

If they do indeed strike, it will be a sad day for Ford, and perhaps even a sad day for America.