Houston, Texas, 11/04/07

Ford Folds, Cuts Quick Contract Deal with UAW

Agreement on a new labor contract between the UAW and Ford Motor Co. came without a fight.

Ford apparently decided that the near-failure of the Chrysler deal at the rank-and-file level was enough threat to soften the company's bargaining stance.

I had expected a very hard line from unprofitable Ford.

The pattern of previous negotiations was preserved: new hires to get up to 50% less pay, and Ford rolls over about $22 billion in long term health care liabilities to the Union.

But the trump card was company promises to keep plants open. Chrysler recently surprised rank-and-file union members with model cuts and plant closings in the wake of their contract deal.

So the UAW's focus at Ford was job security.

Ford’s Way Forward turnaround plan had 16 plants scheduled to close. The UAW has extracted pledges to keep six of them open for the life of the contract.

Ford's SUV factory in Wayne, MI, was among those spared.

It looks to me like Ford has made a serious error. In return for a quick ratification vote, they have promised something which cannot be delivered: job security.

In my humble opinion, Ford needs to be reducing capacity, especially in the pickup/SUV area, and has few compelling products market wide.