DEARBORN, Mich. – The jokes came quickly as officials of Ford Motor Co. stretched across a conference room table Monday to shake the hands of United Auto Workers negotiators and formally kick off contract talks.
“You pull hard, I’ll be on that side,” quipped Ford Executive Chairman Bill Ford as he grasped the hand of UAW President Ron Gettelfinger.
“I look better than Rick, huh?” said Chief Executive Alan Mulally, referring to General Motors Corp. Chairman Rick Wagoner, whose hand Gettelfinger shook earlier in the day as talks began with GM.
Although both sides pledged cooperation, their tones were more serious when asked about the contract talks.
Bargaining with Ford and GM formally got under way Monday and began with Chrysler Group on Friday, but in reality, talks have been going on for months. The national contracts with all three expire on Sept. 14.
“The harsh reality, though, is with all the progress that we’ve made together, we still have a lot to get done” during these negotiations, Joe Laymon, Ford’s group vice president of human resources and labor affairs, told reporters.
Industry analysts have said that all three automakers must cut costs to survive. It’s most critical at Ford, which lost $12.6 billion last year and has mortgaged its factories to secure a $23.4 billion line of credit to cover losses and fund its restructuring plan.
All three say their hourly labor costs are about $25 more than their Japanese rivals, Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co.
But Gettelfinger, speaking after the GM handshake ceremony, said the union is not in the mood to make concessions. The UAW has said that labor costs represent only 10 percent of the price of a new vehicle.
At Ford’s Dearborn headquarters, he wouldn’t concede that Ford’s financial situation is worse than its Detroit-area counterparts.
“They’ve got a lot of cash, by the way,” he said. “That’s not an issue for us right now.”
But Laymon said the union knows better.
“I think Ron is well aware of the financial situation of Ford Motor Co.,” he said.
“It’s no secret that our CEO-president said we recently took out the largest home loan in the history of mankind. If we were in great financial standing we would not have to have mortgaged the assets,” Laymon said.
Neither the companies nor the unions would talk specifics about what they expect to get out of the negotiations. But company officials have said privately that they need to cut retiree health care and other costs to better compete with the Japanese.
Gettelfinger said pattern bargaining, in which one company reaches a template agreement for the other two, will take place this year, and he said the UAW would seek a four-year contract. He also said a strike is possible, despite the financial conditions of the three automakers, which last year lost a combined $15 billion. A target company for pattern bargaining has not yet been selected, he said.
The UAW president said he doesn’t accept the premise of the cost gap between the Detroit Three and the Japanese, but then said it was possible.
“I don’t question … there’s a differential. By the same token, I recall reading a story not too long ago that talked about how Toyota workers were making more than Big Three workers,” Gettelfinger said.
GM, which lost about $2 billion last year and still isn’t making money in North America, clearly will put concessions on the bargaining table.
“We know that these are going to be difficult contract negotiations,” Diana Tremblay, GM’s chief negotiator, said after the handshake at a GM-UAW human resources building along the Detroit River. “We know that we need to make some changes to make the business sustainable over the long term.”
Gettelfinger also said this year’s talks are about defending America’s middle class and are not limited to wages and benefits in the auto industry.
The UAW, he said, already has helped the auto companies with health care cost concessions and local agreements to make individual factories more competitive.
“I think it’s fair to say we’ve given a lot,” he said.
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