Ford Motor Co. and the United Auto Workers struck a tentative contract deal yesterday that mirrors a new contract at General Motors Corp. by committing Ford to spend up to $1.6 billion over three years to maintain the income of displaced workers.
It doesn't, however, immediately shrink the company's labor cost gap with Japanese automakers.
And it sets the stage for a showdown with Chrysler Corp., where top officials have insisted they can't afford to match wages and benefits paid by GM and Ford.
The UAW and Ford announced the new agreement yesterday after a 24-hour bargaining session.
Talks bogged down for a while Saturday night, union officials said, because of a $200 million disagreement on how much Ford should have to spend on the income maintenance commitment if a recession forces substantial layoffs. "This is an exceptionally good agreement. It touches all the bases: job security, income security, taking care of the problems of the retirees. It does it all," said UAW President Owen Bieber at a news conference yesterday afternoon.
Ford Chairman Harold Poling said he was pleased by the "good will" that continues to mark Ford's relationship with the UAW.
He was less upbeat, however, about the contract's effectiveness in trimming Ford's estimated $8-an-hour cost disadvantage against the Japanese assembly plants now operating in the United States. The cost gap, said Mr. Poling, "will continue to be a serious problem in the decade of the '90s."
The Ford agreement provides a 3-percent base wage increase in the first year, followed by two annual lump sum bonuses equal to 3 percent of base wages. Cost-of-living formulas and health care benefits were unchanged.
Like the GM pact, the Ford deal limits temporary layoffs due to slow sales to 36 weeks over three years, for workers with more than two years seniority.
Laid off workers are guaranteed Supplemental Unemployment Benefits which, combined with state unemployment checks, provide about 95 percent of take-home pay. Beyond those 36 weeks, workers are guaranteed full pay. As in the GM contract, the UAW acknowledged that it can't stop plant closings due to slow sales. UAW officials expect ratification of the Ford contract to be completed by Oct. 21.