UAW votes down Ford labor contract

The astonishing turnaround at Ford (F) has been built on three legs. The first was the company's decision to take in over $20 billion, pledging most of its assets, before the recession began in earnest. It had enough cash on hand that it did not have to turn to the government when things got bad. The second was that Ford brought new, fuel-efficient cars like Fusion and Focus to market quickly, offering cost-conscious buyers a set of U.S. alternatives to foreign vehicles. The third was that Ford radically cut costs, and many of these expense reductions were done with the help of the UAW.

Perhaps the UAW members think that Ford has prospered, at least relative to other U.S. car companies, at their expense. Ford recently negotiated a new contract with union representatives that would have allowed it to cut costs further. Over the weekend, the rank-and-file voted it down. The new agreement was essential to America's No. 2 car company because it is still at a labor cost disadvantage to Chrysler and GM.


Ford had offered workers a $1,000 bonus to ratify the new deal, but the contract would have frozen entry-level pay and limited the union's ability to strike.

The union may elect not to come back to the bargaining table. Ford cannot afford to press the issue because a strike would put its progress at picking up market share in the U.S. in jeopardy.

With their labor concessions already in hand, GM and Chrysler have an advantage over Ford for the first time in a long time.

Douglas A. McIntyre is an editor at 24/7 Wall St.


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