American Icon (45 page)

But there was more to the deal than the VEBA. General Motors and the UAW also agreed that the automaker could pay new hires who were assigned to what were now identified as “non-core jobs” substantially lower wages and provide them with fewer benefits. These jobs included most factory positions not directly involved in the production of vehicles or vehicle components. And the agreement changed the rules governing GM’s jobs bank. From now on, workers could say no to only one job offer. If they did not accept the next position GM offered after that, they would have to leave the company. In exchange, GM made substantial new product commitments to the UAW and promised additional investment in its American factories.

On October 10, the UAW announced that its members had ratified the agreement. But the vote had been perilously close at several factories. It would be even closer at Chrysler, which announced an almost identical agreement with the union the same day after a brief walkout lasting less than seven hours.
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F
ord had said all along that, if it could not go first, it wanted to go last. By the time formal high-level negotiations between the Dearborn automaker and the UAW resumed on Wednesday, October 31, the terms of the UAW’s deals with GM and Chrysler had been published. Ford knew exactly what the union was willing to accept. It also knew that the UAW was willing to bend the pattern, because it had given Chrysler slightly less favorable terms than it had negotiated with GM. Ford hoped it could tweak the contract to better meet its needs. It might even be able to get a sweeter deal from the union, because Gettelfinger would not have to offer the same terms to GM or Chrysler.

Once again, Ford’s special relationship with the UAW paid off.

The company successfully pushed for more favorable terms on the two-tier wage system. The deals the union cut with GM and Chrysler were tied to specific job classifications. Ford saw several problems with that. For one thing, many of those non-core jobs were the same cushy positions UAW members aspired to at the end of their careers. Ford suspected that was a big part of why ratification proved so difficult at some of its competitors’ factories. Those workers often carried a lot of clout on the assembly line. At the same time, Ford was worried that the system GM and Chrysler had negotiated with the union left the door open to ongoing disputes at every facility over every job. So Hinrichs and Mulloy proposed a less complicated approach. About 20 percent of Ford’s UAW-represented workers were employed in non-core jobs. Ford suggested that all new hires come in as second-tier workers regardless of what job they were assigned to do, but agreed that no more than 20 percent of Ford’s hourly workforce would be made up of these lower-wage workers. If it reached that cap, some second-tier workers would have to be promoted to the first tier before Ford could hire any more entry-level employees. The UAW agreed. The union also agreed that any new positions the company created by bringing work back into its factories that was currently being performed by outside suppliers could also be filled with second-tier workers without those new employees counting toward
the total percentage. The union’s ranks were dwindling, and it needed to add more members to survive financially. So Gettelfinger and King viewed this as a win for both sides.

Ford also got a better deal on the jobs bank. Its workers could stay in the program for only one year and had to accept any job Ford offered them, even if it required them to relocate.

In exchange for these more generous terms, Ford not only made good on the product commitments Mulally had made back at the Dearborn Inn earlier that year but also agreed to keep several U.S. plants open that had been slated for closure as part of its Way Forward restructuring plan. These included Ford’s Ohio Assembly Plant in Avon Lake and the Wayne Stamping and Assembly Plant.
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Gettelfinger was a big believer in old-school negotiating tactics. He thought the only way to reach the best possible deal was through marathon, around-the-clock negotiations. So that is what he insisted on at Ford, even though most of the heavy lifting had already been done in the secret sessions early that year. Both sides stayed at World Headquarters until almost eleven o’clock on Halloween night, and they were back at the negotiating table by seven the next morning. From that point on, there were no more breaks.

Everything was wrapped up by Friday evening, with one exception—the VEBA. Here, too, the UAW was willing to give Ford slightly more favorable terms than it had negotiated with GM and Chrysler, but it was still not good enough for Leclair. He continued to push for more stock and less cash. As the sun set on Saturday, the two sides were no closer to a deal than they had been that morning. The other Ford negotiators could see that Gettelfinger was losing patience and started to worry that the whole agreement might unravel. Ford’s labor team told Leclair that the company had to be more flexible. Leclair refused to budge. Mulally was brought in to mediate.

As Ford’s senior leadership debated the issue on the twelfth floor, Hinrichs got word that the UAW bargaining team was getting ready
to leave. He ran downstairs to try to keep Gettelfinger and King at the table. Hinrichs launched into a long, rambling presentation outlining all of the product commitments Ford was prepared to make in its U.S. factories if it got the deal it needed on the VEBA. It was all stuff they had heard before. The union men listened, but they were growing impatient. Just when he thought he was losing them Hinrichs got a call from upstairs. He whispered into his phone for a few moments, and then asked Gettelfinger to follow him up to Laymon’s office. Mulally was waiting there when they walked in. Leclair was nowhere to be seen. Mulally explained that something had come up at the Jaguar–Land Rover headquarters in England that required the CFO’s immediate attention. Unfortunately, someone else would have to take over the VEBA negotiations. Mulally apologized. Gettelfinger grinned. He agreed to wait while Ford controller Peter Daniel drove into the office from his home.

By the time Daniel arrived at World Headquarters, it was about 10
P.M
. When the two sides reconvened at the bargaining table, it was closer to midnight. Daniel laid out the following terms: Ford would pay $17.3 billion into the VEBA trust. That was roughly the same percentage of its total liability that GM and Chrysler were putting into theirs. But Ford could cover only 40 percent of that with cash. The rest would have to be paid in the form of convertible notes. That was substantially less cash than the other two automakers were putting up, but it was as high as Ford could go. However, the company would agree to invest the difference in its U.S. factories. It took almost three hours to go over the details. Just before 3
A.M.,
Gettelfinger pushed back his chair and stood up. Hinrichs thought he was going to walk out again. Instead he looked around the room and then spoke in a voice that betrayed little of the exhaustion everyone else was suffering.

“We need this VEBA structured the way it’s proposed, because we need the investments in our plants to keep our people in those plants,” he said solemnly. “I take responsibility for what we’re agreeing to. We need to get this deal done.”

The Ford negotiators looked at each other with wide eyes. It was over. At 3:20 Sunday morning, Ron Gettelfinger and Alan Mulally shook hands in Joe Laymon’s office. Joe Hinrichs, who had not even
taken a nap since Thursday, found he could not stand up. He had to call for a driver to take him home.

V
oting on the new contract began four days later. Ford had no trouble winning ratification for its deal. Few workers were happy about the concessionary agreement, but most viewed it as a necessary evil.

“I figure in today’s economy, this is probably the best we’re going to get,” said John Kujat, a Michigan Ford worker, as he cast his vote in favor of ratification.

On December 3, the leaders of Ford Motor Company and the United Auto Workers gathered at World Headquarters to sign the formal document. Both sides praised the spirit of cooperation that had characterized their talks since the beginning and expressed their confidence that the deal would lead to a better future for the company and the union.

“This is an historic day for Ford,” Bill Ford declared. “The teamwork was amazing, and we came up with a contract that is—in my mind—excellent for the employees, excellent for the retirees, and great for the company.”

Mulally did not get everything he wanted. The jobs bank was still there, though there were few workers left in it and those who remained would be gone within a year. But it was close enough. The new deal with the UAW had not only gone a long way toward closing Ford’s labor cost gap with its foreign competitors, but also moved a huge chunk of the company’s legacy costs off the books. Mulally had done what many inside the Ford believed was impossible: He had figured out a way to profitably produce cars in the United States.

Now he needed to convince the American people to start buying them.

Selling It Like It Is

I
f Toyota had a rock star in its ranks, it was the gaijin Jim Farley—the American marketing savant behind its über-cool, youth-oriented Scion brand, and the man credited with making Lexus the Cadillac of luxury automobiles. Farley was the cousin of zany, drug-addled comedian Chris Farley, and it showed. He looked like a thin version of his more famous relative and had something of his unhinged air that, combined with his often out-of-control hair, gave the impression of a mad scientist probing the outer limits of the Japanese automaker’s staid corporate culture.