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“What if we can beat GM and Chrysler to the punch?” he asked. “What if we can negotiate our own deal with the UAW first?”

It would not only keep Ford from being disadvantaged, but also free up cash that Booth could use to buy back debt. Mulally was not sure. He was afraid it might look like Ford was taking advantage of the situation, risking the ire of the federal government and undermining the goodwill that it was starting to build with the American people.

But Hinrichs persisted, and the talks between the UAW and the other two automakers continued to drag on. Gettelfinger was clearly hoping the Obama administration would step in and offer better terms for his members, which had done their part to put the new president in the White House. Yet with each passing day, the union was looking more like the villain in this drama. By early February, Hinrichs was convinced that Gettelfinger would jump at the chance to demonstrate his willingness to compromise.

“See what you can do,” Mulally told him.

Hinrichs almost ran down the hall to Mulloy’s office, catching him just as he was leaving for the night.

“We gotta go see Ron,” he said with a triumphant grin.

Despite Gettelfinger’s unwillingness to begin negotiations with
Ford, Hinrichs had never stopped talking to the UAW president. In fact, they called each other almost every day. Sometimes Gettelfinger gave him an update on the negotiations with GM and Chrysler. Most of the time he just vented. And Hinrichs let him. That night he called Gettelfinger and asked him to come to the table.

“You have this deadline coming up, Ron, and if you don’t have a deal done with either of them by then, it’s going to look like the UAW was the one at fault here,” Hinrichs told him. “The UAW is going to be viewed as unreasonable.”

He said Ford was hearing that the Republicans were just waiting for GM and Chrysler to declare an impasse so that they could take another swing at the union. But Gettelfinger knew when he was being pushed and gave Hinrichs both barrels.

“I don’t want to hear what Ford wants to do!” he shouted into the phone. “I’ll tell
you
what the UAW wants to do!”

Then he hung up.

But Hinrichs was undaunted. On Saturday, January 24, he sat at his home computer composing a long and carefully worded e-mail to Gettelfinger and his lieutenant, Bob King:

Hinrichs then outlined Ford’s cost disadvantage versus the foreign transplants. It came to approximately $700 million a year.

He then listed twenty-five changes to the current contract that he thought Ford and the UAW could agree on, with the dollar amount each would save the company annually. It included things such as reducing break time and eliminating the Easter Monday holiday. Most of the savings were small, but they added up to well over $500 million annually. By comparison, a 5 percent wage cut would save the company only $110 million. Together Ford and the UAW could show Washington a way to close the labor cost gap without cutting workers’ base wages. In exchange, Ford wanted the same deal that GM and Chrysler were trying to get on the VEBA: half the company’s remaining obligation payable in stock instead of cash.

Hinrichs hit “Send” and waited, checking his BlackBerry every few minutes. But by Monday morning, there was still no reply. He waited a few more days before calling Gettelfinger to make sure he had actually received the message.

“I did,” the gravel-voiced UAW leader said.

“Well, why don’t you let Marty and I come down to Solidarity House and make our pitch to you and Bob?” Hinrichs asked. “Why
don’t you let us show you why it makes sense for the UAW and why it makes sense for Ford?”

Gettelfinger agreed to meet the two Ford men at the union’s headquarters on Friday, February 6.

Solidarity House is a modern office building that sits on a piece of riverfront real estate in downtown Detroit. Hinrichs and Mulloy pulled into the gated parking lot, past the sign informing visitors that foreign automobiles were not allowed on the property. They knew they would get only one chance to convince Gettelfinger and King to come to the table, so they prepared a thorough presentation that they hoped would answer all of the union’s questions and address all of its objections. When they arrived at the UAW’s headquarters, neither Gettelfinger nor King seemed to be in a particularly good mood, so Hinrichs got right to the point.

“You’re never going to get a deal,” he told the union leaders. “General Motors is carrying too much debt. They’re going to have to go into bankruptcy.”

He reminded Gettelfinger and King what had happened when Delphi filed. The UAW had already discovered just how hard it would be to protect its members’ interests in bankruptcy court. It would be better to negotiate with Ford now, while they still could. Once they reached an agreement, the union could take it to GM and Chrysler and challenge them to match it. If the automakers refused, they would be the bad guys, not the UAW.

“Go on,” Gettelfinger said.

“You’ve been talking about shared sacrifice since the first hearing,” Hinrichs told the union boss. “We’re prepared to give it to you.”

The company had already announced that it was cutting another 10 percent of its salaried workforce in January. Some 1,200 Ford Credit employees were about to lose their jobs, too. Ford would put together a debt-restructuring deal that would give bondholders a short haircut and dilute stockholders in the process. Everything else would be on the table, include executive compensation and board pay. It took Hinrichs and Mulloy ninety minutes to go over all the details. When they were done, they thanked the UAW leaders for their time and left them to think about Ford’s proposal.

Mulloy received a call from King that night.

“We’ll be there Monday to start negotiating,” he said.

Talks began on February 9. They continued all week, with plenty of back-and-forth wrangling over issues like job security and the jobs bank program. The company and the union bargained through Friday without making much progress. Then, on Saturday morning, Gettelfinger and King arrived with a proposal that would change everything. For the first time ever, the union said it was willing to consider an end to the jobs bank. One of the Ford negotiators—a veteran finance guy who had been brought out of retirement to help hammer out a deal—summed up the company’s reaction.

“I worked for the company for thirty-seven years, and I never thought I would see this day!” he exclaimed when Hinrichs told him what he had just heard from the two union bosses. “This is historic!”

Negotiations proceeded quickly from that point on, and the final deal fell into place over the next twenty-four hours. Hinrichs gave Gettelfinger an office a few doors down from his own on the twelfth floor of World Headquarters. King and Mulloy were in a conference room downstairs with the rest of their respective bargaining teams. Each time they reached an agreement on something, Gettelfinger and Hinrichs would calculate the cost savings and see how much more they needed to close the gap with the Japanese transplants. By two in the morning on Sunday it was finished—or so Ford thought. The company had already agreed to eliminate bonuses for all salaried employees, but Gettelfinger wanted more. He wanted to make Alan Mulally share the pain, too.

“He has to work for one dollar a year,” Gettelfinger insisted.

Hinrichs was expecting the UAW president to demand a pay cut for Mulally, but he had no idea that Gettelfinger was going to go this far. Hinrichs had already asked Mulally how much latitude he had. Mulally gave him a number, but it still had seven figures. Hinrichs told Gettelfinger to think about what he was asking for, to consider the ramifications.

“First, we need Alan, and none of us want Alan to leave—so let’s keep that in our minds. Secondly, I don’t think the CEO should be making less than everyone else in the company,” Hinrichs said. “Alan
would be willing to take a $600,000 pay cut for two years. That’s $1.2 million, which is a big deal. The board will also agree to forgo compensation.”

Gettelfinger tried hard not to smile.

“What about Mark, Lewis, and the others?” he asked.

“The salaried team has already taken a big hit. They’re giving up their bonuses. You’ve got your shared sacrifice.”

Gettelfinger nodded and shook his hand.

Now all that was left was for Hinrichs to make one of the most awkward telephone calls of his entire life. He went to his office, closed the door, and dialed Mulally’s cellphone. There was no answer, so Hinrichs left a message, sheepishly informing his boss that he had just negotiated away nearly a third of his salary. When Mulally listened to it later that morning, he was just glad Hinrichs had been able to work out a deal.

But there was still the matter of the VEBA. Hinrichs and Mulloy wanted to finish the negotiations that weekend, but Gettelfinger wanted to take what they had already agreed on to GM and Chrysler first and try to get them to match it ahead of the fast-approaching February 17 deadline.

“I’ll be back,” he promised.

T
he crisis in the American automobile industry had officially become Barack Obama’s problem on January 20, when he was sworn in as the forty-fourth president of the United States. In practice, Obama and his team had been dealing with it ever since the election. Obama had already tapped a former reporter turned Wall Street billionaire, Steven Rattner, to be his “car czar” weeks ahead of the inauguration. Rattner was a managing principal at the Quadrangle Group, a private equity firm, and had no automotive experience. When news of Obama’s choice leaked on January 7, Bill Ford was one of the first to express concern.

“
It would be really helpful to have somebody in there who would take the time to have a deep understanding of our industry,” he said at the Detroit auto show, the implication being that Rattner would not.

Obama had hinted that he would also establish an automotive task force, but as the due date for GM and Chrysler to submit their viability plan approached, even Rattner’s appointment remained unofficial. On February 16,
reporters on Air Force One were pestering the new White House press secretary, Robert Gibbs, about the task force. They reminded him that the deadline was only a day away. Gibbs assured the scribes that a formal announcement could come later that day. It did not, nor did it come the following day. After the two failing automakers submitted their reports on February 17, the administration issued a short statement saying only that “more will be required from everyone involved—creditors, suppliers, dealers, labor and auto executives themselves—to ensure the viability of these companies.”