Ford-UAW pact won't reverse trend toward outsourcing

Don't look for a massive shift of parts work from independent suppliers back to the Big 3 automakers just because Ford Motor Co. agreed to maintain its UAW employment at no less than 99,750, or 95% of the current 105,000 workers in the U.S.

There are incentives meant to encourage Ford to consider making parts it now buys from the outside. For example, if Ford bought a plant that makes instrument panels and pays its workers well below the $18 to $22 hourly wage its UAW workers receive, then Ford could count two of every three of those lower-wage workers toward its minimum employment level. "Independent" experts would then determine the wages of the new parts workers.

There is no across-the-board lower "second-tier" wage scale for parts plants Ford owns now. The agreement does carry over the provision in the 1993 agreement that allows the Big 3 to pay new hires 70% of the UAW hourly rate. But that wage gradually will increase to match the UAW scale in three years.

Another clause in the contract says Ford must offset parts jobs lost to outside suppliers by creating work in its other plants.

The two sides reinforced language in a letter from the 1993 contract in which Ford pledges to tell suppliers and the business community about the benefits of its relationship with the UAW.

Whether this language is anything more than semantic symbolism remains to be seen.

Initial reaction from suppliers was guarded.

"There are several interpretations, such as what is a new product, a new application of an existing component or new technology?" says George Perry, president of Siemens Automotive. "In general suppliers are no better off and no worse off because of this. We still have to fight for everything we get."

The case that still puzzles suppliers is last spring's decision by Johnson Controls Inc. to recognize the UAW at just-in-time seat plants in Plymouth, MI, and Oberlin, OH, after an organizing drive garnered enough petition signatures to ask workers to vote on UAW representation.

"I don't think that will be a trend," says Siemens' Mr. Perry. "Some suppliers might (recognize the union) under pressure, but not many."

Jack Sights, president of Guardian Industries Corp.'s automotive products group, says Guardian is not concerned about the Ford agreement.

"The OEMs are still at a price disadvantage if they have to use captive suppliers to preserve jobs," Mr. Sights says.

An official at another major Tier I interior supplier points out that outsourcing has shifted white-collar design and engineering jobs, as well as production jobs, from the Big 3 to suppliers.

"Even if they wanted to produce a certain component they don't make today, they probably don't have the engineers to support it," the official says.