UAW Praises Ford, Slams Visteon on Restructuring

The way Ron Gettelfinger sees it, the United Auto Workers union was not trying to bail Visteon Corp. out of its troubles by agreeing to a restructuring plan calling for Ford Motor Co. to take control of 14 UAW-represented component plants.

The union was looking for a way to preserve 17,400 jobs before Visteon was forced into potential bankruptcy protection, the UAW president says.

“We were trying to salvage jobs for 17,400 of our members from a corporation that was on the verge of collapse,” Gettelfinger tells Ward's in an interview. “These people were in a situation where had we not done something we could have possibly faced a closure.”

Gettelfinger praises Ford for “stepping up to the plate” to help its largest supplier remain viable for the long term.

“I think a lot of employers would not have done that, and I very much appreciate that fact,” he says. “They have gone full stretch to try and help us rectify this situation and get these plants back into becoming viable operations.”

While praising Ford, Gettelfinger was more critical of Visteon top brass, saying they failed to live up to their promises to make additional investments at a number of plants in return for the union agreeing to a lower, 2-tier wage system in May 2004.

“Visteon has not invested in those facilities and they allowed them, I think intentionally, to deteriorate,” he says. “It feels like they felt they had the best of both worlds and Ford would always be there to bail them out.”

Visteon Chairman and CEO Michael Johnston says the facilities in question were under constant pressure to achieve efficiency gains, both under Ford and Visteon ownership.

“Ford was improving them every year and we continued to do that,” Johnston says. “If you look at the metrics of things like launch performance or quality or any normal efficiency metrics, there has been continuous improvement throughout and I would expect that culture would continue as they (the facilities) move back (to Ford ownership).”

Under the new agreement, which was ratified by affected UAW members June 5, two Visteon plants (Sterling Heights, MI, and Rawsonville, MI) will return to Ford, while the remainder will be transferred to a limited liability company (LLC) controlled by the auto maker.

All employees at the 14 UAW plants will be covered under the UAW's master agreement with Ford, as opposed to the Visteon pact. The shift means up to 900 employees hired within the past year under the 2-tier wage pact now will be paid higher Ford wages and benefits.

“They will fall under the master agreement,” Gettelfinger says. “They have become Ford employees.”

The new pact also calls for the new employees to have full “flow-back” rights to any Ford facility. This provision provides the new Ford employees with preferential status when a position opens up at any UAW-represented plant within the Ford manufacturing system.

Ford also is required to pay employees of plants covered under the LLC at UAW-Ford master agreement wage rates until those employees retire. When the plants are sold, Ford may have to pay a differential to each employee to keep them at the wage rates outlined in its agreement with the UAW.

The union will object to any attempt by Ford to renegotiate the wage structure for employees covered under the LLC when the auto maker and the union return to the bargaining table in 2007.

“As far as I am concerned, that is off-limits,” Gettelfinger says.

The union chief voiced disgust with reports that Visteon paid former Chairman and CEO Peter Pestillo more than $4.28 million in total compensation in 2004, along with $4.16 million in total compensation to Johnston.

“Hell no, we're not happy with that,” Gettelfinger says. “Executive compensation is atrocious in this country, and it's going to be more and more of an issue.”

The union also says Visteon has paid steep bonuses to retain some executives and to others that have recently left or joined the company.

Johnston tells Ward's bonuses are paid based on the company's financial performance, and that Visteon executive compensation levels are decided with the help of two outside consultants that benchmark against competitive companies.

“When you add up the totals of where we should be, given the performance that we're experiencing, we haven't paid any incentive bonuses for I think three years and we won't unless we hit certain (financial) objectives,” Johnston says.