BUSINESSWEEK ONLINE : OCTOBER 11, 1999 ISSUE
COVER STORY

Why the Unions Are Stirred Up


Jacques A. Nasser's aggressive campaign to remake Ford Motor Co. (F) may be playing well with investors and management gurus, but don't count the United Auto Workers among his fans. After negotiating fairly easy contracts with DaimlerChrysler Corp. (DCX) and General Motors Corp. (GM), the union is turning its attention to Ford, where tension is building after two decades of peace.

The union is fuming over Ford's plan to lop off its $18 billion parts unit, Visteon Automotive Systems. It fears that Visteon's 23,500 hourly workers will end up with lower wages and benefits than assembly workers.

Some of the friction can be blamed on personalities. Much of the longstanding goodwill between Ford and the union stems from trust between UAW President Stephen P. Yokich and Ford Vice-Chairman Peter J. Pestillo, who handles labor relations. But this year, Nasser and another newcomer, UAW Vice-President Ronald Gettelfinger, are injecting their own forceful styles into the bargaining.

ANXIETY. Nasser's vigorous moves to put his stamp on the company--and an early talk in which he told UAW leaders they would have to consider a Visteon spin-off--have stirred anxiety. Says Alan Baum, an analyst at industry consultant INR Inc.: ''The underlying issue is the rate of change at Ford. And Visteon becomes the obvious whipping boy.''

Moreover, while GM's spun-off Delphi Automotive Systems and Visteon seem similar, the state of their parents makes all the difference to some workers. GM had been starving parts plants of investment for years, so workers considered their prospects brighter under an independent Delphi. But Visteon employees are reluctant to give up their share of the wealth as Ford piles up the industry's biggest profits.

In the end, the UAW probably can't stop the spin-off. But negotiators are prepared to butt heads with Ford to protect Visteon jobs, wages, and benefits. A strike can be averted, says Dan Luria at Michigan Manufacturing Technology Center, if Ford agrees to keep a handful of power-train and stamping plants under its umbrella. Even in the new Ford, old-fashioned horse trading may prove to be the most effective bargaining tool.

By Joann Muller in Detroit

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