American Icon (42 page)

The adversarial relationship between Ford Motor Company and the UAW began to change at that moment. Henry Ford stunned Reuther by offering him more generous terms than the union had been seeking for its members. If Ford was going to be a union company, it was going to offer the best contract in the business.

Relations between the company and the UAW continued to improve under Henry Ford II, who remained remarkably at ease with the rank and file even as he became a role model for the international jet set. In the boom years after World War II, union workers prospered along with the company. Wages got richer and contracts got fatter as Detroit fell into the happy stupor of prosperity that carried it through the end of the 1960s. Labor agreements that were originally a few pages long morphed into thick tomes filled with arcane rules that governed every aspect of factory operations, from the division of labor to the time allowed for restroom breaks. Like the other Detroit automakers, Ford lost the ability to reassign workers and could not close plants without the UAW’s approval. Workers were eligible to retire with full pensions and benefits after just thirty years on the job, making it possible for some to earn more as retirees than they had on the assembly line. The companies also had to fund massive union bureaucracies that
grew inside each factory to ensure the terms of these contracts were being followed to the letter. It was hard for the companies to complain too loudly. The union’s bureaucracies were inspired by those on the management side, often matching them person for person, while demands for ever-higher wages were a response to the mushrooming salaries of the automakers’ top executives. As Paul Ingrassia put it in his book
Crash Course
, “
Detroit’s auto industry was built on corporate oligopoly and union monopoly—a combination that had produced decades of astounding success but also sowed the seeds of failure.”

When the Japanese invasion of the 1970s sent the automakers scrambling for cover, union bosses were unwilling to cede the gains they had made for their members over the past three decades. As Ford and the other manufacturers demanded concessions to keep their cars profitable, the UAW dug in its heels. The industry entered a new era of labor hostility. Quality began to erode as workers took out their frustrations on the assembly lines, and the automakers began sending more work to factories in Canada and Mexico—particularly after the North American Free Trade Agreement removed the barriers to trade with those countries in 1994.

Even in the face of this increasing animosity between the UAW and Detroit’s Big Three, Ford managed to maintain a better relationship with the union. Ford family members often dealt directly with UAW officials, even during the period when there was no Ford in the chairman’s seat. None of the company’s factories had been struck since 1976. But even Ford could not get the concessions it needed to be competitive with the growing number of foreign transplants setting up factories of their own in the southern United States.

I
n 2002, Ron Gettelfinger was elected president of the UAW. Gettelfinger was a short, wiry, gravel-voiced man with a white mustache and an intense stare who carried himself with the air of a volcano about to erupt. A puritanical fighter for workers’ rights, he had grown up as one of a dozen children on a farm in rural Indiana. Gettelfinger crossed the state line to take a job at the Ford factory in Louisville, Kentucky, in 1964. At night he worked on his business degree at
Indiana University Southeast in New Albany. Gettelfinger graduated in 1976 and began making his way up the union’s ranks. He was elected vice president in 1998 and became head of the UAW’s National Ford Department. Four years later, he became the head of the whole union.

Despite the often-confrontational relationship between the union and the American automakers, relations between company executives and UAW bosses had remained remarkably chummy behind the scenes. Ford, GM, and Chrysler spent big on golf outings, cigars, and booze to ensure the lines of communication remained open. Gettelfinger was the brother of a Catholic bishop and did not drink, smoke, or play golf. He put an end to all of this schmoozing when he took over at Solidarity House, the union’s international headquarters in downtown Detroit. For a while it seemed like things might go from bad to worse, at least as far as the companies were concerned. But Gettelfinger was also a pragmatist. He knew that the fate of the UAW and its members was inextricably tied to the fate of the Detroit automakers.

Bill Ford believed Gettelfinger was someone he could work with. The great-grandson of Henry Ford had spent a lot of time thinking about how to end the decades-long stalemate between his company and the UAW. He had studied labor history in college and was part of the company’s bargaining team in the 1982 contract talks that got the UAW to commit to making quality “Job One.” When Gettelfinger emerged as the heir apparent to confrontational UAW boss Stephen Yokich in 2001, Ford instructed Joe Laymon to start building a rapport with him. It was the sort of thing Laymon did best. During their first meeting, he offered to pass Gettelfinger confidential information about Ford’s competitive position and finances. He also offered to set up secret meetings between Gettelfinger and Bill Ford. During these sessions, Laymon urged Gettelfinger to raise any issues he might have with the automaker. When Gettelfinger did, Ford did his best to see that they were addressed. If lower-level managers lied to the UAW, Laymon told Gettelfinger the truth. Occasionally Ford would call in a favor. But not often. This was all about laying the foundation for a deal that would fundamentally alter the rules of the game in Detroit.

Laymon found himself sitting across the negotiating table from Gettelfinger in 2003, but the timing was wrong. The industry was still
making too much money from its sport utility vehicles to demand meaningful concessions from the union. But that did not mean Ford had to wait until that contract expired in 2007.

I
n October 2005, Bill Ford promoted Joe Hinrichs to vice president in charge of North American vehicle operations, giving him responsibility for all of the company’s factories in the United States, Canada, and Mexico. Hinrichs was a young production executive who looked and sounded like a corporate version of Adam Sandler. Like Gettelfinger, he never drank, and he possessed a boundless energy that made him difficult to keep up with—even in conversation. At thirty-eight, Hinrichs was the youngest vice president in Dearborn, but he had already spent enough time in the automobile industry to develop a passionate aversion to the inefficiencies imposed on Ford and the other Detroit automakers by the UAW.

After earning a degree in electrical engineering from the University of Dayton in 1989, Hinrichs had signed on at General Motors. He did stints at a number of plants before being assigned to a joint-venture parts factory in Kentucky that GM had set up with Japan’s Akebono Brake Corporation. Like most Japanese-run factories, this plant had only two job classifications for hourly workers: production and maintenance. It was a model of efficiency compared to the American-run factories Hinrichs had worked in where the UAW contract established dozens of different job descriptions and prohibited the company from assigning workers tasks that were not specifically part of their description. He became so frustrated with GM’s inability to compete that he decided to get out of the automobile business and give private equity a try. Hinrichs became a partner at a Chicago firm that specialized in manufacturing companies, but returned to Detroit in 2000 as manager of Ford’s Van Dyke Transmission Plant. There he heard much about the cooperative relationship Ford was supposed to have with the UAW, but could discern no real benefit from it on the factory floor. There was no question that Ford avoided the nasty skirmishes that perennially plagued GM and Chrysler, but that did not make the Dearborn automaker any more competitive with the foreign
transplants. When he was tapped to join Mark Fields’ Way Forward team, Hinrichs decided to challenge the UAW to make this so-called special relationship truly special.

Every spring, Ford hosted a meeting with local union leaders from around the country in Las Vegas. It was mostly about wining and dining on the company’s dime, but Hinrichs was determined to get a return on Ford’s investment when he headed for Sin City in March 2006. During a meeting with Ford’s plant managers and their UAW counterparts at the Paris Las Vegas hotel, he delivered a blunt analysis of Ford’s automotive operations in the United States. The company had too many employees in its U.S. factories—40,000 more than it needed to meet the current demand for its cars and trucks. Hundreds of these men and women were twiddling their thumbs in the company’s jobs bank. Thousands more were being paid assembly-line wages to clean the bathrooms, mop the floors, and mow the lawns. There was an unspoken rule at American automobile factories that, when a worker’s body started to pay the price for all those years of toil on the assembly line, he would be given a nice easy job pushing a broom or riding a mower until he was ready to retire. The problem was that many of these new assignments were so cushy that the workers who got them stayed on the job long after they were eligible to retire. This was work that any other company would have outsourced to low-wage contractors at a substantial savings. Hinrichs told the UAW leaders that this model was no longer sustainable. He also presented a series of slides comparing each of Ford’s U.S. factories with those of its principal competitors—Toyota, Honda, and GM—on the key metrics of quality, safety, and productivity. Hinrichs translated the productivity data for each plant into a dollar amount, showing the local union leaders just how much more Ford’s competitors were getting for their money. He also showed how this gap was forcing Ford to charge more for its cars and trucks and siphoning off cash that could be better spent elsewhere.

“If we had this money, we could be investing in new products—which you say you want for your plants,” Hinrichs told the labor leaders. “We could grow market share, which could boost employment. So, let’s start talking about how we fix this.”

There was a rush for the microphone. The first one to grab it was Mike Oblak, the chairman of UAW Local 900, which represented workers at Ford’s stamping plant in Wayne, Michigan.

“You don’t respect the UAW!” he shouted, accusing Hinrichs of youthful inexperience and an adherence to the adversarial labor practices he had learned while working at General Motors. “This is how GM thinks, not how Ford thinks.”

“The facts are the facts,” Hinrichs replied coolly. “We’re here to save the company, not appoint blame.”

Similar accusations followed from the next couple of speakers. But then something unexpected happened. First one UAW official, then another took the floor to thank Hinrichs for sharing this information with them. For years they had been listening to the company complain that its factories were becoming less and less competitive, but this was the first time anybody had shown them the data that proved it.

“I think we need to talk about it and start working together on what we’re going to do about it,” said one plant chairman, “because I’m worried about the future.”

And the UAW was about to get a lot more scared.

Though few recognized it at the time, Ford and the other American automakers had been handed a big break on October 8, 2005, when Delphi Corporation, the largest automotive supplier in the country, filed for Chapter 11 bankruptcy protection.
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Like the companies it served, Delphi was groaning under the ever-increasing burden of providing pensions and health care to thousands of retired factory workers and their dependents while union contracts written in better times saddled it with higher labor costs than its foreign competitors and imposed work rules that made its factories inefficient and uncompetitive. What made Delphi different was the way it decided to deal with these problems. After going back and forth with the UAW for months, Delphi walked into bankruptcy court on March 31 and
asked a federal judge to void its contract with the union. For the first time anyone could remember, someone was calling the UAW’s bluff.