The deal Ford (NYSE: F) cut with the UAW in the hours before dawn today looks very much like the ones the union has with General Motors (NYSE: GM) and Chrysler. But Ford needed it more. Its sales in the US have fallen twelve months in a row.
The new contract calls for the car company to pay for a health-care fund that will be run by the UAW. That could cost Ford $20 billion in a one-time payment. Ford will also be allowed to pay "non-core" workers less than most of the union rank-and-file. That will probably only matter to the non-core workers, but the deal will hurt them.
"Our bargaining committee came through for our active and retired members," said UAW President Ron Gettelfinger, in a statement picked up by The Wall Street Journal. Gettelfinger, who may be retired by the next set of negotiations in four years, will have as his legacy these 2007 contracts.
How will be be remembered? His moves helped save the North American operations of the Big Three. The contracts pave the way for lower labor costs and lower benefit costs. If the US car companies can stabilize their market shares, they may be able to make money in North America again.
But if Detroit does return to a period of prosperity, Gettelfinger may be viewed at the man who gave too much and got too little. Many union jobs will be gone and the money will be rolling in again in the Motor City.
Douglas A. McIntyre is an editor at 247wallst.com.
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