United Auto Workers president Bob King said ‘excessive' compensation for Ford Motor chief executive officer Alan Mulally will make it difficult to get workers at that company to agree to a new contract this year.
"It already has," King said yesterday in an interview in Southfield, Michigan. "It's created much more tension and much more emotion in the process than I'd like to see."
Ford, based in Dearborn, Michigan, rewarded Mulally in March with $56.6 million (Dh207.8 million) in stock for leading the car company's turnaround. In addition, his 2010 compensation rose 48 per cent to $26.5 million.
"It's outrageous, I think it's excessive," King said in a separate interview on Bloomberg Television's ‘Bottom Line' with Mark Crumpton. "This was a huge mistake and I don't think it's been fair to workers whether they're blue collar or white collar. We talked about one Ford, one plan, profitability for all; then one individual can't do that much better than everybody else."
John Stoll, a Ford spokesman, said in March Mulally's leadership last year was ‘widely recognised as extraordinary' and that his pay, "reflects Ford's goal of retaining a world class CEO." He declined to comment further.
King, 64, will open contract negotiations this week for 113,000 workers at General Motors, based in Detroit, Ford and Chrysler Group. These are the first talks since GM and Chrysler reorganised in US-backed bankruptcies in 2009.
The current contracts at the car company expire on September 14. King has said workers must be rewarded for the $7,000 to $30,000 in concessions they each gave since 2005 to help the company survive.
The concessions included surrendering raises, bonuses and cost-of-living adjustments. The union also agreed to a two-tier wage system, in which new hires earn about $14 an hour, half the amount paid to senior production workers.
Given Mulally's compensation, King must craft an agreement at Ford that includes a significant signing bonus in order to get the deal ratified by the car company's 41,000 hourly workers, said Art Schwartz, president of the consulting firm Labour and Economic Associates in Ann Arbor, Michigan.
"They will have to somehow show that the agreement will also reward the hourly workers, too," said Schwartz, a former GM labour negotiator. "That's why the workers will have to get an interesting amount of money as a signing bonus."
GM, Ford and Chrysler this year have announced plans to hire workers as they have returned to profitability on the strength of new, more fuel-efficient models such as the Chevrolet Cruze and Ford Fiesta small cars. US industrywide sales of cars and light trucks rose 13 per cent in 2011's first half, according to Autodata of Woodcliff Lake, New Jersey.
GM, Ford and Chrysler combined to earn more than $6 billion in the first quarter. Last year, GM earned $6.17 billion. Ford, the only major US car-maker to avoid bankruptcy, had net income of $6.56 billion in 2010, the most in 11 years.
Chrysler posted a net loss of $652 million last year and forecast net income of as much as $500 million this year. Chrysler, based in Auburn Hills, Michigan, is majority owned by Turin, Italy-based Fiat SpA.
Ford has indicated it wants to further lower labour costs, which it has said are $8 an hour higher than the mostly non-union factories of foreign car companies and Chrysler. King said the union will not be granting additional concessions.
"No way," King said yesterday. "It would be the wrong thing to do to talk about concessions, they're not needed today. The way that Ford can make up that cost gap really quickly is to grow market share and open up more facilities."
King said the union would look in the negotiations for ways to lower costs while not through cutting benefits.
"We will not take further concessions in terms of our members paying more money for higher deductibles or higher co-pays," King said. "We will work together to reduce costs."
It's to the union's benefit to find the health care savings, King said. "I would rather have that money in somebody's paycheque or I'd rather have that money in a bonus or I'd rather have that money for better pensions than pharmaceutical companies making way excessive profits," he said.
The last things the union will give up are, "health-care and defined-benefit pensions," Schwartz said. "Those two issues are very important to them."
King also said the union is open to replicating with other car companies a special agreement that allows GM to staff a plant with more workers making entry-level wages in return for building small cars in the US.
GM retained 1,550 hourly and salaried jobs to build the Buick Verano and Chevrolet Sonic cars this year at its Orion Township, Michigan, plant, where about 40 per cent of workers will earn half the regular wage of $28 an hour.
"If we can get Ford to bring the Fiesta back or we get Chrysler to bring the 500 here, we'd be open to that kind of an arrangement," King said of two models now built in Mexico.
"It's a small car arrangement. We do think it made sense and we were convinced by the facts that that was the only way we could do it here and do it profitably."
From / Gulf News