Ford-UAW contract ratification at risk

DETROIT Thu Oct 13, 2011 5:12pm EDT

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DETROIT (Reuters) - Workers at a Ford Motor Co plant in Chicago overwhelmingly rejected a proposed four-year labor contract, the second "no" vote at a Ford plant this week, throwing into doubt the prospects for ratification.

Workers at Ford's Chicago Assembly Plant voted 77 percent to reject the pact, which would cover 41,000 Ford factory workers represented by the United Auto Workers union, a local official said.

As of Thursday, less than 20 percent of the overall vote has been completed at Ford, according to a posting by UAW Local 551, which represents the Chicago workers.

The "no" vote to reject the contract was ahead with almost 55 percent. An official tally by the union has not been released.

UAW President Bob King said on Wednesday he was confident the pact would be ratified and that the weakening economy would undercut the union's position if the two sides were forced back into bargaining.

A rejection of the proposed contract at Ford would open the door to a period of uncertainty at the No. 2 U.S. automaker. The two sides might return to negotiations, or the union might give Ford a 72-hour strike deadline, analysts said.

"This will put tremendous pressure on Bob King and the UAW leadership," said Gary Chaison, a labor professor at Clark University.

The proposed UAW contract at Ford is the richest of the deals offered to workers at the Detroit automakers. In one of the key differences, Ford workers would get a signing bonus of $6,000 each, compared with just $5,000 for workers at General Motors Co and $1,750 at Chrysler Group LLC.

Over the term of the contract, Ford workers are guaranteed at least $16,000 in bonuses. GM workers would get $11,500 at a minimum. At Chrysler, the weakest of the Detroit Three, guaranteed payout is just $5,750.

But in a debate that played out on Facebook and in union halls around the Midwest, UAW-represented workers at Ford challenged the fairness of the contract, given the strength of the automaker's rebound and the bonuses paid to executives led by Chief Executive Alan Mulally.

"I've heard folks say anyone who doesn't vote yes is stupid," said a posting on the UAW's Ford Facebook page. "I say anyone who doesn't vote no is perpetuating the divide and conquer mentality."

Other workers and union officials warned about the consequences of a no vote. In a posting, the UAW local that represents Ford's Kansas City truck plant warned that a "no" vote would endanger "house payments," "car payments" and "Christmas presents."

Ford workers would receive only $200 in strike assistance per week from the UAW.

"A no vote will lead to a strike. How long will it last? How will it be resolved? Will the next contract be better or worse? No one knows," the message from Local 249 said.

Ford shares closed down 4 cents at $11.34. The stock has gained 17 percent since the start of the month.

'TROUBLING,' BUT NOT 'FATAL'

Morgan Stanley analyst Adam Jonas said the "contentious" nature of the Ford ratification vote suggested the automaker negotiated a good deal for shareholders.

"A strike might be a legal option within the UAW's rights, but carries risks given public opinion in the current economic environment," Jonas said in a note for clients that recommended buying Ford shares on uncertainty over the labor contract.

Chaison and other labor experts said they were surprised by the wide margin in favor of the no vote at Ford's Chicago assembly plant, but they expected the contract to be ratified by a narrow margin.

"The Chicago vote is a troubling, though hardly fatal sign," said Harley Shaiken, a labor expert at the University of California-Berkeley who is close to the UAW.

Tom Saybolt, a former Ford attorney who now teaches at the University of Detroit-Mercy law school, said a rejection of the Ford contract would put in danger the 12,000 jobs Ford has promised to create or maintain.

"Ford has made job commitments, but if you push these guys too hard, Mexico is going to start looking more and more attractive," he said.

King said on Wednesday he expected ratification of the contract at both Ford and Chrysler.

He said the union pushed for the best deal under difficult economic circumstances and that, if the UAW was successful in organizing the U.S. plants of Japanese, South Korean and German automakers, it would have more power to fight for higher pay and benefits in future contracts.

Earlier this week, UAW Local 900, where 2,582 workers voted from three plants, including the Michigan Assembly operation in Wayne, voted 51 percent to reject the proposed contract.

The Ford ratification vote is scheduled to conclude on Tuesday.

(Reporting by Bernie Woodall; additional reporting by Deepa Seetharaman and Kevin Krolicki; editing by Dave Zimmerman, Ted Kerr, Matthew Lewis and Andre Grenon)

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