AUTOS: Pay Cut for Willys

When Adman Ward Canaday bought control of Willys auto company in 1936, he resolved never again to have a strike such as the one that cost Willys $25 million and all but wrecked the company 20 years before. Canaday’s method was simple. He promised to pay better wages than anyone else in the auto industry, in exchange for a no-strike pledge from the United Auto Workers. Willys has not had a strike since. But when Henry Kaiser bought the company last year (TIME, April 6. 1953), he found that Willys, in addition to the usual cost handicaps of an independent, had an extra one. It paid workers $2.31 an hour v. the $2.04 paid by the Big Three, which made it virtually impossible to compete or make money without the fat jeep contracts that kept it profitable during the war.

In Toledo last week, at the urging of U.A.W. Local 12 leaders, union members voted a 5% pay cut for Willys’ 3,500 production workers. In the first such vote in auto history, the unionists agreed to give up incentive payments for work produced over a set quota. By increasing efficiency and shaving employment 5%, President Edgar Kaiser hopes to cut labor costs a total of 20% in the next six months. In return for the pay cut, he agreed to set up a fund into which Willys will contribute all savings from increased efficiency. One-third of the fund will be paid periodically as bonuses to Willys workers.

Though the union tried to represent this as paving the way to a later pay rise, the industry recognized the new pay plan for what it was: a desperate effort by Kaiser and U.A.W. to get the company, which is barely breaking even on every car it makes, into the black.