LABOR: Making Striking Cheap

“This decision will force an employer, in effect, to finance a strike against himself through providing company-wide strike benefits.” So said Ford Motor Co.’s Vice President John Bugas, commenting on a Michigan State Supreme Court decision which the U.S. Supreme Court declined to review last week. What the Michigan court decision did was to repeal a longstanding rule that functionally integrated plants are all part of the same establishment. Hereafter, employers may be taxed to pay unemployment compensation even when the union strikes a plant on which the whole company operation depends for an essential part.

The case grew out of a United Auto Workers’ strike at Ford’s Canton, Ohio castings plant in 1953. Seeking a reason for reopening a five-year wage contract, the U.A.W. claimed a safety violation at Canton, then the supplier of all the rear axle shafts used in Ford cars and trucks. The U.A.W. held the unionists out five weeks, forcing Ford to shut down across the nation, grant the union a big pension fund increase. The Michigan Employment Security Commission ruled that the Michigan workers were involved in the Canton strike and so were ineligible for unemployment pay. A circuit court upheld the commission. But last January the state’s highest court reversed the ruling, ordered the commission to pay Ford employees about $1,000,000 in benefits. Author of the majority opinion was Associate Justice George Edwards, 44, onetime U.A.W. employee (director of education and welfare). To the surprise of Michigan lawyers, Edwards did not disqualify himself, although another associate justice, Thomas M. Kavanagh, state attorney general when the case got into court, did.

To Ford and other automakers, the Michigan decision means that hereafter, when the union strikes a key production plant, the employers will have to pay the bulk of the strike benefits, except at the establishment actually on strike. Under the law, each company is liable for benefits paid to its employees. When its balance is drawn down, its payroll taxes go up until the proper reserve is established. In any future strike on the Canton pattern, said a Ford spokesman last week, the company must figure on paying $3,000,000 a week to U.A.W. members on top of the loss of sales.