Business: Peace at a Sound Price

After five months of trying to get “the biggest package ever,” United Auto Workers’ President Walter Reuther last week settled with Ford for far less. He got just about what Ford—and the other carmakers—offered back in April. Reuther joined with Ford Vice President and Chief Negotiator John Bugas to announce “a sound and equitable agreement … a three-year contract .. . fair to the workers, the company and the American public.”

General Motors and Chrysler were pleased that Reuther had settled so modestly; they hope to settle on about the same terms. Washington was relieved: the contract promised to bring three yeaRs of auto labor peace at a price that Washington thought would add little to inflationary pressure. Ford’s wage bill per worker will go up about 4% annually, which could be balanced by industry’s gains in productivity, thus should not greatly alter auto prices.

Saving a Face. What preceded the peace was, said Bugas, “just a helluva poker game. It’s a screwy process, but you have to go through with it.”

How did the game go? Early last week, Ford called for a showdown. It laid a new offer on the 50-ft.-long bargaining table in the English Room of the Detroit-Leland Hotel. Within 18 minutes, General Motors and Chrysler gave the U.A.W. almost identical offers. It was one more warning to Reuther that the Big Three, bargaining together as never before, might take some drastic action such as a shutdown or delay in bringing out new models if the U.A.W. went through with plans to strike Ford. Reuther plainly could not afford to fight the united front. It would break his strike war chest in a few weeks.

The tip-off that Reuther would give in came when Ford proposed a three-year agreement. Reuther raised no real objection, even though this key Ford demand had been flatly turned down for months. From then on, differences were quickly settled. The problem was to find enough high-sounding but low-cost fringe benefits so that Reuther, who had long ago scrapped his grandiloquent profit-sharing schemes, could save face. Fordman Bugas hurried to a special evening meeting of Ford’s board in Dearborn. He returned with a few penny-ante sweeteners. Reuther stepped back into the conference room, as union stewards cheered him along the hallway: “Give ’em hell, Walter,” “Go get ’em, old Redhead.”

At daybreak Bugas stopped bargaining to see the Ford board again, came back with more contract “refinements.” At 10 a.m. the strike deadline passed, and 98,000 Ford workers went out while the U.A.W. hastily readied telegrams urging them to please go back to work. A few hours later Fordman John Bugas, happy that he had bagged the management’s best contract since World War II, stretched out his hand to Reuther. “Walter,” he beamed, “you’ve got yourself a deal.”

Trimming a Package. The deal that Reuther got will add up to about 28^ an hour to paychecks over the next three years, a penny a year away from the package that the companies originally offered, a far cry from the 73¢ parcel that Reuther demanded last spring. It breaks down to an average 7¢ each year in “productivity” wage boosts, a 3¢ cost-of-living boost, and a total 4¢ in fringes for pensions and workers’ life-insurance and hospital-insurance plans. The only major new fringe for the auto workers (but not new to oil, steel and rubber workers) will be severance payments to workers laid off permanently, from about one week’s pay for two-year men to 30 weeks’ pay for 30-year men, bankrolled by the companies’ supplemental unemployment-benefits fund.

Although at week’s end the union was flexing strike muscles at G.M. and Chrysler, Detroit was betting that Reuther would soon come to terms with both of them.