Ford's Bill Ford taking lead in UAW talks - Ford Forums

Stacy94PGT · 02-27-2003, 22:31

February 28, 2003
BY JOHN LIPPERT, BILL KOENIG and DORON LEVIN
BLOOMBERG NEWS

DEARBORN, Mich. -- Ford Motor Co. Chief Executive Officer William Clay Ford Jr., who vowed to cut costs by $9 billion, will take a leading role in the automaker's U.S. union contract talks this year, people familiar with the situation said.

In a move that bypasses two of his top deputies, the CEO of the world's No. 2 automaker will receive direct reports from Ford's day-to-day negotiators and will be the only senior company executive authorized to comment about discussions with the United Auto Workers union, the people said.

Ford needs union concessions to close four factories protected by the current contract as the company attempts to rebound from losses of $6.43 billion in the past two years. The talks are the company's first with the UAW since Bill Ford became chief executive in October 2001, and by becoming involved he is putting his authority at risk should the negotiations become acrimonious.

"It's a bit strange" for a CEO to be so close to the talks, said Gerald Meyers, a University of Michigan business professor and a former chief executive of American Motors Corp. "He shouldn't get trapped in negotiations."

Bill Ford announced the decision on the talks in a letter to company officers this month, the people said. The current UAW contract ends Sept. 14. UAW President Ron Gettelfinger declined to comment about the Ford bargaining team.

Ford shares rose 22 cents, or 2.7 percent, to close at $8.33 in New York Stock Exchange composite trading. The stock is down 46 percent over the past 12 months.

The plan outlined in the letter is "consistent with the way we have done things in the past," Ford spokeswoman Anne Marie Gattari said. "Every negotiation in the recent past has included a statement from the CEO to authorize some senior executives to speak on negotiations-related issues."

Chief Operating Officer Nicholas Scheele, the No. 2 executive, and Executive Vice President James Padilla, head of North American operations, won't be authorized to speak publicly on the talks or receive direct reports from company negotiators, the people said.

Bill Ford's decision leaves Scheele without a prominent role in one of the company's main challenges this year. The company didn't have a chief operating officer when it negotiated the current UAW contract in 1999.

The plan for the UAW talks also differs from how the chief executive handled negotiations last year with the Canadian Auto Workers union. Bill Ford had no direct contact with the union during the Canadian talks, CAW President Buzz Hargrove said in an interview.

Padilla, whose North American responsibilities include factories where both UAW and CAW members work, announced some details of the Canadian settlement in October.

Scheele also publicly discussed the Canadian talks, announcing in mid-September that he expected a settlement without a strike. He also defended Ford's record of investment in Canada, as the union sought to prevent a plant closing.

The stakes are high for Bill Ford, who also is chairman and represents the company's founding family, which controls 40 percent of shareholder votes through preferred shares.

By taking such a visible role, Bill Ford may be seeking to "prevent (the talks) from getting off track," Meyers said.

Face of Ford

"At this point, it's the right thing to do," said Maryann Keller, an independent auto analyst and consultant. "Bill Ford is the face of Ford Motor Co. He might as well take the lead."

While Scheele and Padilla will have little involvement in the negotiations, both probably will review the contract talks with the chief executive, said Alan Baum, director of forecasting at Planning Edge, a Farmington Hills, Michigan, automotive consulting firm.

Ford's 7.25 percent notes maturing in 2011 fell 2.1 cents to 96.4 cents on the dollar, according to Trace, the bond price reporting system of the National Association of Securities Dealers. The yield rose 0.38 percentage point to 7.8 percent.

These bonds traded as low as 84 cents on the dollar amid a slump in the corporate bond market last fall. Standard & Poor's cut Ford's ratings in October, leaving it at the second-lowest investment-grade rating.

The automaker is the most widely held issuer with $124.3 billion of outstanding bond debt, of which $17.99 billion is due this year, according to Bloomberg data.

Bill Ford's letter designated three lower-ranking executives who can comment on the talks. They are Roman Krygier, group vice president of manufacturing and quality; Joe Laymon, vice president of corporate human resources; and Dennis Cirbes, the new vice president of labor affairs and the company's chief negotiator.

Krygier, Laymon and Cirbes will report directly to Bill Ford during the negotiations, the people said.

"Roman Krygier has been selected by Bill Ford, Jim Padilla and Nick Scheele to be the senior member of operating management to be involved," Gattari said. "As head of Ford Motor Co., it is appropriate that Bill Ford play a role. As head of human resources, it is appropriate Joe Laymon play a role. And as head of labor affairs, it is appropriate Dennis Cirbes be active in the talks."

Ford's bargaining team in the 1999 UAW talks, which was made up of three other executives, reported to former Chief Executive Jacques Nasser, the people said.

Bill Ford was non-executive chairman during those negotiations and his role was mainly limited to attending opening and closing ceremonies, the people said. He became CEO in October 2001 when the company's board ousted Nasser as the company was headed toward an annual net loss of $5.1 billion.

The chief executive's January 2002 plan to generate $7 billion in pretax profit by 2005 involves cutting costs and closing plants in Edison, New Jersey; St. Louis; Cleveland; and Dearborn, Michigan. In the UAW talks, the automaker will be seeking closure of those factories and will ask for the union's help in reducing health-care costs.