Ford Australia wants pay freeze and two-tier wages

DanielXR8 · 13-07-2009, 12:56 PM

Interesting story on GoAuto this morning.

Mixed feelings on this one. On the one hand Ford faces a very competitive and tough market at the moment. On the other Ford needs employee buy in on such things as raising the quality and consistency of the cars it builds, if it is to live down some of the woes of BA Falcon and the Territory. Both of which have undoubtly pushed past Ford customers away from the brand.

Tough call for Marin Burela.

Anyway here is the story:

Blue-collar pay freeze looms as Ford Oz and union debate new enterprise agreement

By JAMES STANFORD 10 July 2009

FORD Australia is calling for its factory workers to accept a wage freeze and adopt a new two-tier pay structure as it aims to slash costs in a bid to return to profitability this year.

Documents obtained by GoAuto reveal the company is seeking the wage concession as part of new enterprise agreement currently being negotiated with representatives of the Federation of the Vehicle Industry Unions.

The Ford Australia log of claims made during the opening round of negotiations in June includes the proposed pay freeze as well as a call for a two-tier wage system that would see new employees paid less than existing workers.

At this stage, there is no timeframe for the pay freeze, which would depend on the length of the agreement.

The Ford log of claims also includes a call for allowances to be frozen at 2006 rates and some to be abolished when a worker is affected by ‘market initiated change’, ‘employee initiated change’ and ‘forced transfers’.

There is also a proposal for removal of sick leave payouts and annual bonuses.

Ford Australia president Marin Burela has stated the company is determined to keep its costs in check so the company turn around its $274 million loss of 2008.

Left: Marin Burela.

After announcing another price increase for its Falcon range from July, Ford Australia is looking to trim back supplier costs as well as cut wage costs. Mr Burela said the current economic climate meant it was not possible to justify salary increases for either Ford's blue-collar or white-collar employees, who like their counterparts at GM Holden remain under a pay freeze.

“I have been very consistent with this. We have had a management wage freeze for a long time and rightly so,” he said.

“We have put down on the table the fact that we don’t think this is the right time for us to be making demands on ourselves as a company and it terms of a group of people of growing our cost base.”

Mr Burela said the meetings between Ford and union representatives had been productive and he hoped the negotiations would conclude within the next month.

“That is not an easy conversation to have - obviously that is very difficult - but it is being met by professionalism and maturity at every level of the trade union movement,” he said.

“Where that will lead us over the next month, only time will tell.”

Mr Burela said he felt the union representatives understood the company’s position.

“There wasn’t the emotion that you might think because people genuinely understand the severity of the issues we have confronting us,” he said.

Mr Burela would not discuss the details of the various claims, but said he hoped the agreement would cover the next 18 months to two years.

“We clearly spoke about a number of things; some of them were centred around the level of different financial impact on things, flexibility, we spoke about the areas that we don’t think have worked for us over the last two or three years,” he said.

The union federation is considering the pay freeze, but its initial log of claims included an annual five per cent wage increase. It has rejected the idea of a two-tier pay structure and maintains there is no way it will accept that aspect of the proposal.

A union source told GoAuto it was also looking to improve conditions for workers subjected to down-days at Ford’s plants, suggesting they be paid 90 per cent of their normal rate on those days.

“We are not insensitive to market conditions that are facing the industry at the moment,” the source said. “We think there is a capacity to make some improvements in terms of funding affected employees.”

The negotiations are taking place after a wave of job cuts including a major restructure at the end of last year which affected blue and white-collar workers at Ford’s Victorian operations.

Mr Burela said while requesting a wage freeze and other changes was not easy, the company had already made some tough calls that prevented the workforce being subjected to many down days.

“We took some very hard decisions in 2008 when we restructured the company. I was probably the least liked person in Australia at that time... I was the villain, but we did it the right way,” he said.

“If you look at our position in 2009 we have not had to react like our competitors - in terms of massive production down days we have our production set for the whole year.”

Mr Burela said Ford Australia was committed to returning to the black and said it aimed to do so soon.

“We are very focussed on finishing this year at break even or better - that is our aim,” he said.

“Our objective is to continue to improve our financial performance and we are on the road to doing that; 2010 will be a very challenging year and our objective is to maintain that level of stability.”

Mr Burela said Ford Australia had already sold the next two months' supply of locally produced vehicles to dealers, which is a very different scenario to the days of excess stock.

“Our order bank for July is very healthy; in fact our production is sold for July, for August and we are taking orders for September,” he said.

“Six or seven months ago you would have seen us holding, I don’t know, 8000 to 9000 vehicles on the grass with our imports and local production. Now, we have nothing on the grass,” he said.

As part of its moves to improve the bottom line, Ford Australia increased the pricing of its Falcon sedan, ute and wagon range by between $1000 and $1500 from July 1.

Mr Burela dismissed any suggestion the move was made due to the full order bank, stating that the increases was simply a reflection of the rising cost of production.

He said exchange rates did play a role, but added that the price of raw materials including steel and plastic had increased.

“There is the exchange, but also the commodities - the ups and downs of commodity prices that you can’t control,” he said.

Wretched · 13-07-2009, 02:13 PM

I see this as fair.
A lot of organisations have adopted these polices years ago.
If this is what Ford OZ needs to do to survive then so be it.
Australian manufacturing needs to move into the 21st century if it is to survive, the sooner unions learn this the better.

flappist · 13-07-2009, 02:15 PM

This is going to be fun.

/me sits and waits for the usual suspects.......

cob115 · 13-07-2009, 02:21 PM

definatly some thing that has to be taken into acount,if ford any auto make wants to survive in Australia,i know its going to suck lemons for the workers but times arent the best at the moment and haveing a job at ford would be better than having non

Gobes32 · 13-07-2009, 02:30 PM

It is a moral conundrum in regards to the two different wages, on one hand, current employees should not care because they are already employed, but what of the next generation of employees? Should they be on less pay for the same job because they started there after you?

RG · 13-07-2009, 02:47 PM

Quote:

Originally Posted by Gobes32

It is a moral conundrum in regards to the two different wages, on one hand, current employees should not care because they are already employed, but what of the next generation of employees? Should they be on less pay for the same job because they started there after you?

Personally I'd prefer a job with less pay than no job with no pay.

MO · 13-07-2009, 02:47 PM

MO,pulls up comfy chair and watches with flappist and no doubt 4vman will be along soon.hehehe

Gobes32 · 13-07-2009, 03:32 PM

Quote:

Originally Posted by RG

Personally I'd prefer a job with less pay than no job with no pay.

I agree, but if the employee's accept two tier wages, sure it won't affect them, but what about the next batch of employee's Ford hire?

RG · 13-07-2009, 03:34 PM

Quote:

Originally Posted by Gobes32

I agree, but if the employee's accept two tier wages, sure it won't affect them, but what about the next batch of employee's Ford hire?

Well if they don't do it they won't be hiring will they.

gtfpv · 13-07-2009, 03:39 PM

what a great idea. next time i pay my electricity , council , phone and grocery and water bills , i'll offer them 90% of the price too, and when new people moving into the area might want to see if they can pay less .
ford has increased the car prices . that covers it . i would say they are already minimally staffed . otherwise they'd be offering redundancies .
if they are already minimally staffed , that means they are running asefficiantly as they can .

Gobes32 · 13-07-2009, 03:40 PM

I just think you need to think of the employment world you leave your children.... Would you be happy if your son was on 25% less pay than his other workmates just because he was born a couple of years later than them?

gtfpv · 13-07-2009, 03:41 PM

Quote:

Originally Posted by Gobes32

I just think you need to think of the employment world you leave your children.... Would you be happy if your son was on 25% less pay than his other workmates just because he was born a couple of years later than them?

exactly, these guys are still going to pay the same as everyone else for living .

4Vman · 13-07-2009, 03:50 PM

Ford arent making a profit yet are they?
Oh well, it doesn't matter, just give them all pay rises anyway, then watch the price of cars go up even more, then watch Ford loose sales because they're too expensive...
From there its easy to work out the result.

Wally · 13-07-2009, 03:54 PM

Seems a long way from Henry Ford's $5/8hour day innovation.

Gobes32 · 13-07-2009, 03:54 PM

Quote:

Originally Posted by 4Vman

Ford arent making a profit yet are they?
Oh well, it doesn't matter, just give them all pay rises anyway, then watch the price of cars go up even more, then watch Ford loose sales because they're too expensive...
From there its easy to work out the result.

I understand what you are saying mate and as a union member I will be happy to take a wage freeze, I am more worried about supporting my employer than trying to screw an extra $30 a week out of them. But my moral issue is that you are effectively screwing over the next generation of workers by denying them equal pay. If you are worth $20 an hour to do a set task, then the next person hired, if able to do the same job competently, should be entitled to the same pay also.

gtfpv · 13-07-2009, 04:09 PM

i've been down the path of taking a pay freeze before of 4% for a multi national big company, and my colleuges agreed to a once off extra 75 hours per year for free,( for onr year only ) and guess what , never ever ever got it back. i dont agree with pay cuts for managers or employees . .
FORD increased it's prices to cover some losses . they can cut hours and/or overtime for employees, not pay rates . costs of living dont go down . big businesses need to realise this .

SB076 · 13-07-2009, 04:11 PM

Dont know what the right answer is in regards to this - obviously its difficult to pay more and still remain competitive however I would also argue that there are additonal costs over and above a workers take home pay that makes it difficult to compete.

Was talking to an accountant the other day and he suggested that accountancy firms are starting took at utilize overseas labor for some of the more mundine/simple tasks. He gave an example that for $25,000 a year (all inclusive) his firm could employ a fully qualified student from India to do some of the simple tasks - obviously there are still checks in place back here but ultimately once they are satisfied with the quality of work they will remove those and send more work off shore.

GQ_Smooth · 13-07-2009, 04:51 PM

I've yet to be involved in wage negotiations where both parties are honest with each other. As a result it's difficult to have an educated opinion as very few of us will know the true facts.

Can you imagine what these discussion would be like at GM USA after the GFC is over, with the unions having a 17% stake in the company pushing a pay increase? This has not worked in Europe (France) and ended up in the Unions having to sell their share of the busines (from memory for a financial loss).

Gobes32 · 13-07-2009, 05:10 PM

I think most people seen the wage freeze coming, however, i still do not think it is fair for two people doing the same job to be worth different amounts purely based on the time they started at Ford's.

mik · 13-07-2009, 05:53 PM

the fact that they`re still 270 million in the red would say to me if pay cuts are needed then like it or lump it boys you can only run at a loss for so long, if not it will be time to shut up shop down the track, even if they put the price up on cars $1000 each it will take a long time to make up 274 million then start to make a profit.

vztrt · 13-07-2009, 06:03 PM

Quote:

Originally Posted by mik

the fact that they`re still 270 million in the red would say to me if pay cuts are needed then like it or lump it boys you can only run at a loss for so long, if not it will be time to shut up shop down the track, even if they put the price up on cars $1000 each it will take a long time to make up 274 million then start to make a profit.

270 million was not due to the workers wages. I believe they got their manufacturing costs down to 14million.

Bossxr8 · 13-07-2009, 07:51 PM

I think the union will be willing to accept a pay freeze as long as the company provide other benefits that will cost them either nothing or little cost, but the company doesn't want to give up anything, they just want to offer no pay rise and they want to take away other benefits such as the payout on sick leave when you retire or leave.

If they want a pay freeze they should realize they won't get it for nothing in return.

4Vman · 13-07-2009, 07:57 PM

Quote:

Originally Posted by Bossxr8

I think the union will be willing to accept a pay freeze as long as the company provide other benefits that will cost them either nothing or little cost, but the company doesn't want to give up anything, they just want to offer no pay rise and they want to take away other benefits such as the payout on sick leave when you retire or leave.

If they want a pay freeze they should realize they won't get it for nothing in return.

I cant for the life of me see how anyone can justify getting paid out their sick leave.... no wonder cars are damn expensive if that's an example of the benefits staff get..

snappy · 13-07-2009, 07:57 PM

sorry but whats a wage freeze .

vztrt · 13-07-2009, 08:03 PM

Quote:

Originally Posted by Bossxr8

I think the union will be willing to accept a pay freeze as long as the company provide other benefits that will cost them either nothing or little cost, but the company doesn't want to give up anything, they just want to offer no pay rise and they want to take away other benefits such as the payout on sick leave when you retire or leave.

If they want a pay freeze they should realize they won't get it for nothing in return.

I know I had a fair bit of sick leave left when I left (210 hours). I never received anything on it, unless I pulled a sickie.

mik · 13-07-2009, 08:22 PM

Quote:

Originally Posted by 4Vman

I cant for the life of me see how anyone can justify getting paid out their sick leave.... no wonder cars are damn expensive if that's an example of the benefits staff get..

yer it`s a bit of a racket really, work for your self and see how much sick lave you get....

Joe5619 · 13-07-2009, 08:26 PM

Quote:

Originally Posted by Bossxr8

I think the union will be willing to accept a pay freeze as long as the company provide other benefits that will cost them either nothing or little cost, but the company doesn't want to give up anything, they just want to offer no pay rise and they want to take away other benefits such as the payout on sick leave when you retire or leave.

If they want a pay freeze they should realize they won't get it for nothing in return.

A pay freeze in this market is a 100% must & there should be no "other" benfits needed to be given by Ford to get this. You want a benefit, here is it "you get to keep your job!!". The company I work at has done a 100% pay freeze world wide & we got nothing in return for it.. It was either "some get a pay rise & others get the sake" or "you all kept your jobs, but no increases for a year" (well, that is how manager sold it anyway)..

Falc'man · 13-07-2009, 08:52 PM

Quote:

Originally Posted by snappy84

sorry but whats a wage freeze .

No to annual increase in celery, they keep it in cold storage for years to come.

Wretched · 13-07-2009, 08:54 PM

Quote:

Originally Posted by Bossxr8

I think the union will be willing to accept a pay freeze as long as the company provide other benefits that will cost them either nothing or little cost, but the company doesn't want to give up anything, they just want to offer no pay rise and they want to take away other benefits such as the payout on sick leave when you retire or leave.

If they want a pay freeze they should realize they won't get it for nothing in return.

You guys have it good then.
Most companies will not pay out sick leave and most will expire it at the end of each year. Why should they pay out the sick leave? Don't you think annual leave is enough? Our company stopped pay rises years a go and only rewarded the people who did deserve it not people who think turning up to work deserves one. People wonder why manufacturing is leaving this country.

You should be lucky you have a job.

gtfpv · 13-07-2009, 08:55 PM

[QUOTE=Joe5619]A pay freeze in this market is a 100% must & there should be no "other" benfits needed to be given by Ford to get this. You want a benefit, here is it "you get to keep your job!!". The company I work at has done a 100% pay freeze world wide & we got nothing in return for it.. It was either "some get a pay rise & others get the sake" or "you all kept your jobs, but no increases for a year" (well, that is how manager sold it anyway)..[/