Reference no: EM133142377
Case Application: Negotiating a Ford Contract (The Case Study)
Individuals such as Ford's vice chairman and chief labor negotiator, Peter J. Pestillo, have made it their goal to work through even the toughest of issues. General Motors, for example has a long history of conflict with the United Auto Workers (UAW) union. In the late 1990s, GM was paralyzed by a 54-day strike that cost the company more than $ 2 billion after-tax profits. In contrast, Ford Motor Company has excellent relations with the UAW and hasn't had a strike since 1986. Why this difference? Many industry analysts point to one chief reason, Peter Pestillo.
Many auto company labor negotiators are former factory managers, with advanced business degrees, who came from middle-to upper-class roots. Not Pestillo. The son of a union machinist, his first job after high school was in a ball-bearing company where he was a dues-paying member of the UAW. After graduating from college, he worked at General Electric and B.F. Goodrich while working his way through law school. At age 38, he came to Ford Motor Company to oversee its labor policy-activities he's still performing nearly a quarter-century later.
Pestillo stands out among auto executives because of his belief in cooperation with unions. He encourages factory managers to work closely with workers and union leaders, and he's forced out factory managers who couldn't. "In the old days, they were happy to make loads of union grievances and disciplinary actions to prove how tough they were, "Now we measure how effective they are." Due in no small part to Pestillo, Ford plants are now among America's 10 most productive car factories and 7 of the 10 most productive light truck factories.
Pestillo has built close personal ties key UAW officials. He likes them and they like him. The current president of the UAW, for example, considers Pestillo a friend with whom he enjoys drinking and playing golf. This close relationship has benefitted Ford. The UAW traditionally negotiates a three year agreement with one automaker and uses that as a reference point when negotiating with the others. For most of the past 20 years, the union has gone to Ford first because of its cooperative relationship. Pestillo has used this opportunity to negotiate deals that have cut Ford's costs and done little to help its rival, GM.
Questions:
What role does relationship building have on positive labor-management relationships?
How can cooperation between the union and the company benefit both organizations?
Do you believe this type of arrangement can work in other labor-management relationships? Why or why not?