Squeeze, Squeeze, Squeeze

Detroit's No. 1 salesman last week was United Auto Workers Boss Walter Reuther. Having left the Ford Motor Co. bargaining table with the richest labor settlement in industry history, he now had to sell the terms to the boys. The 35-month contract was worth "seven hundred to eight hundreds of millions of dollars," in wages and benefits, he said on an hour-long TV pitch. "I tell you that we have squeezed and squeezed and squeezed."

Reuther took to the tube to ensure swift ratification of his contract, amid fears that Ford's 20,000 skilled workers, who generally complain of getting short shrift compared with their counterparts in the building trades, might revolt. One truculent group shouting "No! No! No!" gathered at a demonstration that ended in a fist-swinging brawl with union officials. In the end, however, the vote ran overwhelmingly--9 to 1 in the case of production workers, nearly 3 to 1 among the skilled men--to stop the costly 49-day strike.

Second Introduction. Though workers began to go back to Ford's 93 plants at midweek, pesky local issues remained to be settled at some key stamping and engine facilities, and it will be at least two weeks before Ford gets back into full production. Ford had already lost $1 billion in car and truck sales to its 7,200 dealers. In the mid-October selling period, Ford sales plunged 65% while its strike-free rivals forged ahead. So slow is traffic in Ford showrooms that the company plans to start the year all over again, with a "second introduction" of its 1968s. There was one casualty: because of strike delays, Lincoln's new small-sized Continental Mark III, which was originally supposed to appear in February, will not be able to hit the road until next spring.

Though Ford Negotiator Malcolm Denise admitted after the settlement that "our costs are always reflected in prices," the company kept mum on how much, or when, it might up car prices to meet the cost of the new contract. Undoubtedly, the $114 average price increase that Ford announced last month--in line with the rest of the industry--anticipated many of the labor costs. If Reuther's $800 million package was more than the company had projected, prices may be raised once again at year's end, when shoulder harnesses become a mandatory safety item.

Inflationary Surge. The Johnson Administration has long belittled the possibility of lasting damage to the economy as a result of the strike. On the eve of the walkout, Gardner Ackley, chairman of the President's Council of Economic Advisers, brushed off such fears, saying that there would be "a burst of production to make up for it later." It may take quite a burst. The Commerce Department last week reported that in September alone, factory orders for durable goods dropped by 3.2% from August as Ford's shutdown rippled through its suppliers. All in all, said Commerce, the strike cut $2 billion from the G.N.P. in the third quarter.

Still, the lasting damage is not likely to settle in production--automen are sticking by their bright and early predictions of a 9,000,000-car year--but in a surge of inflationary wage increases. With its staggering 7% annual increase in wages and benefits, the Ford settlement dwarfs the 4.9% won last year by the airline machinists, who effectively buried the Administration's once cherished 3.2% wage-price "guide-posts." Though the Administration has been strangely silent of late, it is now clear that another mark has been passed. Last August CEA's Ackley expressed the hope that Reuther's men would not jostle "the general pattern that has developed this year around 5%."

7% Pattern. The new pattern is already emerging. Reuther's 7% will almost certainly spread through the auto industry, and from there to industries less able to afford it. The ink had hardly dried on the Ford contract when the U.A.W. exacted a similar settlement from Caterpillar Tractor Co., which was the first of five farm-equipment makers to face contract negotiations this year. And the United Steelworkers Union last week cranked up for contract talks soon to begin with can manufacturers by issuing a policy paper outlining a Ford-style settlement. For his part Reuther's next task is to call on General Motors* and Chrysler, who racked up impressive third-quarter figures while Ford was on the sidelines. Chrysler, which Reuther announced last week will be his next target, has been long pressed by a severe cost squeeze and will probably settle quickly. Powerful General Motors, however, may give Reuther a longer run for his money.

*Which last week called in 1,143,000 standard-sized 1965 Chevrolets--second largest safety recall ever--for possible replacement of a steering-assembly component that, if worn, can cause a sharp veer when braking, has resulted in four accidents (no injuries).

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