Autos: Coping & Hoping

American Motors Corp. has encountered many obstacles on the road back to financial health but none any more perilous than its eight-month-long labor negotiations with the United Automobile Workers. Away from the bargaining table, the company has made headway against major roadblocks. Last month it announced earnings for the three months ending Dec. 31 of $4,500,000 (plus a special tax recovery of $19,200,000), its first quarterly profit in 18 months. Its auto sales for the current model-year have been running about 10% ahead of last year's levels. Encouraging as those signs may be, however, A.M.C. knows that its recovery prospects could be scuttled by either an auto-production strike or a costly labor settlement.

Last week the company was breathing somewhat easier—for the time being. In Milwaukee and Kenosha, Wis., A.M.C.'s 11,000 auto-production workers voted to accept the new two-year contract agreed on a week before by company and U.A.W. negotiators. The terms were tailor-made for the auto maker's shaky fortunes. During the first year, for example, the average A.M.C. worker will get only a 120 wage increase over the $3.40 an hour he now earns. That represents a marked concession by the auto union, which had won a 200-an-hour first-year hike in last year's settlements with Chrysler, Ford and General Motors.

The U.A.W. was not so agreeable when it came to contract talks cover ing its local at A.M.C.'s money-losing Kelvinator Division in Grand Rapids. At issue was the fact that Kelvinator's 3,100 appliance workers earn less than their auto-production counterparts. While the U.A.W. demanded parity, A.M.C. countered that the average wage at Kelvinator—$2.91 an hour—compares favorably with that earned by other appliance workers. When the impasse persisted, the union merely relayed the company's final offer to the Grand Rapids local without making any recommendation for or against ratification. The rank and file rejected the offer —by the narrow vote of 1,157 to 1,134 —and went out on strike.

Though Kelvinator turns out some auto parts—including door stampings, interior trim and /seat upholstery—A.M.C. expressed confidence that the division's shutdown "will not hurt auto production for a few weeks yet." The reason is that A.M.C. had built up big parts inventories in anticipation of such a strike. To guard against a protracted Kelvinator shutdown, the company also began laying plans to turn to outside suppliers for the affected parts. With high hopes for continued recovery, A.M.C. obviously has every intention of avoiding, if possible, even the briefest auto-production stoppage.