Ford, UAW Reach Tentative Contract Deal

Nov 03, 01:35 PM

Current Headlines: By Rick Popely, Chicago Tribune

Nov. 3--Ford Motor Co. reached tentative agreement early Saturday with the United Auto Workers on a four-year contract that will lower labor costs at the second-largest Detroit-based automaker as it struggles to return to profitability.

Details of the contract weren't released, but Ford said in a statement that it includes creation of a union managed trust fund for retiree health-care benefits, a key provision in the contracts recently ratified by UAW workers at General Motors Corp. and Chrysler LLC.

The contract also is expected to give Ford more leeway in hiring new workers at lower wages and require UAW members to pay more of their own health-care costs, matching the contracts at GM and Chrysler.

"Though we will not discuss the specifics of the tentative agreement until after it becomes final, we believe it is fair to our employees and retirees, and paves the way for Ford to increase its competitiveness in the United States," Joe Laymon, Ford's group vice president of human resources and labor affairs, said in a statement.

The agreement was reached after a marathon negotiating session that lasted nearly two days at Ford headquarters in Dearborn, Mich., and comes less than a week after UAW members narrowly ratified a pact with Chrysler.

Briefings on the contract for Ford's 54,000 UAW members will begin in a few days, and ratification votes will be held at union locals over the next two weeks.

The UAW left negotiations with Ford for last because it is widely considered in the worst shape of the three domestic automakers and, thus, the most in need of help. Ford lost $12.6 billion last year and is in the midst of a massive restructuring that will include cutting more than 40,000 jobs and 16 plants in North America by 2012.

Ford has named 10 of the plants that will close, but has held off on the remainder, including two assembly plants, while it negotiated with the union.

Neither side said Saturday whether Ford altered plans to close six more plants, but UAW Vice President Bob King said in a statement, "Our goals for this contract were to win product and investment, to enhance job security and protect seniority, and we made progress in all these areas."

Job security has long been an issue with the UAW. GM salved concerns by committing to build new products at 14 of its 16 U.S. assembly plants after this contract ends in 2011, though those plans can be altered by declining sales. Chrysler's promise is to keep plants open only through 2011, making the contract a tougher sell.

GM's contract was approved by two-thirds of UAW workers who voted, but Chrysler's got the approval of only about 56 percent in part because of job-security concerns.

Ford's contract could face heavy opposition as well, especially after Chrysler announced Thursday--less than a week after the deal was ratified--that it would eliminate 12,000 North American jobs by the end of 2008 and shifts at six plants. Chrysler's latest job cuts come on top of 13,000 announced in February.

Likewise the cutting may not be over at Ford. It indicated during negotiations that it wants to cut another 8,000 to 10,000 union jobs after enticing 27,000 this year to accept buyouts or retirement incentives.

Even with the cost savings in the new contract, Ford faces substantial problems at home. U.S. sales fell 9.3 percent in October and are down 13 percent for the year, the most of any major manufacturer. Sales of the F-Series pickup, Ford's most popular and most profitable model, is off 12.5 percent this year.

Ford was alone in reaching a deal with the UAW before a strike. The union staged a two-day walkout at GM before agreeing to a contract Sept. 26 and a six-hour work stoppage at Chrysler on Oct. 10 before coming to terms.

A key goal for Ford was to reduce an estimated $1,300 labor-cost gap with Toyota in the U.S. About $600 of the gap was from Ford's higher wages and $635 from retiree health-care benefits, according to the Center for Automotive Research. Ford has about 125,000 retirees and surviving spouses who collect pensions and medical benefits. The center estimates that GM's contract eliminated $800 to $1,000 of a $1,400 labor cost gap it had with Toyota under the old contract.

The $28 hourly wage for Ford's union workers is similar to what GM and Chrysler workers earn. Including benefits, Ford said that under the old contract the average worker received $70.51 per hour.

rpopely@tribune.com

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