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New Ford-UAW Contract Mirrors Gains Won At GM After Strike

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11/01/2019 | 04:12pm EST

By Nora Naughton

The United Auto Workers' new labor deal with Ford Motor Co. largely mirrors the contract agreement struck with General Motors Co. last month after a 40-day strike, but with some exceptions.

Unionized workers at Ford will get pay increase, lump-sum payouts and a path to full-time work for temporary workers -- similar to the gains the UAW won at GM, according to details released Friday in Detroit. The Ford agreement, which workers still must ratify, will also match the GM pact in holding employee health-care contributions at 3% and shortening the time it takes for new hires to reach the top tier of pay from eight years to four years.

The UAW also strengthened contract language on the use of temporary workers in the new Ford contract, requiring the company to limit its number of temps to 8% of the total workforce and 10% of the workforce at each plant.

But Ford workers will get a smaller $9,000 signing bonuses if the contract is approved, and Ford has committed to $6 billion in new U.S. factory investment, less than amount pledged by GM, despite having a larger union-represented factory workforce than its crosstown rival.

The agreement also allows Ford to close an engine plant in Michigan that now employs 600 workers. Those affected will be transferred to a nearby transmission plant, resulting in no job loss, the UAW said.

Labor experts say it is a decent deal for Ford workers, who will benefit from similar gains as their GM counterparts, but without having to strike.

"The membership should be satisfied, not happy and tickled to death," said Art Wheaton, a labor studies professor at Cornell University. "It'll be ratified but it will probably be somewhat close."

In 2015, the last time a tentative labor agreement was presented for a vote, Ford's hourly workers narrowly passed it with 51% approval. That same year, UAW-represented workers at Fiat Chrysler voted down their first contract proposal, sending bargainers back to the table to hash out another deal.

Union leaders will return to their plants this weekend to present the proposed terms to members. Voting on this latest deal will begin Monday and wrap up Nov. 15. Ford's UAW-represented workers must ratify the agreement by a simple majority.

Chris Budnick, 34, a quality inspector at Ford's Kentucky Truck Plant in Louisville, Ky., said he'd rather Ford commit more money to its U.S. factories and nix tiered-pay altogether -- as opposed to doling out big one-time bonuses.

"The bonus is to buy our votes, basically," Mr. Budnick said.

If they back the deal, the UAW will next move onto negotiations at Fiat Chrysler Automobiles NV, which labor experts expect to be more complicated in part because of plans revealed this week for the auto maker to merger with France's PSA Group.

While GM workers approved a deal to end the longest nationwide strike at the company since 1970, it isn't immediately clear whether members will back this latest deal with Ford. A rejection would mark a significant setback, once again prolonging contract talks that have already lasted longer than many in the industry anticipated.

GM set a high bar for its U.S. rivals to meet in this latest round of bargaining. While GM got the go-ahead to close three U.S. factories, it also granted the UAW financial gains that will raise labor costs over next contract's four-year period, analysts say.

The UAW headed into negotiations with Ford, looking to match the gains it secured at GM on wages, benefits and other big-picture economic items.

Ford, in particular, was hoping to win some concessions on health care at the bargaining table with medical bills for its unionized workforce expected to top more than $1 billion next year.

But those prospects dimmed once GM agreed to keep health-care contributions at 3% -- a far lower rate than the average paid by other private-sector workers.

Ford's all-in labor costs, which include wages and benefits, are the second-highest of the Detroit car companies, averaging $61 an hour this year, according to the Center for Automotive Research. Foreign-based auto makers, which don't have unionized workforces at their U.S. plants, spend about $50 an hour on labor costs, according to the Center.

The Dearborn, Mich., car company is also in the midst of a massive restructuring, which aims to generate billions in cost-savings. Once the strongest financially of the Detroit car companies, Ford has since slipped behind GM in profitability and is trying to restore earnings growth by closing factories in Europe and South America and by laying off salaried workers in North America.

Ford last month dialed back its full-year profit forecast, citing new cost pressures and a weaker-than-expected fourth quarter.

Ben Foldy contributed to this article.

Stocks mentioned in the article
ChangeLast1st jan.
FIAT CHRYSLER AUTOMOBILES 2.47% 13.194 End-of-day quote.4.04%
FORD MOTOR COMPANY 2.31% 9.32 Delayed Quote.21.83%
GENERAL MOTORS COMPANY 2.44% 36.1 Delayed Quote.7.92%
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