Daily Auto News Ford, Union Reach Deal
Daily Auto News
Ford has reached a deal with the United Auto Workers union that will see wages frozen, year-end bonuses eliminated, and changes to retiree benefits both sides hope will help Ford survive. The pact may be just the first time the union agrees to concessions to help an automaker out of the crisis rocking the auto industry — General Motors and Chrysler are both in talks seeking similar agreements.
The AP reports, “Unionized workers at Ford Motor Co. have approved contract changes that include freezing wages and cutting benefits in a move aimed at helping the automaker remain competitive. The United Auto Workers said Monday a majority of hourly workers voted in favor of modifications to the 2007 contract with Ford, eliminating cost-of-living increases and cash bonuses.”
“It is a move,” CNBC reports, “That puts Ford on par with foreign auto companies in the U.S. when it comes to hourly labor costs. Even more important, Ford is in line to save billions of dollars by getting the UAW to agree on taking Ford stock as payment for up to half of the unions retiree healthcare fund.”
According to the Kansas City Star, “About 59 percent of Ford’s United Auto Workers union members voted in favor of the concessions.” Jeff Wright, president of UAW Local 249, told the Star, “Nobody likes concessions, but our members understand how bad the economy is right now. If we’re not selling cars, we have to do what’s needed to survive.”
The AP speculates, “The agreement is expected to be a model for Chrysler LLC and General Motors Corp., which need to bring their labor costs in line with those of foreign auto companies’ plants in the U.S. as a condition for the $17.4 billion they have received in federal loans so far. Under terms of their loan agreements, progress must be made by March 31. The companies are seeking an additional $21.6 billion in government aid.”
But Ford, which has not accepted federal bailout funding, was the first automaker to reach an agreement — a fact, some analysts say, that plays into the debate in Washington, D.C. over funding for automakers. CNBC notes, “Over the weekend Republican Senators McCain (R-Ariz.) and Richard Shelby (R.-Ala.) both said that they believe bankruptcy is still the best way to restructure GM and Chrysler. Their argument is that Chapter 11 would let the companies kick out their contracts (including those with the UAW) and re-negotiate deals at a lower rate. That would be a moot point for GM and Chrysler if the companies can follow Ford’s lead with the UAW.”
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