Ford and UAW Reach Labor Contract Agreement
Ford (NYSE:F) and the United Auto Workers union have reached a tentative agreement on a new four-year labor contract. Ford’s 41,000 U.S. hourly workers still have to ratify the agreement. General Motors (NYSE:GM) workers have already ratified a new four-year contract, while Chrysler has extended the deadline to reach a deal to October 19.
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The UAW is negotiating new contracts for 113,000 U.S. autoworkers for the first time since GM and Chrysler went bankrupt in 2009. The previous contracts were negotiated in 2007. Ford was the only company of Detroit’s big three to avoid Chapter 11, and as such, its workers are seeking more from the automaker they helped save. Because the government stepped in to keep GM and Chrysler afloat, their workers had to agreed not to strike, an option Ford workers still have, leaving them with more leverage in negotiations.
Ford has discussed adding as many as 10,000 new jobs as part of its new agreement with the UAW, of which 4,000 would be related to making the Fusion midsize sedan, which is currently manufactured in Mexico. However, Ford has also said it must lower hourly labor costs that are higher than those at GM and Chrysler.
UAW President Bob King argues that Ford CEO Alan Mulally’s compensation rose 48% in 2010 to $26.5 million, while the CEO received a $56.6 million in stock in March 2011 for leading the automaker’s turnaround, negating Ford’s claims that it needs to save money. Ford currently pays an average of $58 an hour, plus benefits, the highest of the big three union-organized automakers. GM’s hourly labor costs average $56 per worker, while Chrysler has said its labor costs are about $50 an hour.
Ford, the second-largest U.S. automaker, earned $4.95 billion in the first half of 2011, with light-vehicle sales — including cars, SUVs, minivans, smaller pick-up models — rose 11% this year through September, while the industry gained only 10%. After losing $30.1 billion from 2006 through 2008, Ford has earned $9.28 billion in the past two calendar years. In 2006, Ford borrowed $23.4 billion, putting up all of its major assets as collateral, thus avoiding bankruptcy and the need for a government bailout.