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Ford, UAW Reach Tentative Accord on Contract Changes (Update4)

By Keith Naughton

Oct. 13 (Bloomberg) -- The United Auto Workers reached a tentative accord with Ford Motor Co. that would give the automaker contract concessions similar to those the union accepted at the company’s U.S. competitors.

UAW local leaders approved the changes at a meeting in Detroit today, said Gary Walkowicz, a union official at a Ford truck plant in Dearborn, Michigan. The deal now must be voted on by the 41,000 UAW members at the second-largest U.S. automaker.

The accord includes a six-year ban on some strikes, a wage freeze for new hires and a reduction in factory work rules, as well as added jobs and a potential $1,000 bonus, according to a UAW summary confirmed by Walkowicz. The concessions match those granted earlier this year to General Motors Co. and Chrysler Group LLC, which both reorganized in U.S.-aided bankruptcies.

“Some may ask ‘Why now, why not wait until 2011?’” when the contract expires, UAW President Ron Gettelfinger and Vice President Bob King wrote in a letter given to union leaders today. “We agreed to enter into discussions in keeping with the principle of pattern bargaining and to take the opportunity to seek additional gains and protections.”

Ford pledged to add more than 200 jobs at a factory in Wayne, Michigan, 300 jobs at a Chicago plant and a “significant number” of positions at a Louisville, Kentucky, factory in 2011, according to the UAW’s contract highlights.

Strike-Ban Limits

The strike ban is limited to walkouts based on wages and benefits. The union still can strike Ford if the company doesn’t live up to its job commitments, Gettelfinger said.

“We have the right to enforce the product commitments,” the UAW president told reporters after the meeting. He didn’t say when the ratification vote will begin.

The changes to the four-year contract reached in 2007 “would help Ford improve its current and long-term competitiveness in the United States,” the Dearborn-based automaker said in a statement today. Ford declined to disclose details of the agreement until after it’s ratified by workers.

Workers are reluctant to give additional concessions after agreeing in March to cede annual bonuses and cost-of- living increases and accept reduced layoff benefits, Walkowicz said. The Dearborn-based automaker has said those concessions will reduce its annual labor costs by $500 million.

“This is going to very difficult to pass because people are angry about the no-strike clause and giving any more concessions,” Walkowicz said. “Ford is out there talking about how they’re doing better than the other companies.”

Quality Bonus

To entice workers to vote for the givebacks, the agreement also includes the bonus tied to quality and productivity goals in addition to the promises of new production, according to the highlights of the accord.

Ford, the only U.S. automaker to avoid bankruptcy, is seeking parity in labor expenses with GM and Chrysler.

The bonus and promise of new work will help get the deal ratified, said Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts.

“Because Ford didn’t go bankrupt, it has to give something to get something,” he said. “I wouldn’t call it a bribe, but it’s a gift for signing this agreement.”

That strike ban is “more cosmetic than anything else,” Chaison said. “The UAW recognizes a strike of any domestic automaker for more than one day would spell disaster.”

The givebacks don’t include cuts to retiree benefits, such as vision coverage, that were granted to GM and Chrysler, according to the highlights. The bonus will be paid to Ford workers in March based on meeting 2009 productivity and quality targets, according to the union summary.

“If Ford turns the corner, the next agreement with the union in two years will be substantially different,” Chaison said. “It will have pluses instead of minuses.”

Ford was unchanged at $7.62 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have more than tripled this year.

To contact the reporter on this story: Keith Naughton in Southfield, Michigan at Knaughton3@bloomberg.net

Last Updated: October 13, 2009 17:08 EDT

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