March 9 (Bloomberg) -- Ford Motor Co., seeking to survive without federal aid, became the first U.S. carmaker to gain a new round of concessions from the United Auto Workers union as members ratified reductions to compensation and benefits.

The contract changes won the support of 59 percent of production workers and 58 percent of skilled-trades employees, the union said today in a statement. About 42,000 UAW members at Ford were eligible to cast ballots on new terms that include elimination of annual bonuses and cost-of-living pay increases, as well as reductions in layoff benefits and the company’s cash contribution to a retiree health-care trust.

“Both sides knew the stakes here,” said Harley Shaiken, a labor professor at the University of California at Berkeley. “Ford workers were looking not at what they were giving up, but what they were facing, which was the demise of the company.”

The union vote helps Ford avoid government aid as plunging auto sales pressure operating cash. The second-largest U.S. automaker lost a record $14.6 billion last year and owes $13.2 billion to the union-run retiree health-care trust.

Ford rose 4 cents, or 2.4 percent, to $1.74 at 4:01 p.m. in New York Stock Exchange composite trading. Ford shares are off 79 percent since hitting a 52-week high of $8.48 on May 1, 2008.

“Once again UAW members have stepped up to make the difficult decisions necessary to deal with the reality of the current economy, the deteriorating auto industry as a whole and specifically the negative impact the economic climate is having on Ford,” union President Ron Gettelfinger said in a statement.

Health-Care Fund

A key provision of the accord lets Ford cut by half its cash contribution to the medical fund, known as the Voluntary Employee Beneficiary Association, or VEBA. Stock will make up the balance of the payments to the fund, beginning in 2010 when $3.2 billion is due, according to a March 5 report by auto analyst Brian Johnson of Barclays Capital.

The agreement with Dearborn, Michigan-based Ford probably will set a pattern for concessions sought by General Motors Corp. and Chrysler LLC, Shaiken said. Those two automakers have received a combined $17.4 billion in U.S. loans and are seeking as much as $21.6 billion more.

“By working together with our UAW partners, we identified solutions that will help Ford reach competitive parity with foreign-owned auto manufacturers and that are important to our efforts to operate through the current economic environment without accessing a bridge loan from the U.S. government,” Joe Hinrichs, Ford group vice president of manufacturing and labor affairs, said in a statement.

‘Sacrifice’ From All

To help persuade Ford workers to take the deal, Executive Chairman Bill Ford and Chief Executive Officer Alan Mulally agreed to take 30 percent pay cuts. The change in VEBA funding was contingent upon Ford restructuring its debt, the automaker said March 4 when it offered investors cash and shares to retire as much as $10.4 billion in borrowings.

“We are focused on doing everything possible to rebuild a great industry and keep manufacturing jobs in the United States,” Gettelfinger said. “In order to succeed, shared sacrifice will be required from all stakeholders, including executives, directors, shareholders, bondholders, dealers and suppliers.”

Buyout Offers

Ford also is seeking to reduce its hourly employment through buyouts valued at as much as $75,000 each.

The offers include as much as $40,000 for workers who qualify for retirement and have at least 20 years of service, while those who aren’t eligible to retire can take $50,000 to quit, according to a copy of the tentative agreement obtained by Bloomberg News.

Workers taking the buyouts also would have the option of receiving a $25,000 voucher for a new car or $20,000 in cash, according to the agreement.

The Canadian Auto Workers union said yesterday it reached a tentative agreement with GM to freeze wages and pensions until 2012 and to require workers and retirees to pay a monthly health- care fee to reduce the automaker’s costs. The Canadian industry minister made concessions by the union a condition for government help, which may total as much as $5.4 billion (C$7 billion) for GM alone.

Ford’s new labor agreement also eliminates the so-called jobs bank, a 25-year-old program that paid UAW employees with no duties to perform their full salary indefinitely to report to work. GM and Chrysler already eliminated their programs.

Reduced Benefits

Instead, Ford union workers with more than 20 years will get 52 weeks at about 70 percent of their gross wages, so-called supplemental unemployment benefit, or SUB, pay -- or about double what they would receive in unemployment -- and 52 weeks more at half that rate.

Workers with more than 10 years and fewer than 20 get 39 weeks of full SUB pay and 39 weeks at half the rate. A worker with less than 10 years’ service gets 26 weeks at full supplemental pay and 26 weeks at half.

In the past, workers would get the supplemental pay for 48 weeks and then go into the jobs bank.

Ford workers under the revised terms also will work 40 hours before they are paid overtime, which would allow for four 10-hour days without overtime. Workers also will have shorter breaks.

In exchange, the company agreed to put new models in factories in Ohio, Missouri, Michigan, Kentucky and Illinois, and forgo any cut to core wages, health-care benefits or pensions.

“Anything the union gave up will be difficult to get back,” Shaiken said. “But when you’re in a boat in rough rapids, you want to get through it and that’s what Ford and the union did.”

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

Last Updated: March 9, 2009 16:35 EDT