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Ford, UAW Said to Reach Accord on Labor Concessions (Update4)

By Keith Naughton and John Lippert

Oct. 9 (Bloomberg) -- Ford Motor Co., seeking concessions granted to U.S. rivals, reached a tentative United Auto Workers accord that includes a six-year ban on some strikes and a wage freeze for new hires, two people familiar with the matter said.

UAW leaders will present the plan Oct. 13 in Detroit to the Ford National Council, which consists of factory-level union chiefs, said the people, who asked not to be identified because the terms aren’t public. Ford offered pledges for new production and a $1,000 bonus tied to quality goals, the people said.

New savings would help Ford build on a $500 million cut in labor costs under a UAW agreement in March, while the sweeteners are aimed at damping resistance to fresh concessions. General Motors Co. and Chrysler Group LLC won union givebacks to help them with their U.S.-backed bankruptcies.

“There’s a lot of sentiment against concessions inside the plant,” said Gary Walkowicz, a union official at a Ford truck factory in Dearborn, Michigan, who isn’t directly involved in the national contract talks.

Ford, the only U.S. automaker to avoid bankruptcy, is seeking parity in labor expenses with GM and Chrysler, which received UAW approval for a six-year pay freeze for entry-level employees, a no-strike accord until 2015 and fewer union job classifications.

The March accord with the UAW calls for Dearborn-based Ford’s 41,000 U.S. hourly workers to cede annual bonuses and cost-of-living increases and accept reduced layoff benefits.

‘Making Progress’

Ford declined to comment today on whether an accord had been reached on new concessions. “We don’t have an announcement to make,” said Marcey Evans, a spokeswoman. “We continue to work with the union and we are making progress.”

A UAW spokesman, Roger Kerson, didn’t immediately respond to a phone call and e-mail requesting comment.

Strikes over wages and benefits would be prohibited for six years under the new agreement, while walkouts over issues such as plant safety would still be permitted, the people said. The plan doesn’t include cuts to retiree benefits, such as vision coverage, that were granted to GM and Chrysler, the people said. The $1,000 bonus payment will be made to Ford workers in March based on meeting 2009 product-quality targets, one person said.

In exchange, Ford is promising to put new work into two plants in Sterling Heights, Michigan, that make transmissions, axles and steel body panels for cars, the people said.

Shares, Bonds

Ford fell 6 cents to $7.12 at 4 p.m. in New York Stock Exchange composite trading. The shares have more than tripled this year.

The automaker’s 7.45 percent bonds due in July 2031 rose 0.25 cent to 82 cents on the dollar, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority. The yield declined to 9.4 percent.

Without additional givebacks, Ford may be at a “longer- term” disadvantage in manufacturing costs, the automaker’s labor chief, Joe Hinrichs, said Sept. 30.

Hinrichs, group vice president of global manufacturing and labor affairs, met last month with workers at plants across the U.S. to review Ford’s competitive position. Ford has lost $30 billion in the last three years and Chief Executive Alan Mulally has said he expects to break even or be profitable in 2011.

The Canadian Auto Workers union said yesterday that talks with Ford will resume on Oct. 26. Ford, which employs about 7,000 hourly workers in Canada, is seeking concessions the CAW granted GM and Chrysler to help close a 15 percent productivity gap between its Canadian and U.S. plants.

To contact the reporters on this story: Keith Naughton in Southfield, Michigan, at Knaughton3@bloomberg.net; John Lippert in Chicago at jlippert@bloomberg.net

Last Updated: October 9, 2009 16:16 EDT

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