UAW Says It Has a Tentative Contract Deal With Ford

UAW Says It Has a Tentative Contract Deal With Ford
  • Workers to receive $10,000 including early profit sharing
  • Local leaders will gather in Detroit on Monday to review

Ford Motor Co. and the United Auto Workers reached a tentative four-year agreement that will grant across-the-board raises for 52,900 hourly workers and pay them a fatter signing bonus than a similar deal with General Motors Co., said people familiar with the matter.

The deal included “substantial economic gains” for members, the union said in an e-mailed statement that didn’t provide financial details. Along with raises for hourly workers and better health-care plans for entry-level staffers, Ford’s UAW members will get $10,000 -- $8,500 for ratification plus a $1,500 advance on profit-sharing payouts -- if they accept the deal, said the people, who asked not to be identified because members haven’t yet seen the details. GM workers got an $8,000 ratification bonus, double what senior Fiat Chrysler Automobiles NV workers got.

“This agreement is significant for our members in that it creates a clear path for economic advancement for active members and rewards veteran employees for their sacrifices in recent years,” union Vice President Jimmy Settles said in the statement. “It is one of the richest agreements in the history of UAW-Ford.”

The settlement with Dearborn, Michigan-based Ford comes after the UAW reached a deal with GM that was richer than the contract it negotiated with smaller and less-profitable Fiat Chrysler last month. The Ford deal extends medical benefits to entry-level workers that match those of veteran employees, just like the GM agreement did, the people said.

“These are generous agreements, the union gained a lot,” Harley Shaiken, a labor professor at the University of California at Berkeley, said in an interview. “The UAW built a strong entry into the middle class for autoworkers. That was the union’s historic gain and they’ve gone back to the future.”

UAW President Dennis Williams sought sweeter deals at GM and Ford, which each posted record North American profits this year. The contract with Fiat Chrysler will cost that automaker close to $2 billion over four years, people familiar with the matter have said.

What Ford Gets

The agreement announced Friday, if ratified, “will help lead the Ford Motor Co., our employees and our communities into the future,” John Fleming, the second-largest U.S. automaker’s executive vice president for global manufacturing and labor affairs, said in an e-mailed statement.

The tentative agreement also eliminates a limit on Ford that said that once the company had 28 percent of its workers at the entry-level pay and benefits scale, it had to convert the most senior members to top level pay. Since entry-level workers can now work toward the top pay structure, the union was able to give up the cap, the people said. Ford executives have complained that the company was subject to that clause while the other two had been exempted since their bankruptcies.

Ford’s average labor cost, including benefits, is about $57 an hour, or $10 more than at the U.S. operations of Fiat Chrysler or Toyota Motor Corp. and $2 more than at GM, according to the Center for Automotive Research in Ann Arbor, Michigan.

In June, before contract talks started, Ford told the union it was moving production of the slow-selling Focus small car and C-Max hybrid out of a Michigan factory. The company told union officials those models would be produced outside the U.S., most likely in Mexico, according to a person familiar with the discussions. Ford said it would build a different model in that Michigan factory, which could have been resolved in these talks.

“This agreement lays the basis for future investment in the United States,” Shaiken said. “It’s an agreement that the companies feel will allow them to compete effectively.”

‘Our Time’

After almost a decade without raises for senior workers while newer hires got lesser wages and benefits, the UAW had said it’s payback time for helping the automakers survive the recession that led to the 2009 bailouts and bankruptcies of GM and Chrysler. Ford’s deal matched raises at GM and Fiat Chrysler, which all include boosting entry-level workers’ pay over eight years to the more-than-$29 an hour that senior workers will get, the people said.

Like the pacts at GM and FCA, the Ford deal also includes two 3 percent hourly wage raises and two bonus checks equal to 4 percent of pay for the veteran workers. Ford workers will also be eligible for an annual competitiveness bonus of $1,750, compared with $1,500 at GM, the people said.

The union’s Settles had said he was “very determined” to get raises for workers because the company is “making plenty of money.” In a video posted on social media in September, Settles said: “Now it’s our time and it’s just how much.”

Williams took an unconventional path in this round of contract talks by starting with Fiat Chrysler, the smallest and weakest company. Workers there rejected the first agreement the UAW reached by a 2-to-1 margin. Williams went back to the bargaining table and won additional wages and benefits and workers then ratified it by a 2-to-1 margin.

“Dennis Williams felt the toughest challenges would be at Chrysler,” Shaiken said. “Better to do those first and to build up from that, rather than to do the stronger companies first and have to scale it down for Chrysler.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE