• Proposed deal includes $9 billion in factory investments
  • Tentative accord creates or secures 8,500 jobs, union says

Ford Motor Co. employees represented by the United Auto Workers will begin voting on a proposed four-year contract that includes $30,000 in additional wages and bonuses and $9 billion in factory investments expected to create or secure 8,500 jobs, the union said.

The tentative agreement reached Friday was recommended Monday by leaders from union locals across the U.S. who gathered in Detroit. It now moves to a vote by Ford’s 52,900 U.S. hourly workers. The UAW didn’t give a timeline for ratification.

UAW members at Ford will be deciding on a contract that’s richer than the deals reached with General Motors Co. and Fiat Chrysler Automobiles NV. The union has had to go back to members at GM, where skilled-trades workers voted against the proposed pact even as production workers approved it. The Fiat Chrysler agreement has already been ratified.

The Ford deal’s proposed plant investments are aimed at keeping the Dearborn, Michigan-based company from moving work to Mexico, as a person familiar with the matter said the automaker would do with small and hybrid car production now in Michigan.

“One of the biggest challenges facing your negotiators was protection of our jobs,”  UAW President Dennis Williams and Vice President Jimmy Settles told workers in a letter with the contract highlights. “Ford recently announced plans to move some production to Mexico. We have learned from that experience that without product and plant investments, each of our jobs are at risk.”

Wage increases of $10,633, plus a variety of bonuses guaranteed payouts, will boost the average production worker’s pay by a total of $32,513 over the life of the contract, according to the union. Skilled trade workers’ total compensation will grow an average or $35,098 over four years, the union said. Those calculations don’t include profit sharing.

The Michigan Assembly plant, which will lose production of the Ford Focus and C-Max, will get $700 million in upgrades and gain a new product in 2018 that people familiar with the plans have said is the Ranger small pickup. By 2020, the plant will begin building a new version of the Bronco sport-utility vehicle, according to a person familiar with the plans who asked not to be identified revealing internal discussions.

Factory Details

The Chicago assembly plant that now produces the Explorer sport utility vehicle will receive $900 million in new investment and gain a new product. That factory also builds the Taurus sedan, whose future is uncertain. The union’s highlights said only that he “Taurus will continue through its product lifecycle,” suggesting it may not be replaced with a new version.

The F-150 factory in Dearborn will get $250 million in enhancements as well as new production of the Raptor, a souped-up version of the pickup, the union said. Ford’s Ohio Assembly plant will also receive a new product and $250 million in upgrades.

The deal includes across-the-board raises for workers for the first time since Ford struggled to survive during the recession six years ago. As with similar deals reached with Fiat Chrysler and GM, veteran Ford workers will receive two 3 percent raises, while new hires, who had topped out around $19 an hour, will now progress to the traditional wage of $29 over eight years.

The Ford deal, though, is richer. Upon approving the contract, workers will get $10,000 in combined bonuses, including the payment for approval and $1,500 in profit sharing that has been pulled forward. They also annually will receive $1,750 in inflation protection and competitiveness payouts.

“We worked hard to secure an agreement that provides a clear path to traditional wages for all members and substantial raises for traditional members for the first time in 10 years,” Williams said in a statement. “Our members will have the final word.”

Buyout Plan

The Ford deal also includes a plan to provide $70,000 buyouts to workers who want to retire or leave the company, including skilled-trades employees. GM’s contract didn’t include the $70,000 buyout for skilled trades.

Settles has called the proposed pact “one of the richest agreements in the history of UAW-Ford.”

“These are generous agreements,” Harley Shaiken, a labor professor at the University of California at Berkeley, said in an interview. “The union gained a lot.”

The additional $30,000 in wages and bonus do not include profit-sharing payments, which are contingent on Ford booking earnings in North America. Over the past four years, Ford workers have received more than $30,000 in profit sharing, the union said. The new contract eliminates a cap on those payouts, giving workers the opportunity to share more in the company’s prosperity as U.S. auto sales approach record levels.

Ford workers will continue to pay no premiums for their health-care coverage and newer hires will receive traditional medical coverage under the proposed contract, the union said. The GM proposal also contained those terms.

Newer hires don’t receive traditional pensions, but the company will boost its contribution to their 401(k) retirement savings plans to 6.4 percent.

“We’re extremely proud of the job your committee did for UAW members in the face of hard-line negotiations at the company,” Williams and Settles wrote in the joint letter. “We reminded the company time and again that our members deserve to share in its success.”

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