Ford workers approve new contract
More than 22,000 workers, or 63 percent of those who cast ballots, voted in favor of the pact, while almost 13,000, or 37 percent, opposed it, the United Auto Workers said in a statement Wednesday.
The vote means that new contracts have been approved at Ford and General Motors Co., with Chrysler workers just starting to vote on their deal. At all three companies, union leaders agreed to profit sharing and signing bonuses instead of annual pay raises, a novel concept that helps the companies control their costs yet rewards workers.
The contracts set the wages and benefits for 112,000 auto workers nationwide and also influence the pay at auto plants owned by foreign companies, auto parts supply companies and other industries.
As part of the deal at Ford, the company promised $4.8 billion in new investments in its U.S. plants and 5,750 new jobs.
** FILE ** United Auto Workers President Bob King listens to a ... more >
Most workers won’t get annual raises under the contract, but they will get profit-sharing checks, inflation-adjustment payments and other bonuses worth at least $16,700 through 2015. The deal at GM was similar, but the Chrysler pact has far smaller signing bonuses and profit-sharing checks.
UAW Vice President Jimmy Settles, the union’s top Ford negotiator, said in a statement that workers at Ford were frustrated with the economy, a lack of pay increases and what he called “outrageous” pay packages for executives, yet they still approved the pact. Eighty-five percent of the union’s 41,000 members at Ford cast ballots, he said.
“As the nation’s economy remains stalled and uncertain and its employment rate stagnates, we were able to win an agreement with Ford that will bring auto manufacturing jobs back to the United States from China, Mexico and Japan,” union President Bob King said.
The company said the deal means it will add shifts at four U.S. factories: Michigan Assembly in Wayne, Mich., near Detroit, where the Focus compact is made; the Chicago Assembly Plant, where Ford makes the Taurus sedan and Explorer SUV; Louisville Assembly in Kentucky, where Ford will make the new Escape small SUV; and the Auto Alliance plant in Flat Rock, Mich., which will get additional production of the Fusion midsize car.
The company also said it will move production of medium-duty trucks from Mexico to an assembly plant in Avon Lake, Ohio, near Cleveland.
“Our agreement is fair to our employees and it improves our competitiveness in the U.S.,” Mark Fields, Ford‘s president for the Americas, said in a statement.
Despite the signing bonuses and profit sharing, analysts expect a minimal impact to Ford‘s labor costs, in part because most of the new workers will be hired at lower wage rates than the company’s longtime workers. Brian Johnson, an auto analyst with Barclays Capital, estimates the contract will add about $70 million to Ford‘s labor costs each year. If large numbers of older workers leave the company, Ford will spend even less, he said.
Mr. Johnson said Ford could see immediate benefits from the union approval in the form of a ratings upgrade, which would help lower its borrowing costs. Standard & Poor’s Ratings Service has said it expects to raise Ford‘s corporate credit rating to “BB+” — which is one notch below investment grade — if the labor agreement is ratified.
Shares of Ford rose 6 cents to $11.84 in morning trading Wednesday.