Ford, UAW Reach Deal - Maybe

Ford Motor Co. (F) has finally reached a tentative national agreement with 250 leaders of the United Auto Workers (UAW) on modifications to its 2007 labor contract. The deal, which runs until 2011, will help Ford end its cost disadvantage while securing jobs for the union workers at the same time. However, the deal has yet to be approved by the 41,000 UAW members at Ford. Voting will begin this week.

Ford was upset with its higher labor costs compared to its Detroit rivals, General Motors and Chrysler. Both of those companies were given concessions as they headed into bankruptcy protection earlier this year. However, the deal will enable the automaker to lower the labor costs to match those of its rivals.

If the members ratify the agreement, they will be given bonuses and additional work with investments at some factories. The $1,000 bonus is payable in March next year to every UAW worker. Additional work includes manufacturing a new product in the Chicago assembly plant with a planned addition of 300 jobs in 2010.

The deal also bans strikes over wages or benefits, freezes entry-level wages and changes work rules to require some skilled-trade employees to do more than one job. Under the deal, the union is also required to enter arbitration with Ford rather than strike in the next round of contract talks in 2011.

Ford will also resume discussion on contract negotiations with the Canadian Auto Workers (CAW) on Oct 26. Both the parties opened negotiations last month for a contract agreement that could preserve jobs in Canada by allowing for future investment, besides addressing a wage gap compared with workers at the plants in the U.S.

We continue to recommend the shares of Ford as Neutral with a target price of $8.

Comments

[Dave Harris:]

Personally,
I hope the UAW quickly acts to ratify this agreement.....it will bring long term benefits to keep Ford's labor costs competitive with its' cross-town rivals of GM and Chrysler, both of whom gained extensive labor concessions under taxpayer funded Bankruptcy reorganization. This new agreement will, I believe, only bring long term prosperity and success for all Ford Motor Company Employees and the general consumer as well.

Dave

Oct 15 08:14 PM

[My Preacher:]

I think the UAW should bargain to get back some education benefits for its members. They were taken away aned in this era they are needed and won't cost that much.

Oct 16 02:09 PM

[My Preacher:]

I also think the UAW in order to help FORD should bargain for the ability to have more hands on preview of new vehicles and the process to vote on new design ideas. There are 41,000 or so members. If each was to bargain for a larger performance and profit sharing bonus, That would take away from FORD maybe 2 percent of the profit since that would be the percentage versus sales. In other words if FORD makes a profit of $2500 dollars average on each vehicle and they give that to 41,000 workers then that is only the profit from 41,000 vehicles. 2,500,000 vehicles left for everyone else to profit from! The bonuses should then be doubled if they are used as new vehicle vouchers. THAT IS A WIN WIN ECONOMIC STIMULUS even better than giving up pay and dignity. The things FORD are asking for have in some ways already been taken and FORD could show that it cares for its workers by giving them things that help rather than hurt the company. YOU HURT THE COMPANY WHEN YOU HURT THE WORKERS AS THEY ARE THE MOST LOYAL CUSTOMERS forget about ripple effect!! Maybe the new workers don't ge as much but at least give them education benefits after a couple or so years!!!

Oct 16 02:26 PM

[My Preacher:]

41,000 thousand divided by 2,500,000 million equals 1.6% percent! Do the math!!!

Oct 16 02:32 PM

[My Preacher:]

FORD also not mentioning that it has sold almost a million vehicles in CHINA in the past year and that CHINA-not the US-is the largest vehicle market. Maybe the UAW could bargain for some of those CHINESE vehicles to be built here. WHAT SALES AND PROFIT!! WHAT DISADVANTAGE> WIN WIN ANYONE???????

Oct 16 02:39 PM

[My Preacher:]

Also the Skilled Trades workers should bargain that not their jobs be combined, but that the JOBS as outlined by in house process documents shold be named exclusively as to which TASKS! can be done by team members instead of apprenticeable trades following Lines of Demarcation. For example, certain lighter machines could be moved, or very low pressure hoses disconnected if in the way, or if need be, some cleaning could be done on the weekend by anyone of the team members, etc. Make efficiencies by identifying the wasteful part of the tasks. The workers themselves need to be MORE HIGHLY TRAINED AND SPECIALIZED NOT DUMBED DOWN IF WE PLAN TO REMAIN COMPETITIVE WITH JAPAN AND CHINA!!!! WE CAN MAKE BETTER CARS THAN HYUNDAIS>>> THEY ARE NOT AS DESIRABLE AS THE NEW FORDS!!! SO WE DO NOT NEED TO ADAPT THEIR BUSINESS PRACTICES!!!!!?!?!?

Oct 16 02:48 PM