Ford May Reinstate Dividend

| About: Ford Motor (F)

Ford Motor Co. (NYSE:F) is considering reinstating dividend payments for its shareholders as the company expects to benefit from labor efficiency improvements resulting from the newly ratified 4-year contract with United Auto Workers (UAW).

The automaker revealed that the UAW contract would increase its labor costs by less than 1% annually, the smallest increase in four decades. Its hourly labor costs, including wages and benefits, will rise to $59.00 from $58.00.

Meanwhile, entry-level wages will rise to $19.28 per hour from $15.78 per hour by 2015. However, wages of senior workers-- who get $28.00 per hour presently--would not be raised, .

Under the deal, Ford also promised to invest $6.2 billion in U.S. plants creating 5,750 jobs. Thus, the automaker would add 12,000 jobs in the U.S. until 2015 after adding 6,250 jobs previously announced by the company.

The automaker will also give bonuses totaling $10,000 and profit-sharing payments to its 40,600 workers in the U.S. this year. However, the company expects higher bonus payments will be offset by efficiency gains resulting from flexibility in work rules under the new contract.

Ford also plans to lower its labor costs further by offering buyouts to high-paid workers. The company is offering $50,000 buyouts to production workers and $100,000 buyouts to skilled-trade employees. It has estimated that about 900 to 1,000 of its skilled-trade workers will accept the buyout.

The workers at General Motors Co. (NYSE:GM) already ratified the UAW deal in September. Under the agreement, most of the workers would not get annual pay raises, but signing bonuses totaling $5,000, profit-sharing checks and other payments amounting to at least $11,500 during the tenure of the deal.

The UAW is now waiting for the workers at Chrysler to ratify the 4-year deal. The tentative agreement between UAW and Chrylser includes $3,500 signing bonus, which will be paid in two installments: $1,750 when it is signed and $1,750 once Chrysler achieves financial stability. The deal covers 23,000 factory workers and 3,000 salaried workers.