The automaker company has signed and finalized a deal with the UAW, and in the next four years is expected to see an increase of 5% in its labor costs.
The wages at the automaker, Ford Motor Company have be rising much slower than the inflation rate and according to the news by Business Finance News, as per the four year labor contact the costs of labor are predicted to shrink by as much as 1.5% on a yearly basis. This works in favor of the company since the wages are rising very slowly so the automaker still has an edge in the market over its competitors.
Currently, the Detroit based automobile company has been running on a two tier wage system but recently it has put a stop to it by finalizing and signing a deal with UAW - United Auto Workers union. By the year 2019, the labor costs of the automobile company are expected to increase by approximately 5% to $60 from a currently labor cost of $57.
The automaker in the present quarter is expected to incur money from bonus ratification which will be as much as $600 million; these bonuses for the quarter will be worth $500 per worker of the company. The agreement that has been signed has over 53,000 employees; now the employer is looking to add low-paid workers to the company which would be temporary workers since the company is currently putting a halt to hiring more new full time workers. The company is doing so mainly to reduce the burden it is expected to face with the wage expenses.
Bob Shanks, the chief executive officer of Ford Motor believes that currently the company is completely and directly in line with the objectives of the automaker. The deal with the UAW - United Auto Workers union was approved on November 20, 2015; this contract was approved by over 51.4% of the union's workers. The Ford CEO commented on this contract by saying that the company is quite pleased with the contract as it syncs with the company's short term as well as long term priorities and plans.
Presently, according to the research by BFN, Ford Motor has the highest labor costs per hour with $57 with General Motors being second with a cost of $55 and finally Fiat Chrysler Automobile with $47. According to further predictions the costs are expected to increase by 5% making the cost of all the company to be $60, $60 and $56 respectively.
Since the contract expires in the next four years, the projections that have been made for the next eight years could face some problems. So in fiscal year 2019, the companies will need to make further negotiations. According to the US department of transportation, the production growth in the past three years has been quite steady.