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Ford, UAW Tentative Pact Means 12,000 Jobs

October 6, 2011
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(Story via Edmunds AutoObserver )-Ford and the United Auto Workers (UAW) union reached a tentative national contract in the wee hours of Tuesday morning, Oct. 6. Ford executives said the contract, if approved by the rank and file in the coming weeks, would create or save 12,000 U.S. jobs and would include $16 billion in investment in new products and additional plant capacity. But at the same time, it would keep Ford, which has the highest hourly labor costs among the Detroit Three, to be more competitive. “We are pleased with this new contract,” said John Fleming, Ford executive vice president in charge of Global Manufacturing and Labor Affairs, in a press briefing Tuesday morning. Fleming provided few details of the contract, saying he’d wait until it was approved by workers. He yielded to UAW officials set to brief the media later Tuesday on contract details.

“We really believe this is fair to employees and recognizes the contribution that they’ve made to the success of Ford Motor Co., but we are also very happy with the fact that it will continue to improve our competitiveness in the United States," Fleming said. "This agreement also enables us to in-source work from Mexico, China, Japan and other areas as well. This is good for jobs in United States.” Marty Mulloy, Ford vice president of Labor Affairs, added that throughout the negotiations and in the months leading up to them, the primary focus of Ford and the UAW was retaining and creating U.S. jobs.

Details Fleming would not address include those already contained in the now-approved General Motors-UAW agreement, including raises for entry-level Tier Two workers, bonuses in lieu of raises to other workers and plans for underutilized plants, notably the Flat Rock, MI, plant in which Mazda no longer is partnering with Ford. Ford’s Avon Lake, Ohio, plant, where it assembles the full-size E-Series van, also is underutilized and is awaiting additional products to build. Also in question is Ford’s Twin Lakes plant in St. Paul, MN, where it makes the Ford Ranger. The small pickup is scheduled to be dropped from the product line, and the planned set for closure.

Of the 12,000 jobs covered by the tentative contract, Fleming said 7,000 were ones previously announced by Ford with another nearly 5,750 never-before mentioned by Ford. Of the $16 billion to be invested, Fleming said $6.2 billion would go directly to plants. Typically, he said of a $16-billion investment, a third (or about $5 billion) would go directly to plants with the other two thirds spreading evenly to engineering and supplier tooling.

UAW Vice President Jimmy Settles said that the extra 5,750 jobs "are outside of" any sales-volume considerations. He said that the Flat Rock plant, operated by the AutoAlliance International between Ford and Mazda, would be adding a second shift so that it can produce the Ford Fusion at volumes of 175,000 to 200,000 units a year. Ford predicts that Fusion sales will punch up through the 200,000-a-year mark in the United States this year for the first time, and Settles said that "some may be exported" from the Flat Rock plant. Plants that also will add employees under the contract's terms, he said without being more specific, include the Dearborn, MI, truck assembly plant and a truck plant in Louisville, KY, as well as Ford's Chicago assembly plant and a transmission plant in Sharonville, PA. UAW officials said that the additional number of entry-level jobs in the pact wouldn't bring the total of such jobs among hourly workers to the 20% ceiling specified between the two companies.

The tentative Ford-UAW contract must be approved by the automaker’s 41,000 union members in voting that starts next week. Approval is not a sure thing as some workers believe Ford, which has been making substantial profits for the past nine quarters including nearly $5 billion in the first half of this year, should restore pay raises and other benefits that workers gave up to help Ford survive during the mid-decade. Worker bitterness only increased when Ford gave CEO Alan Mulally, who Ford executives said was involved every day at least once, twice or three times a day in contract talks, a $26.5 million pay package based on the company's 2010 performance.

Nevertheless, Bob King, the union's president, told reporters that he doesn't feel he needs to "sell this agreement" to his membership. "Our members have family members, friends, neighbors, church members who all are unemployed or underemployed in this economic climate," King said. "And people realize that things are extremely unstable." They and union leadership are "aware of the world that we live in and aware of the competition that [the Big Three] face," he said. "We're also aware that our membership makes a lot more money overall than workers for Hyundai-Kia, Volkswagen and a number of other transnationals [with U.S. plants]." King added that ensuring stable and additional jobs was a much higher priority for the UAW than short-term pay gains. The pact "builds a foundation for members in the long run, where eventually wages and other things will be more improved than in this agreement because of that foundation. A $5-an-hour pay increase wouldn't mean much if it meant that 5,000 people had to be laid off."

With the contract with GM ratified by workers and a Ford deal to take to its workers, the UAW now shifts its full attention to negotiating a contract with Chrysler.

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