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Source Says Ford-UAW Deal Would Cut Labor Costs for More Work

October 13, 2009
Related Topics: Finance/Taxes, Labor Relations, Workforce Planning, Latest News

Ford Motor Co. has made additional product commitments to its U.S. factories and will bring parts work back in-house as part of a tentative new contract that the heads of Ford’s UAW locals are expected to vote on Tuesday, October 13, said a source close to the talks.

In return for the commitments, the union has agreed to additional factory work rule changes and reductions of skilled-trades classifications to try to reduce Ford’s labor costs, the source said.

The tentative agreement does not include any modifications to the 2010 UAW-administered voluntary employee beneficiary association, the source said.

The presidents and shop chairs from UAW locals across the country have been called to Detroit for a 1 p.m. meeting Tuesday, the source said. They will hear details of the agreement and possibly vote on whether to take the contract to the rank and file at Ford factories for ratification.

For weeks, Ford has negotiated with UAW leadership to bring labor costs more in line with those negotiated by General Motors Co. and Chrysler Group as part of the two automakers’ bankruptcy restructurings this spring. Ford CEO Alan Mulally has said the carmaker would not be disadvantaged by its competitors’ deals.

The UAW and Ford have been close to reaching a tentative agreement since late last week.

UAW spokeswoman Christine Moroski declined to comment. Ford spokeswoman Marcey Evans said talks are progressing but that the company has nothing to announce.

UAW negotiators have told Ford that workers were reluctant to give additional concessions given the company’s recent market share gains and net profitability in the second quarter. Ford was told that any labor savings would require product commitments in exchange, the source said.

The source declined to detail the scope of savings in the newest agreement.

In the last round of UAW concessions in March, Ford said it expected operating savings of about $500 million a year from the suspension of performance bonuses, holiday pay cuts, reductions in overtime and restructuring of VEBA funding. As part of the funding of the health care trust, the UAW agreed to take half of a $13 billion Ford obligation in equity instead of cash.

But after the Ford deal was done, GM and Chrysler negotiated even better terms under the threat of financial collapse.

Filed by David Barkholz of Automotive News, a sister publication of Workforce Management. To comment, e-mail

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