Are Ford and the United Auto Workers Union ready to announce a deal on a new 4-year contract?
There are certainly signs that an agreement is at hand, the UAW calling senior local leaders to Detroit for a Tuesday morning meeting that sources indicate will be used to discuss a tentative agreement. The likely settlement is expected to at least match the gains both General Motors and the union each claimed in the settlement they reached last month – though Ford is also expected to provide a slightly larger bonus to its hourly employees.
Negotiations, meanwhile, continue at Chrysler, though there are indications the two sides have hit some significant stumbling blocks over issues that include a desired up-front “signing bonus,” as well as an increase in wages for second-tier hourly employees currently earning just half of what veteran Chrysler employees get.
UAW spokesperson Michele Martin said the meeting was being called in “hopeful anticipation” of an agreement, with the union notifying Ford workers via its Facebook page that, “We, like you, are anxious to get a tentative agreement completed. However, we will not let this urge override our commitment to you, the membership. We will not leave the bargaining table until we are satisfied we have reached an agreement that addresses the concerns of our membership.”
Ford was the only one of the Detroit makers not to seek a federal bailout, nor to go through the bankruptcy process in 2009 (a point the maker emphasized in a controversial TV commercial it ran last month. Click Here for that story.) It is also considered the healthiest of the domestic Big Three makers. It is also the only one of the Detroit companies that the UAW could legally strike – a walkout over economic issues barred under the terms of the government bailouts at GM and Chrysler.
Insiders suggest the union is aiming to get a $7,500 signing bonus from the number two domestic maker, 50% more than it got at GM. Employees at the largest American maker will see bonuses of about $12,500 in cash – and about $3 an hour added to the wages of second-tier workers — along with the creation of about 6,400 new union jobs.
But the UAW also agreed to significant improvements in productivity for GM and to cuts in the company’s blue-collar legal aid fund. Analysts like Rod Lache, of Deutsche Bank, believe that such gains offset any added labor costs. That was underscored when GM was given a much hoped-for increase in its credit ratings last week.
Ford is seeking similar concessions. And the maker’s CEO Alan Mulally has said his goal is to bring Ford’s credit back up to investment grade, something that will require moderation in any new agreement.
Following announcement of the GM contract, last month, a senior UAW official proclaimed that the agreement was all about “jobs, jobs, jobs,” and the UAW has been making that a centerpiece of its campaign for a 4-year Ford contract, as well. Earlier this year, Ford announced plans to add 7,000 hourly slots in the U.S. through 2012. But additional employment opportunities are believed to anchor a new settlement.
Among other things, Ford is expected to keep open the AutoAlliance plan it currently operates as part of a joint venture with Mazda. The Japanese maker is planning to stop production of its midsize Mazda6 and abandon the plant in the near future – leading to some earlier speculation that Ford would shut the factory down. Instead, the U.S maker is now believed to be offering to produce new midsize Ford and Lincoln products in Flat Rock, along with the Mustang now built there.
The new products for the AutoAlliance factory would likely include the Lincoln MKZ as well as the popular Ford Fusion, a midside sedan that will significantly updated next year. (The next Fusion is expected to borrow from the styling of the Ford Evos Concept shown in Frankfurt, TheDetroitBureau.com has reported. Click Here for that story.)
Ford lost $30 billion between 2006 and 2008 and borrowed heavily to keep itself operating during the nation’s deep recession. Since then, it has earned $14.2 billion but is still saddled with significant debt it has been racing to pay down.
If the Ford contract is, indeed, announced over the next day or two it would leave only Chrysler to work out a settlement with the UAW. The two sides appeared close in the hours prior to the original September 14 expiration of the automaker’s union contract — which was later extended through October. But snags developed — Chrysler reportedly balking at a big bonus and increases for Tier Two workers. The smallest of the domestics has said it cannot afford the sort of settlement reached at GM because of its weaker finances. Should the two sides reach a deadlock terms of the 2009 bailout will require them to take their disagreement to binding arbitration.