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New Settlement Will Increase Ford’s Competitiveness – Yield New Jobs and Investments

Maker hoping it will also trigger a credit rating hike.

by on Oct.04, 2011

The new UAW contract should result in Ford's maintaining the AutoAlliance plant in suburban Detroit which now builds the Ford Mustang and Mazda6. Mazda plans to abandon the plant.

Ford Motor Co. will increase by $16 billion its investment in North America while adding 12,000 new jobs, the maker announced as it confirmed reaching a tentative new contract with the United Auto Workers Union.

While declining to release specific details of the settlement, which was reached in the wee hours of the morning after more than two months of bargaining – and nearly three weeks after the union reached an agreement with General Motors – Ford officials stressed that the new contract will “improve our overall competitiveness.”

Ford is also hoping that, much like the GM agreement, the new contract will be received well by credit rating agencies.  Ford CEO Alan Mulally has made it a top priority to return to investment grade.  S&P last week indicated it would consider an upgrade if the Ford contract appeared similar in its advantages to the settlement won by GM.

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“We believe this agreement,” said Ford EVP John Fleming, “will enable us to increase our overall competitiveness in the United States,” something he underscored by noting the 4-year contract, if ratified, “will also permit us to insource work from Mexico, China, Japan and other parts of the world.”

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