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Ford Wants to Close $8-an-Hour Labor Cost Gap

Could prove contentious issue during upcoming auto talks.

by on May.09, 2011

Ford CEO Mulally's huge pay package could make it difficult to win UAW concessions.

In an industry where even a nickel’s added cost can make a competitive difference, Ford is dealing with an issue of dollars and sense that could turn into a big issue as it heads back to the bargaining table with the United Autoworkers Union.

The maker says it currently is paying its U.S. union workers $8 an hour more than what non-union factory employees make at the “transplants” operated by makers like Toyota, Honda and Hyundai.  On average, Ford employees are earning $58 an hour, including wages and benefits, compared to the average $50 cost of labor at foreign-owned factories.

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“We cannot continue to have a cost gap with the competition and still be able to make significant U.S. investment and create new jobs,” the automaker emphasized in a blog posting on the website that it set up to discuss bargaining issues. “For Ford to be fully competitive in the years ahead, we’ll need to focus on closing the gap even more.”

The second-largest American automaker has generally declined to discuss bargaining issues, part of a joint union-management strategy to avoid the sort of confrontational tone that has traditionally colored the start of negotiations.  But the cost gap is certain to be one of the key issues Ford plans to put on the table, and it appears the maker could be presenting its case directly to workers hoping they will pressure UAW negotiators to place jobs ahead of wages and benefits as a new contract is hammered out.