Ford Motor Co. and the UAW reached a tentative agreement on a new labor contract at 3:20 this morning, the union said in a statement.
Under the terms of a proposed labor contract with the UAW — reached after 44 hours of around-the-clock bargaining — Ford Motor Co. has agreed to scale back its already-announced plans to close 16 factories, a person directly involved in the bargaining told the Free Press. The person did not want to be identified because details of the plan have not officially been announced.
Under the terms of the new deal, he said, six of 16 factories slated for closure have been saved, at least temporarily. In return, the union agreed to more buyouts, and the remaining autoworkers will be doing even more to make Ford competitive, said the person, who declined to elaborate.
But the bargainer told the Free Press that Ford will have the flexibility to idle the plants later if business conditions necessitate their closure. “That's not to say that 3, 4 years down the road, they'll stay open,” the bargainer said.
While scaling back plant closures might not be popular on Wall Street, which is expecting even more cost-cutting from Ford, it will likely give autoworkers the job security guarantees they need to pass a deal.
The need for those promises was amplified in recent days, after Chrysler LLC announced it would lay off 10,000 hourly workers, just five days after UAW members ratified a new labor contract that lacked job protections. Unlike the agreements reached with General Motors Corp. and Chrysler, this deal was forged without a brief strike.
Those contracts, which featured the transfer of retiree health-care liabilities to a union-run trust and hiring new non-core workers at significantly lower wages and benefits, have both been ratified.
The Ford-UAW deal includes a similar retiree health-care liabilities plan, according to a company statement, which did not disclose the level of funding for the trust or whether new hires would come in at a second tier of wages and benefits.
“Though we will not discuss the specifics of the tentative agreement until after it becomes final, we believe it is fair to our employees and retirees, and paves the way for Ford to increase its competitiveness in the United States,” said Joe Laymon, Ford group vice president for human resources and labor affairs.
Ford's Way Forward turnaround plan for North America, which aims for profitability in 2009, had called for closing 16 plants, eliminating 44,000 jobs and revamping the company's Ford, Mercury and Lincoln lineup. But only ten of those plants had been identified when UAW talks started in July.
Ford's financial position is considered fragile. The 104-year-old Dearborn automaker lost a record $12.6 billion in 2006 and it is expected to lose money again this year, despite a first-half profit of nearly half a billion dollars.
The UAW said in a statement early today that details of the new agreement will officially be provided to union members at explanation and ratification meetings at UAW Ford local unions. No time frame was given for ratification.
UAW President Ron Gettelfinger said in a statement that the talks were successful.
“Our team is proud of each and every negotiator because they have encouraged Ford to invest in product and people while addressing the economic needs of our active and retired members,” Gettelfinger said.
UAW Vice President Bob King, who directs the union's national Ford department added: “Our goals for this contract were to win new product and investment, to enhance job security and protect seniority – and we made progress in all these areas.”
Ford said it was also pleased with the process.
“I'd like to take this opportunity to thank UAW President Ron Gettelfinger, UAW Vice President Bob King and the entire UAW national bargaining committee for all of their hard work and professionalism over the past several months,” Laymon said. “I would also like to thank the Ford bargaining team for its skill and dedication during this complex and challenging set of negotiations.”
Several Wall Street analysts previously told the Free Press that any Ford move to scale back its turnaround plan would be viewed as negative, unless substantial cost savings were achieved in other areas.
“It would be viewed as a significant negative,” Mark Warnsman, an auto analyst for Calyon Securities and the former controller for product development finance for Ford's Jaguar and Land Rover operations, previously told the Free Press.
“We'd be looking for Ford to be doing more in the way of reducing capacity, rather than backing off those commitments, especially since we haven't seen an increase in consumer demand.”
