Union leaders from Ford’s factories voted Tuesday to recommend that members approve a deal to lower the automaker’s labor costs to match those of its Detroit rivals.
The deal, which runs until 2011, gives workers a bonus if they ratify the agreement and guarantees new vehicles for five assembly plants. But it also bans strikes over wages or benefits, freezes entry-level wages and changes work rules to require some skilled-trade employees to do more than one job.
UAW President Ron Gettelfinger told reporters Tuesday that the deal brings Ford Motor Co. on par with Chrysler Group LLC and General Motors Co., which were given concessions as they headed into bankruptcy protection earlier this year.
He conceded that talks with Ford, the only Detroit automaker to avoid bankruptcy and government aid, have been tough because of its relative success. Ford mortgaged assets several years ago to borrow $24 billion for its restructuring, a decision that helped it stay out of bankruptcy court.
“It’s been a delicate balance throughout this process. We want Ford to do well, and we knew as they continue to improve that it would make ratification a little more difficult,” Gettelfinger said. “But at the same time, this is not really a concessionary agreement. It’s got more positives for our members than it has negatives.”
About 250 local leaders attended the meeting. Gettelfinger said the vote to recommend the agreement was “close to unanimous.” Local leaders now will try to sell the deal, which changes the terms of a 2007 labor agreement, to Ford’s 41,000 UAW members. Gettelfinger said there is no deadline for local votes to be held, but the sale could be tough because of opposition to concessions. Voting will likely begin this week.
Gary Walkowicz, a bargaining committeeman at a large Ford pickup truck factory in Dearborn, Mich., said many union members are against the no-strike clause because it gives up the union’s biggest bargaining chip in the next round of contract talks.
“People are asking what do we have a union for?” Walkowicz said. “There’s a lot of angry people right now.”
Gettelfinger said Ford was at a disadvantage because GM and Chrysler managed to shut down dealerships, change supplier contracts and get rid of excess facilities when they went into bankruptcy. He said Ford has twice as much debt on its balance sheet as GM.
“Ford does have those kinds of issues they have to deal with in a totally different environment,” he said. “Look, we want Ford to be successful. We want Ford to be profitable. We’re hoping that they have a profitable quarter. We want them to improve market share. That is job security for us.”
Jeff Carter, vice president of a UAW local in Wayne, Mich., where the Ford Focus is made, said the deal helps Ford end its cost disadvantage while at the same time securing union jobs. He said change is inevitable if workers want Ford to grow again.
“The moment the company is back on their feet, they’ve shown us for decades that they’re willing to share a piece of the pie,” Carter said. “When our contract comes up again, if the company is doing well, we’re going to go back in and ask for gains.”
The $1,000 bonus and promises of additional work at some factories may be enough to get the pact through a ratification vote.
The bonus is payable in March to every UAW worker if the changes are ratified. It also guarantees work and investments for certain plants. For example, Ford is now promising a new product to the Chicago Assembly plant in 2010, with a planned addition of 300 jobs.
The tentative deal also says that on issues of wages and benefits, the union must go into arbitration with Ford rather than strike in the next round of contract talks in 2011. The union can still strike over product promises and other issues.
The provisions are similar to those granted by the union to Chrysler and GM as they headed into bankruptcy protection earlier this year.
Ford workers in March were the first of the Detroit Three to approve modifications to a 2007 contract. The changes eliminated cost-of-living increases and performance bonuses in 2009 and 2010 and suspended the jobs bank in which workers were paid indefinitely even though they were laid off.
Then GM and Chrysler ran into serious financial problems and received even deeper benefit cuts and rule changes. Since that time, Ford executives have said they didn’t want higher labor costs than rivals.
The Dearborn, Mich.-based automaker turned a $2.3 billion profit in the second quarter, buoyed by $10.1 billion in debt reductions that cut interest payments.