Ford, GM UAW Workers Ratify Labor Pacts -- Update
November 21 2015 - 12:27AM
Dow Jones News
By Christina Rogers
The United Auto Workers wrapped up months of contract talks
Friday with the Detroit car makers, getting approval of new labor
deals at General Motors Co. and Ford Motor Co. that boost pay for
workers but add higher costs to the companies' balance sheets.
Ford's rank-and-file narrowly approved the new four-year
agreement by a 51% majority, handing UAW President Dennis Williams
a much-needed victory after worker resistance to earlier deals
caused negotiations to drag on for much longer than many had
anticipated. The Ford contract covers 52,900 U.S. hourly
workers.
The UAW also declared its contract with GM ratified Friday,
overriding a rejection by a smaller group of skilled-trade workers.
Approval of the deal had been put on hold for the past two weeks as
union leaders worked to resolve skilled-trade concerns.
"The voice of the majority has secured a strong future that will
provide job security and economic stability for themselves and
their families," Mr. Williams said in a statement.
The contracts at all three U.S. car makers provide workers
raises, extensive production commitments and generous bonuses in
exchange for ratifications.
Rick Hofmann, a worker at Ford's Dearborn truck factory, said he
voted in favor of the deal because it included giving veteran
workers raises and closing a pay gap between entry-level and more
senior workers.
"There are some things I'm not happy about," Mr. Hofmann said.
"But I've been through a lot of agreements, and I feel this one was
fair and equitable."
UAW officials have struggled throughout these talks. Members
rejected the initial contract negotiated with Fiat Chrysler
Automobiles NV in September, marking the first time the
rank-and-file had turned down a major UAW labor deal in a contract
year since the early 1980s.
The two sides eventually reached a contract that gradually
eliminates the pay gap between entry- and senior-level workers, and
pays out hefty bonuses. That deal set the template for subsequent
agreements.
GM's hourly labor and benefit costs would rise to $60 in 2019
under its proposed UAW contract, up from $55 this year under the
prior contract, according to a joint forecast provided by Kristin
Dziczek and Art Schwartz, president of consultants Labor &
Economics Associates. Ford Motor's hourly costs would rise to $60
from $57 over the next four years, the researchers estimated.
Fiat Chrysler will see the biggest increase in average hourly
labor costs, to $56 from $47, over the next four years, according
to the two researchers. The Italian-American auto maker has a
higher share of entry-level workers who will quickly graduate to
the top pay during the agreement, Ms. Dziczek said.
Hourly labor costs include wages ranging between $19 and $29,
health care benefits that are estimated to rise to $13 an hour by
2019, from $8 currently.
The U.S. auto makers' labor costs are closely watched by Wall
Street for their potential impact on the bottom line. Over the past
several years, and particularly during the bankruptcies of GM and
Fiat Chrysler, the companies managed to win significant cost
savings to make their U.S. labor costs more competitive with Asian
rivals building cars in the U.S.
Despite the improved pay, UAW leaders ran into significant
resistance getting workers to back the deal. Ford's vote came down
to the wire with worker's at the company's historic Rouge
manufacturing complex in Dearborn, Mich., providing the crucial
swing vote Friday.
With the auto industry now flourishing and the companies making
healthy profits, some Ford workers had been calling for bigger
raises and a faster progression to the top wage bracket for newer
workers. Under the recently ratified contract, those workers have
to wait eight years to reach top pay.
"For the last decade, we have given up concession after
concession in order to keep the company viable," said Timothy
Arnett, a 16-year Ford assembly plant worker in Louisville, Ky.,
who was among the workers disappointed in the Ford proposal.
Mr. Arnett said union leaders set expectations high, pointing to
a speech by UAW President Dennis Williams last year when he
proclaimed "it's our time."
Write to Christina Rogers at christina.rogers@wsj.com
(END) Dow Jones Newswires
November 21, 2015 00:12 ET (05:12 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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