Ford Is Next to Reach Deal With UAW -- WSJ
October 31 2019 - 3:02AM
Dow Jones News
By Nora Naughton
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 31, 2019).
The United Auto Workers said Wednesday it has struck a new
tentative labor deal with Ford Motor Co., as union bargainers look
to move quickly to wrap up contract talks following a 40-day strike
at General Motors Co.
The proposed agreement, which still must be ratified by Ford's
UAW-represented workers, clears the way for the union to turn
attention next to negotiations with Fiat Chrysler Automobiles NV,
which labor experts and industry analysts expect to be thornier
with the car company pursuing a merger with France's PSA Group.
The UAW didn't disclose terms of the Ford deal, saying it will
first present the details to union-hall leaders from Ford's U.S.
factories in the coming days. UAW Vice President Rory Gamble, the
union's lead bargainer with Ford, said the new contract secures $6
billion in factory investments and creates or retains more than
8,500 jobs.
Ford in a statement confirmed it had reached a tentative deal
with the UAW.
Union bargainers headed into Ford talks Monday using the
agreement struck with GM earlier this month as a template, looking
to reach similar terms on wages and benefits for Ford's 56,000
union-represented factory workers in the U.S.
The GM contract gives the company's workers better pay, it
provides more job security for temporary workers, and it preserves
health-care contributions at 3%, a rate far lower than the average
for other private-sector employees.
Ford entered into talks this time around looking to clamp down
on health-care costs, which are on pace to top $1 billion next
year. Those hopes appeared to dim when details of the GM contract
were first revealed and included no increase in employees'
out-of-pocket health-care expenses.
The Dearborn, Mich., auto maker already has the second-highest
labor costs of the three Detroit car companies, spending an average
of $61 an hour on wages, benefits and other expenses for the
company's unionized workforce, according to the Center for
Automotive Research. Fiat Chrysler spends $55 an hour.
Ford, the No. 2 U.S. auto maker by sales, is in the midst of a
broad restructuring to boost profitability. Chief Executive Jim
Hackett's turnaround effort includes plant closures in Europe and
South America, as well as layoffs and buyouts of more than 2,000
salaried workers in North America over the past year.
Both Ford and Fiat Chrysler are likely to confront higher labor
costs if the UAW is successful in matching the gains won at GM.
Analysts estimate the new GM contract, covering more than 46,000
UAW-represented workers, will increase labor costs by roughly $350
million a year at the end the contract's four-year term.
In exchange, GM got more flexibility to pare back its U.S.
manufacturing operations, including closing three factories that
had been underused and a drag on profits.
That victory won't have as much impact at Ford and Fiat
Chrysler, where executives aren't as pressed to close plants and
are instead looking for cost savings in other areas to offset any
labor-cost inflation, say people close to the talks. Ford is also
in a weaker position financially and has a far bigger
union-represented factory workforce than GM, so any added expenses
from this contract will make a deeper dent in its earnings.
For instance, GM's operating profit in the first nine months of
this year was $8.3 billion versus $5.9 billion at Ford for the same
period.
Contract talks with Fiat Chrysler are expected to be more
complicated. The U.S. car company, the smallest of the three
Detroit car companies, has a newer workforce with many factory
employees earning far less than the top pay of about $30 an
hour.
Changes to new-hire pay, which shorten the period it takes for
workers with less seniority to reach full wages, and a path to full
employment for temporary workers are likely to be more expensive at
Fiat Chrysler than at its Detroit peers, labor experts say.
Fiat Chrysler's merger with PSA Group will only further
convolute talks with the UAW, adding to uncertainty about the
company's future structure at a time when profitability across the
auto industry is under pressure and manufacturers are confronting
slowdowns in three of the world's largest car markets: the U.S.,
China and Europe.
Fiat Chrysler's U.S. unit has already changed hands three times
in the past two decades. A completed merger deal with PSA would
represent a fourth.
(END) Dow Jones Newswires
October 31, 2019 02:47 ET (06:47 GMT)
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