NEW YORK (AP) — Ford Motor Co. and the United Auto Workers have come to terms on a new four-year contract that trades annual pay raises for profit sharing and a signing bonus and promises thousands of new jobs building cars and trucks.
Details weren’t released, but the deal is expected to be sweeter for workers than the contract approved by factory employees at General Motors Co. last week.
Both the union and company said in statements that they would announce details on Tuesday.
Ford shares fell 10 cents to $9.27 in premarket trading.
The agreement is expected to reduce Ford’s hourly labour costs, which are the highest in the U.S. auto industry. But it is likely to add thousands of new union jobs, depending on growth in U.S. auto sales. Already Ford has promised to add more than 7,000 jobs in the next two years, including engineers and factory workers.
The pact still must be approved by Ford’s 41,000 UAW members in voting that will start next week. Approval could be a problem because many expected the company to restore pay raises and other benefits they sacrificed to help Ford through tough financial times starting in 2007.
Local union leaders from around the nation will meet Tuesday morning in Detroit to vote on whether they’ll recommend the deal to the rank-and-file.
Talks between the union, Ford and GM went fairly smoothly this year, with Ford settling a month ahead of the last contract reached in 2007. Four years ago, Ford and the union didn’t reach agreement until Nov. 3. This year, bargaining began on July 29.
Up next is Chrysler, where the talks could be more contentious. The company isn’t making as much money as Ford and GM and probably can’t afford the same deals.
The UAW talks are watched closely because they set wages for more than 112,000 workers in the auto industry and set the bar for pay at auto parts makers and in other manufacturing industries.
At Ford, workers are expected to get a better deal than the union got at GM because Ford is making more money and it didn’t go through bankruptcy protection or take government bailouts. Ford was expected to promise a substantial number of new jobs, exceeding GM’s promise of at least 5,100.
The GM deal gives workers $5,000 signing bonuses, $1,000 a year for three years to cover inflation and at least $3,500 in profit-sharing this year. The worst GM workers can do is $11,500 over the four years of the contract. GM was able to avoid a pension increase for the first time since 1953, and Ford’s terms are expected to match that.
More than 1,900 entry-level workers at GM, who make about half the roughly $29 per hour paid to a GM factory worker, got raises of more than 20 per cent. Ford has only about 70 entry-level workers, and will try to lower its labour costs by hiring more of them.
At Ford, approval by workers is not a certainty. Ford’s turnaround over the last five years has resulted in big profits, but it also has bred resentment from some workers. Many want the company to restore pay raises and other benefits they sacrificed to help Ford get through financial problems starting in 2007.
Workers also are upset that the company gave CEO Alan Mulally a $26.5 million pay package based on the company’s 2010 performance. Ford has had nine straight profitable quarters and earned $4.95 billion in the first half of this year.
Gary Walkowicz, a worker at Ford’s Dearborn truck plant who helped shoot down a round of concessions in 2009, said Tuesday he was awaiting details of the agreement. But he said he wouldn’t support it unless it includes pay raises, cost-of-living adjustments and additional funding from the company for a union-run trust fund that now pays retiree health care bills. Ford has paid $13.2 billion into the fund.
Walkowicz ran unsuccessfully against UAW President Bob King last year.
The Standard & Poor’s ratings agency said last week that it expects to raise Ford Motor Co.’s corporate credit rating once a labour agreement is reached, as long as the new contract is competitive.
S&P put Ford’s “BB-” credit rating on credit watch with positive implications. The agency said it expects to raise that to “BB+” — which is one notch below investment grade — and assign a “Stable” outlook once Ford’s new contract is ratified. S&P said it will only take that action if the contract lets Ford “remain solidly profitable in North America” and doesn’t place the company at a disadvantage relative to GM.
S&P upgraded GM’s corporate rating from “BB-” to “BB+” earlier Thursday and assigned a “Stable” outlook.