Ford Is Said to Discuss Adding 10,000 U.S. Jobs in Negotiations With UAW

By Keith Naughton, John Lippert and Tim Higgins - Sep 29, 2011 3:15 AM GMT+0700
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A Ford Focus is assembled during the launch of the small car at the Ford Motor Co. Michigan Assembly Plant in Wayne, Michigan, on March 17, 2011. Photographer: Jeff Kowalsky/Bloomberg

Ford Motor Co. (F) is discussing adding as many as 10,000 jobs in the U.S. in negotiations with the United Auto Workers union on a new four-year contract, according to three people familiar with the talks.

The job-creation discussion is part of high-level negotiations between Ford and UAW President Bob King over wages, benefits, and employment gains in the new contract and is still subject to change, said the people, who asked not to be identified revealing internal deliberations. As many as 4,000 of those jobs may come from Ford shifting production of the Fusion midsize sedan to the U.S. from Mexico, one of the people said.

The UAW may reach an agreement this week on a contract covering Ford’s 41,000 workers, Joel Goddard, co-chairman of the union’s bargaining committee said in a recorded message Sept. 26. Ford, which earned $4.95 billion in the first half of the year, is seeking to lower labor costs in the new contract. New hires are paid about half as much as senior workers.

“Jobs have been a central goal of the union in this round of negotiations,” said Harley Shaiken, a labor professor at the University of California at Berkeley. “Ford, which is the most advanced in its recovery, is a natural for this kind of job creation.”

General Motors Co. (GM) agreed to add or retain 6,400 jobs in a tentative agreement it reached with the UAW on Sept. 16. GM’s 48,500 hourly workers ratified that contract with 65 percent of production workers and 63 percent of skilled-trades workers voting for it, the union said today.

“Two years ago, GM and Chrysler were hanging by a thread when President Obama stepped in and invested federal funds to help turn the companies and the U.S. auto industry around, protecting the auto supplier base and keeping good-paying jobs in America,” King said today in a statement. Ford avoided the bankruptcies and bailouts that befell GM and Chrysler Group LLC.

Fusion Production

Ford now produces the Fusion at a factory in Hermosillo, Mexico, which employs 3,335 workers, according to the automaker’s website.

Sales of the Fusion in the U.S., where it is Ford’s top- selling car, rose 16 percent this year to 168,929 models through August. Last year, Ford sold 219,219 Fusions in the U.S., according to researcher Autodata of Woodcliff Lake, New Jersey.

King met yesterday with John Fleming, Ford’s chief of manufacturing and labor affairs, to discuss new work the automaker may be willing to put into U.S. plants, one of the people said. King shifted to Dearborn, Michigan-based Ford last week after talks faltered with Fiat SpA-controlled Chrysler, which said it extended its contract to Oct. 19.

“We have accelerated our talks,” Goddard, the union’s Ford bargaining committee co-chairman, said in a telephone recording late Sept. 26. “We are optimistically hopeful we will have good news for our membership by the end of the week.”

UAW Chief ‘Confident’

Marcey Evans, a Ford spokeswoman, declined to comment.

“We’re not commenting on the details of talks,” said Michele Martin, a UAW spokeswoman.

King is “confident that we are on track to secure an economic package that our membership deserves,” Anderson Robinson, recording secretary of the union’s Ford bargaining committee, said in a recorded message yesterday. He added that King and UAW Vice President Jimmy Settles met “for several hours” with Ford bargainers yesterday.

Hiring entry-level workers would help Ford lower its labor costs because they start at about $14 an hour, half what senior employees make, Shaiken said. Ford has said it has fewer than 100 entry-level workers among its hourly workforce, the fewest of the U.S. automakers.

“There’s little question that the entry-level workers are accelerating the hiring process,” Shaiken said. “That’s a key part of the UAW strategy. It creates more jobs.”

GM Agreement

The GM agreement calls for boosting starting pay of entry- level workers to at least $14.78 an hour from $14. That wage rises to as much as $19.28 an hour by 2015 from a previous maximum of $16.23.

GM may reduce labor costs by as much as $350 million annually through a combination of lower starting wages and buyouts of higher-paid skilled-trades workers, Morgan Stanley analyst Adam Jonas wrote in a Sept. 26 note.

“With buyouts and natural attrition of its most expensive workers substituted by higher levels of tier 2 workers, the contract not only offers greater flexibility, it offers the potential of greater profitability for GM,” Jonas wrote.

Ford has said it has the highest labor costs of the three U.S. automakers, at $58 an hour including benefits. GM’s labor costs are $56 an hour, according to the Center for Automotive Research in Ann Arbor, Michigan. Chrysler has said its labor costs are about $50 an hour.

Signing Bonus

Beyond commitments for new jobs, workers at Ford are looking for a contract signing bonus that is larger than the $5,000 GM agreed to, as well as more generous profit sharing, Shaiken said. They are expecting more for their role in helping Ford recover without government assistance.

“It would not be surprising to see something more at Ford for the workers,” Shaiken said. “There’s an expectation there.”

Workers at Ford also have filed an “equality of sacrifice” grievance against the automaker after salaried workers received raises, tuition assistance and 401(k) matches last year. The two sides met with an arbitrator Sept. 15.

Ford’s Turnaround

Ford earned $9.28 billion in the past two years after $30.1 billion in losses from 2006 through 2008. The automaker borrowed $23.4 billion in late 2006, putting up all major assets including its blue oval logo as collateral. That helped Ford avoid bankruptcy and boost U.S. market share the last two years.

Ford fell 19 cents, or 1.9 percent, to $9.93 at 4 p.m. in composite trading on the New York Stock Exchange. The shares have fallen 41 percent this year after rising 68 percent in 2010.

“Ford has shown a tendency in recent years of being innovative at the bargaining table,” Shaiken said. “If there’s one thing that’s going to be dramatic, it’s job creation.”

To contact the reporters on this story: Keith Naughton in Southfield, Michigan at knaughton3@bloomberg.net; John Lippert in Chicago at jlippert@bloomberg.net; Tim Higgins in Southfield, Michigan at thiggins21@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net