DETROIT -- UAW local leaders voted unanimously today in Dearborn to recommend ratification of the tentative contract with Ford Motor Co. to the rank-and-file.
The vote at the Hyatt-Regency Hotel today sets the stage for Ford to join General Motors and Chrysler LLC in signing a cost-saving new contract with the UAW.
The leaders at Ford-UAW locals will now go back to their rank-and-file and schedule ratification votes. The agreement affects about 58,000 Ford hourly employees.
UAW President Ron Gettelfinger said he expects to complete the ratification process by the end of Monday, Nov. 12.
"It's a great agreement and we were very pleased by it," he said after today's meeting.
Good chance of approval
The new agreement with the UAW stands a good chance of approval thanks to job guarantees and future product commitments, a union source said earlier today.
Under the deal, Ford agreed to commit future products and investment to six plants viewed as on the bubble of closing. Last year Ford announced it would close 16 plants, but revealed only 10 that would be closed. Those six plants are apparently staying open, and other plants are getting more future commitments.
Wayne Integrated Stamping and Assembly, which makes the Ford Focus in suburban Detroit, will get a new flexible body shop as a sign that it will continue operations beyond 2011. A body shop can cost upwards of $300 million.
Kansas City, Mo., Assembly; Avon Lake, Ohio, Assembly; and Louisville, Ky., Assembly also will get new flexible body shops.
The Kentucky Truck plant, also in Louisville, will get a flexible body shop as well.
The other two plants on the bubble -- Michigan Truck in suburban Detroit and Chicago Assembly -- already have a flexible body shop but get new product allocated to them during the life of the four-year agreement.
In exchange, Ford is offloading its $22 billion retiree health care obligation to a UAW-controlled trust known as a voluntary employee beneficiary association.
Ford has agreed to pay $13.2 billion to fund the trust and another $2.2 billion to pay for retiree health care until the VEBA opens in 2010. The $13.2 billion funding is about 60 percent of the obligation, which parallels those negotiated previously by the UAW for GM and Chrysler.
Like GM and Chrysler, Ford also negotiated a new hire wage of about half the $28 per hour earned by veteran Ford hourly workers. Ford intends to hold another round of employee buyouts and early retirements to replace the higher priced workers with lower-cost new hires.
Union input in decisions
One major advance for the UAW is an agreement with Ford for a voice in Ford's factory decision-making. According to the highlight book, the head of the UAW's Ford department will have a seat on Ford's Manufacturing Operating Committee.
The committee makes critical recommendations on operations and future products.
The UAW also negotiated a moratorium on outsourcing of UAW Ford jobs to outside contractors. In fact, Ford agreed to bring back in-house about 1,500 jobs for UAW workers, while the carmaker would look for opportunities to bring inside another 1,700 jobs.
Like the GM and Chrysler contracts, Ford agreed to pay a $3,000 bonus in the first year of the contract and bonuses of 3 percent, 4 percent and 3 percent in the subsequent three years.
While Ford has committed future products to specific plants, the company was concerned that strategic details not be released as part of ratification, a UAW source said.
Consequently, the so-called UAW highlight book distributed to workers does not include specific product commitments beyond the current vehicle cycle.
Ford expects to save more than $2 billion annually by 2010 through the creation of the health-care trust fund, lower wages for new hires and other factory rule changes.
The UAW source said Ford also plans another round of early retirements and buyouts. The number could reach 8,000 to 12,000, the source said.
The embattled U.S. automaker and UAW reached an agreement early Saturday after more than 40 hours of bargaining at Ford headquarters.
Ford Chairman Bill Ford Jr. and CEO Alan Mulally were directly involved in the negotiations, Gettelfinger said.
No further layoffs?
GM's contract was ratified by a wide margin. Chrysler's pact came down to the wire with only a small majority approving the deal. In both cases, the automakers announced layoffs at several plants just after the votes took place. Chrysler last week said it would cut up to 10,000 hourly jobs as part of an accelerated restructuring plan.
Gettelfinger said there is "nothing in the offing" that would indicate Ford has such plans.
"We have no doubts or reservations about Fords survival," he said. "Ford will survive. It's a matter of getting product out there and theyve got product coming and were looking forward to getting it in the marketplace."
Analysts have given generally high marks to the potential changes from Fords new contract. Standard & Poors said today it continues to review Ford for a possible upgrade in its credit rating.
We expect to view the new Ford contract as favorable compared with past agreements and similar to the recent GM and Chrysler LLC contracts in many ways, S&P credit analyst Robert Schulz said in a statement. But Fords challenges in turning around its North American auto operations remain substantial.