DETROIT -- Ford Motor Co. could spend more than $2 billion to build flexible body shops at five U.S. assembly plants named in Fords new labor deal with the UAW.
That level of investment assures future vehicles for the plants and paves the way for quick ratification of the agreement reached Saturday, Nov. 3, said a UAW source.
In return, the UAW agreed to a retiree health care trust. And it agreed to lower two-tier wages for all new hires -- maxing out at 20 percent of Fords hourly work force. The new wage rate can apply to production jobs -- unlike contracts negotiated with General Motors and Chrysler LLC.
UAW locals at Fords 31 U.S. plants are scheduling ratification votes this week. UAW President Ron Gettelfinger has said the union hopes for ratification by Monday, Nov. 12.
The five plants getting new body shops are receiving a new lease on life. An automotive body shop, with its sophisticated welders and other tools, can easily cost $400 million.
Flexible body shops allow several different vehicle bodies to be produced along the same assembly line without switching tooling.
The five plants are: Louisville (Ky.) Assembly; Ohio Assembly in Avon Lake; Kansas City (Mo.) Assembly; Kentucky Truck in Louisville; and Wayne Assembly in suburban Detroit.
The plants were all viewed as potential candidates for closing this year because Ford had withheld major investment in them, especially new body shops.
But Ford has pledged in the UAW agreement to keep all of them open. For now, Ford is keeping its plant-closing list at 10 instead of the 16 announced a year ago.
Other Ford plants beyond the five were pledged future new product. And several Ford transmission, stamping and engine plants will get undisclosed investment.
Ford spokeswoman Marcey Evans declined to comment.
The contract contains major concessions for Ford.
For example, 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 trust 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 an hour earned by veteran Ford hourly workers. In a new wrinkle, Ford can hire workers at the lower wage in any job rather than just nonproduction jobs negotiated at GM and Chrysler.
But, in another wrinkle not contained in the other contracts, Ford must limit the number of entry-level hires at the lower wage to 20 percent of its companywide hourly work force. Once it reaches that level, the first round of new hires would move into traditional pay scales by seniority.
Ford intends to hold another round of employee buyouts and early retirements to replace the higher-priced workers with lower-cost new hires, a UAW source said. The number could reach 8,000 to 12,000, the source said.
One major advance for the UAW is an agreement with Ford for a voice in making decisions on factories. According to a UAW contract summary, the head of the unions Ford department will have a seat on Fords Manufacturing Operating Committee.
The committee makes critical recommendations on operations and future products.
The UAW also negotiated a moratorium on outsourcing UAW Ford jobs to 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.
As in 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 UAW contract summary 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.