Ford Says It Gains Flexibility From New UAW Deal

DEARBORN (WWJ) - Ford says its new deal with the UAW makes the company more competitive by allowing to use more temporary workers, add more mandatory overtime, and use alternative work schedules.

"The agreement effectively closes our labor cost gap with GM, and substantially narrows the gap to FCA," says Ford CEO Mark Fields, who adds that his company will still have labor costs that are eight to ten dollars more an hour than foreign companies that are operating in the U.S.

The deal, which passed by the narrowest of margins, gave workers $8,500 signing bonuses, plus wage increases and an eight year path to higher pay for lower paid second tier workers.

Ford, in a conference call with analysts, on Monday outlined the gains the company made in the deal.

That includes, said Fields, the ability to sell products that are made in other markets in the U.S.

"We're not restricted from sourcing products anywhere in the Ford world for sale in the U.S. as long as we're meeting our sourcing agreement."

The most notable move includes the smaller Focus and C-Max, that are currently made at Michigan Assembly. They will be moved elsewhere, but Ford would not confirm union comments that the products would be made in Mexico.

This is part of the overall flexibility, says Ford President of the America's Joe Hinrichs, that goes with a commitment for new work here in the U.S.

"With almost nine billion dollars in investment, we certainly are committed to significant investment in the U.S.," said Hinrichs. "But, we also need to have some flexibility to move some of our smaller products to other locations."

Michigan Assembly, in Wayne, will get a new investment for new products. Hinrichs would not comment on persistent reports that the new products would be a mid size pickup and small SUV that would bring back the classic names Ranger and Bronco.

The deal will increase Ford's labor costs 1.5 percent a year. The company will take a $600 million charge against its fourth quarter earnings to pay for bonuses.

The contract appeared to be going down in defeat before a big margin of victory at several local Ford plants during the last day of voting.

"If you look back at the last number of contracts, these always tend to be fairly close affairs," said Fields. "I think at the end of the day, we have a contract that lays a good foundation for our company. It works for our employees."

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