Sit down, breathe into a bag: Ford gets UAW to agree to concessions

Blind_Io

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http://news.yahoo.com/s/nm/20090311/ts_nm/us_ford

Ford-UAW deal cuts wages to $55 an hour



DETROIT (Reuters) ? Ford Motor Co expects operating savings of $500 million per year from an agreement with the United Auto Workers that will push hourly wage rates into the "ballpark" of foreign-based rivals, the company said on Wednesday.

The agreement trims average wages and benefits for UAW hourly workers to about $55 per hour this year, while the U.S. operations of foreign-based automakers -- or what executives call "transplants" -- pay workers on average $48 to $49 per hour, Ford said.

The agreement with the UAW, which workers ratified earlier in March, allows Ford to suspend some performance and bonus payments, reduce overtime costs and cut a paid holiday, as well as restructure funding of a union retiree healthcare trust.

Joe Hinrichs, Ford's global head of manufacturing, said the savings from the operating agreement and restructuring of the funding of the trust, the Voluntary Employee Beneficiary Association, are "critical to our future competitiveness."

"This gets us to within the ballpark of where the transplants are," Hinrichs said in a conference call with analysts and reporters.
"Over the next couple of years with the buyouts and with the ability to leverage some of the other tools that are now in this agreement, we think we can get there within the next couple of years on parity with the transplants," he said.

The annual savings could exceed $500 million if industry conditions allowed Ford to exercise all of the changes in the agreement, Hinrichs said.
Ford has about 42,000 hourly workers covered by the contract. About half of the annual savings would come from the elimination of performance bonuses and the Christmas bonus and the suspension of cost of living increases.

Ford restructured payments into the VEBA, including the option to contribute about half in company stock, to conserve cash. The plan to make payments in stock requires shareholder approval at the Ford annual meeting this year.

Ford, which posted a record $14.7 billion net loss for 2008, has said it believes it has adequate liquidity to operate through the economic downturn without seeking emergency U.S. government loans.
The agreement with the UAW effectively puts Ford's U.S. hourly wage rates in line with the cuts cross-town rivals General Motors Corp and Chrysler LLC have been negotiating with the union under their government bailouts.

Chrysler, about 80 percent controlled by Cerberus Capital Management LP, and GM have received $17.4 billion of emergency government loans and have requested billions more in emergency loans to complete restructurings.

GM and Chrysler also have reached tentative agreements with the UAW on labor issues, but have withheld details until talks are completed on the funding of their healthcare trusts.

Wages and benefits in the GM UAW agreement are patterned on the Ford contract, but the contracts differ in other areas such as employee placement and company-specific details, UAW Vice President Cal Rapson said in a letter to members on Monday.

"It appears that the agreement essentially meets the terms set forth by the U.S. Treasury loan (to GM)," KeyBanc Capital Markets analyst Brett Hoselton said in a note to clients.

"If correct, we believe this is a significant milestone and investors should now turn their attention to negotiations with the bondholders," Hoselton said.

Ford has announced salaried job cuts and executive pay reductions and last week launched an effort to reduce $25.8 billion of automotive debt by up to 40 percent through conversion of debt to equity and tender offers.
Ford also has agreed to offer buyouts to UAW-represented workers from April 1 through May 22. Ford has offered buyouts previously to hourly workers and the offers will be lower than those in the past due to the current economic conditions.


Ford plans to consolidate assembly work between adjacent Michigan Truck and Wayne Assembly plants near Detroit. The automaker is converting its Michigan Truck plant to build the European-designed 2010 Ford Focus small car.

The Wayne facility will continue to perform stamping and some body work and the consolidation is not expected to result in job cuts from the Wayne facility.

Ford shares were up 9 cents, or 4.9 percent, at $1.94 on the New York Stock Exchange late in the trading session.
Now if we can just get to performance-based promotions and firings...

Nice work, Ford.
 

Spectre

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Yup, that's the next thing.

I suspect Ford *might* be able to push for that when GM and Chrysler file for bankruptcy in the next 60 days.
 

argatoga

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Now if we can just get to performance-based promotions and firings...
Ha, I don't see them allowing that ever.

Still good work on Ford's part. They still have to pay more and offer incentives to get people to actually show up for work, but it is progress.
 

NecroJoe

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$49 an hour...jesus...that's over $100k a year at 40hrs/wk and the places where these car factories are, a $300,000 home is a really nice house. One could live large on that salary with those areas' cost of living...
 

Blind_Io

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$49 an hour...jesus...that's over $100k a year at 40hrs/wk and the places where these car factories are, a $300,000 home is a really nice house. One could live large on that salary with those areas' cost of living...
Read the whole thing, that's what it costs Ford, it's not the worker's take-home.
 

Paul_The_Aussie

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Jesus, that is still a lot of money.

That's $49 USD an hour, convert that to AUD and there are not many professionals on that much here.
Holy hell, I think I need to move to the states and become a factory line worker for Ford.
No wonder these car makers are losing money.
 

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Looks like Ford could survive.
 

Spectre

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Could they possibly be seeing the light?
Yeah.... but I don't think they quite understand it yet. I was just over checking out the UAW heavy fora. They think it will be a temporary thing, that if they just give up this for a little while they'll be able to go back to their old extorting ways. They think that between their man Obama and their pet Congress they can see the light at the end of the tunnel.

Hey, UAW, got news for you. "Then it comes to be that the soothing light at the end of your tunnel was just a freight train coming your way."
 
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Dogbert

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Yeah.... but I don't think they quite understand it yet. I was just over checking out the UAW heavy fora. They think it will be a temporary thing, that if they just give up this for a little while they'll be able to go back to their old extorting ways. They think that between their man Obama and their pet Congress they can see the light at the end of the tunnel.
Meanwhile, I heard (woo NPR) that on the GM side, the UAW is waiting for the bondholders to make "concessions" before they even think about making any more.

I can't even feign surprise at this point.
 
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Spectre

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Meanwhile, I heard (woo NPR) that on the GM side, the UAW is waiting for the bondholders to make "concessions" before they even think about making any more.

I can't even feign surprise at this point.
Yup. Still not clear on the concept, are they?

At this point, I hope they get hit by that train.

Metallica - No Leaf Clover said:
Dont it feel right like this
All the pieces fall to his wish
Suck up for that quick reward boy
Suck up for that quick reward they said.....

Then it comes to be that the soothing light at the end of your tunnel
Is just a freight train coming your way
I begin to wonder if James Hetfield or Lars Ulrich ever got stuck with a crappy UAW product...
 
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Dogbert

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What's this I hear about a deadline? I kept hearing them talk about "x number of days left".
 

Spectre

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Yeah, there's a "drop dead date" in the original bailout packages. They have until March 31 to prove to an appointed panel that they *can* be made viable and to secure union (and other) concessions. See: http://money.cnn.com/2009/02/17/news/companies/auto_plans/index.htm?postversion=2009021717

Basically, GM and Chrysler aren't going to make those deadlines, partially because of UAW stubbornness and stupidity. Thing is, at that point the government will likely take them over and make them into American Leyland... which may be what the UAW actually *wants*.
 

Dogbert

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I'm unfortunately getting the American Leyland vibe, too. Mainly from Tim Geitner... who, the more I hear about, the less I like. However, I did like that the big gov't auto team whozits were unimpressed by a cruise in the Volt and the new Ram.
 
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