The United Auto Workers and Ford Motor Co announced a tentative agreement on Tuesday with a no-strike provision and other concessions to bring its labor costs in line with U.S. rivals.
The union's National Ford Council endorsed the deal Tuesday with some dissenting delegates, sending it next to a vote of the roughly 41,000 U.S. UAW workers at the automaker expected to be completed over the next few weeks.
Ratification of the concessionary agreement, which includes a one-time $1,000 bonus, may be a hard sell for Ford workers who have already agreed to a series of give backs since 2005.
Ford has said it expects to return to at least break-even in 2011 and analysts see it as being in a stronger competitive position than rivals General Motors Co and Chrysler Group LLC, which were reorganized under government-supported bankruptcies in 2009.
Key provisions of the Ford deal would freeze wages for entry-level workers at $14 per hour and prohibit the union from striking over wage and benefit claims when the current contract expires in 2011. [nN13199524]
UAW President Ron Gettelfinger said the tentative agreement would provide job security to current Ford workers by winning production commitments from the automaker.
There is a lot of product commitment here that's secured -- both prior commitments secured from 2007 and additional products, some of which we can't disclose, Gettelfinger told reporters after union officials approved the proposed contract terms.
He said the deal represented a delicate balance for the union as it aims to help Ford return to profitability.
We want Ford to do well and we know that as they continue to improve that it would make the ratification a little more difficult, Gettelfinger said.
Gettelfinger said the union had not set a time frame for completing the ratification vote. Other officials said they expected the vote to be concluded in two to three weeks.
LETTING MEMBERS DIGEST DETAILS
We're going to take our time and let the members digest the information because there has been a lot of misinformation out there on this contract, said Jeff Terry, president of a local for workers at a Sterling Heights, Michigan, plant.
UAW local officials, who met for over two hours at a Detroit hotel to discuss the deal on Tuesday, said they believed membership would approve the proposed changes.
Will it be more contentious than in the past? Yeah, sure, said Jack Muncie, a worker at UAW Local 862 in Evansville, Indiana. Personally, I like it, but there's a lot of people within the union who really don't want to give anything.
Ford has been seeking to bring its contract in line with the deeper concessions the UAW agreed to for GM and Chrysler.
The proposed concessions for Ford come as optimism is building that the U.S. recession has ended and automotive analysts and executives see industry sales as beginning to turn a corner toward a gradual recovery after a four-year decline.
The UAW reached four-year contracts with all three Detroit automakers in 2007, but agreed to make unprecedented mid- contract concessions to the companies amid the severe recession and deep downturn in auto industry sales.
UAW workers agreed to mid-contract concessions in February that saved Ford about $500 million per year and allowed it flexibility in how it funds a union retiree health-care trust.
But Ford has said its deal with the UAW would put it at a disadvantage over the long term. Traditionally, the UAW has applied one pattern to all of its agreements with Detroit automakers.
Gettelfinger said Ford's heavier debt level compared to GM was one reason the union leadership had recommended ratification of the new round of concessions.
Separately, Ford is also seeking concessions from the Canadian Auto Workers union. The CAW said on Thursday it would resume full-scale discussions with Ford on October 26.
The CAW wants guarantees on future plant investments in Canada by Ford, while the automaker wants to address a labor cost gap. Labor costs run about $16 per hour higher for Ford in Canada than in the United States.
Ford shares ended unchanged at $7.62 on the New York Stock Exchange.
(Additional reporting by Soyoung Kim and Kevin Krolicki; editing by Maureen Bavdek, Andre Grenon and Matthew Lewis)