United Auto Workers union leaders urged members on Tuesday to approve a concessionary deal with Ford Motor Co, stepping up the pressure on General Motors Corp and Chrysler to reach similar cost-cutting labor agreements in coming weeks.
Separately, Ford said Chief Executive Alan Mulally would take a 30 percent salary cut for two years as the centerpiece of a package of white-collar pay cuts that could make a vote for concessions more palatable to hourly workers.
Ford executives had said the automaker wanted parity in labor cost reductions the UAW agreed to with GM and Chrysler, which are operating under emergency U.S. government loans. They also promised a shared sacrifice in the cost cutting.
That included the elimination of performance bonuses for salaried employees and senior executives in 2009 and Ford's board agreed to give up all cash compensation this year, Mulally and Executive Chairman Bill Ford said in a memo to employees obtained by Reuters.
The 30-percent reduction in salary for 2009 and 2010 also applies to Bill Ford, though he has not taken any compensation since 2005. The board opted to resume his compensation in 2008, but Bill Ford elected to defer it until the automaker's global automotive operations return to profitability.
Ford has said the cost-saving changes negotiated midway through a four-year contract with the UAW set to run until 2011 were needed to allow it to restructure on its own without resorting to emergency loans from the U.S. government.
Importantly, we remain firm in our resolve to operate without needing to access a bridge loan from the U.S. government ..., Mulally and Bill Ford said in the memo.
The UAW agreement, which includes concessions intended to reduce operating costs and a change in the way Ford funds a union-aligned healthcare trust, are aimed at making Ford competitive with the U.S. operations of foreign carmakers.
UAW leaders who represent Ford workers met on Tuesday and voted unanimously to recommend approval of the agreement. The union hopes to complete the voting by March 9.
NEW ROUND OF HOURLY BUYOUTS
Ford will offer a new round of buyouts to UAW workers of from $20,000 to $50,000, plus the option of a $25,000 voucher toward a Ford vehicle or a $20,000 cash payment, according to a union summary posted on the Detroit Free Press website.
The automaker also committed to not close its Milan, Saline, Sheldon Road and Sandusky facilities reacquired from former parts unit Visteon Corp through the contract and to restructure them for sale.
The agreement includes no reductions in UAW base hourly pay, but would suspend cost-of-living adjustments, performance bonuses and the Christmas bonus.
GM and Chrysler, about 80-percent owned by Cerberus Capital Management , have been kept afloat by a $17.4 billion federal bailout. Both have reached tentative agreements with the UAW on operating concessions that have not been disclosed but are expected to be similar to those reached with Ford.
GM and Chrysler remain in talks with the union about how to change funding terms for retiree healthcare.
Under the proposed change to the Ford contract, which is subject to the member ratification vote and court approval, the automaker has the option of settling up to half of the payments due to the healthcare trust in Ford stock.
Previously, Ford had been obligated to make a $13.2 billion cash contribution to the fund, known as a Voluntary Employee Beneficiary Association, or VEBA.
Under the proposed agreement, the UAW would receive small annual stock contributions from 2009 through 2022 that could be sold quickly to maintain a diverse portfolio and avoid being a long-term owner of large amounts of Ford stock, it said.
Ford's deal with the UAW on the VEBA would save it almost $7 billion in cash and could provide the model for concessions at GM and Chrysler, analysts have said. The agreement would also transfer risk to a growing pool of Ford retirees.
Another change phases out a program of near-total job security for UAW workers even after their positions have been eliminated,
U.S. automakers and the UAW have also been talking about contract changes that would make it easier for the companies to hire in new, lower-cost workers and shut down excess plants, people familiar with the talks have said.
Ford had just under 53,000 hourly workers in North America at the end of December, down from over 100,000 at the end of 2005, according to company data. The automaker cut its salaried ranks by more than 13,000 over the same period to 22,400.