Ford appears to have exceeded its cap on the number of entry-level United Automobile Workers members it is allowed under its union contract and will bump the most senior workers up to the top-tier wage as early as next week, the Detroit Free Press has learned.
Under the collective agreement, Ford is allowed to hire 20 percent of its workforce at a second-tier wage, with exemptions for in-sourced work, temporary workers and those employed at two components plants. With growing demand for vehicles, the automaker has added about 14,000 employees since it negotiated its current contract in 2011.
Ford and UAW officials are scheduled to meet on the subject on Monday, and the move to transition some workers to higher wages is expected to be announced on Wednesday, according to two sources. Senior entry-level workers make about $19.28 an hour, compared with $28 an hour for top-tier employees.
Figures on the UAW-Ford website show as of Jan. 18, Ford was allowed 14,308 entry-level employees and the automaker had 14,239 on the payroll — meaning it only had a buffer of 69 employees. That was less than the 140 extra workers reported the week before.
Ford spokeswoman Kristina Adamski would not comment on the pending announcements.
“We presently have about 50,000 UAW employees, including 14,234 full-time entry level hourly employees which equates to 28 percent entry level. Our contract with the UAW allows for 20 percent plus approved in-sourcing actions and staffing at our Rawsonville and Sterling plants, and we still have some room to grow our entry-level hires,” Adamski said in a statement.
No one from the UAW was immediately available for comment.
Ford is the only Detroit-area automaker with a cap on the number of lower-paid workers it is allowed. Caps at General Motors and Chrysler were suspended until 2015 as part of the companies’ 2009 bankruptcy reorganizations.
The initial group of Ford workers to be bumped to the higher wage is small, likely less than 100 workers. The most senior second-tier workers appear to be at the Chicago; Kansas City, Mo.; and Louisville, Ky., plants.
It makes for good news for some workers: a $9-an-hour pay increase on top of news earlier this week that unionized employees are eligible for an average profit-sharing check of $6,900 based on Ford’s pretax earnings in North America in 2014.
As demand for vehicles grows and Ford continues to hire workers, each new employee will bump a more-senior entry-level colleague to the higher rate.
“Since 2011, Ford has hired more than 14,000 hourly UAW workers — exceeding its goal of creating 12,000 hourly jobs in the United States by 2015,” Adamski said.
About 43 percent of hourly workers at Fiat Chrysler Automobile have been hired since 2009 and make the lower wage. The figure is closer to 20 percent at GM.
“The entry-level cap is a topic that will likely be discussed as part of the 2015 collective bargaining,” Adamski said earlier this week in response to comments by FCA CEO Sergio Marchionne, who reiterated his strong belief that the two-tier wage structure — ratified in 2007 by the UAW and the Detroit Three — isn’t healthy for workers or the company.
“I do not think that it is a stable environment to promote an environment within our plants when you have two tiers of wages and you have people doing fundamentally the same type of work,” Marchionne said.
On that basic point, Marchionne and the UAW see eye to eye. The two-tier wage system is deeply unpopular both with rank-and-file workers and the UAW’s top leaders.
It was adopted in 2007, when GM, Ford and Chrysler had labor rates that were much higher than at plants operated by Asian automakers and when they were all losing money.
In 2011, the UAW negotiated an increase in the entry-level wage. Today, newly hired workers start at $15.78 per hour and earn a maximum of $19.28 per hour.