Ford, UAW Reach Tentative Agreement on 4-Year Contract

Ford Motor Co. and the United Auto Workers union have reached a tentative agreement on a new four-year contract.

The bargaining team unanimously voted to send the proposed tentative agreement to local union leaders who make up the UAW National Ford Council, the union announced Friday afternoon.

The council will meet Monday morning to vote on whether to send it to union membership for a final vote. Details of the contract will not be released until then, the UAW said.

The announcement comes as union members near the end of voting on a contract with General Motors that includes an end to the much-maligned two-tier wage system that starts entry-level employees at significantly lower wages than long-time workers. Ford is the last of the Big Three carmakers to negotiate with the union on new contracts.

“This agreement is significant for our members in that it creates a clear path for economic advancement for active members and rewards veteran employees for their sacrifices in recent years,” UAW Vice President Jimmy Settles said in a news release. “It is one of the richest agreements in the history of UAW-Ford.”

Ford said in a statement: “Working with our UAW partners, we have reached a tentative agreement for the next four years for our employees and our business. The agreement, if ratified, will help lead the Ford Motor Company, our employees and our communities into the future.”

Ford employs more than 50,000 workers at 19 U.S. plants.

Ford reported revenue of $35.8 billion in the third quarter ended Sept. 30 and net income of $1.9 billion, which was up 129 percent from the prior year. Ford and GM are financially stronger than Fiat Chrysler.

Profit sharing, at a rate of $1 per employee for every $1,000 in profit, has added $30,200 to each union member’s compensation at Ford over the past four years, compared to $30,250 at GM and $9,000 at Fiat Chrysler, said Kristin Dziczek, director of the Industry & Labor Group at the Center for Automotive Research.

The UAW’s contract with GM, which Dziczek said was richer than expected, called for an $8,000 signing bonus, more than double what Fiat Chrysler workers agreed to, plus it extended the same health-care benefits GM offers long-time employees to newer workers as well as temporary workers after 90 days.

A key point in the negotiations was the two-tier wage system that was implemented years ago to help make U.S. auto companies competitive with the foreign manufacturers, which have lower labor costs. Ford’s labor costs equate to an average of $57 an hour, versus $55 for GM and $47 for Fiat Chrysler and foreign competitors, according to the Center for Automotive Research.

Entry-level workers hired after Nov. 19, 2007, earn between $15.78 and $19.28 an hour, while employees hired before that earn $28, according to the system. The contracts approved by Fiat Chrysler workers and under consideration by GM workers allow entry-level workers to grow into the top tier over several years, eventually eliminating the two-tier structure.

Ford is unique among the U.S. carmakers in that it caps the share of tier-two workers it is allowed to have, Dziczek said. Once it exceeds that cap, people get bumped to the top-tier wage. About 800 people have been promoted to the next wage as new people got hired.

It isn’t clear hiring can continue at the current pace. That’s because sales and production are forecast to be flat over the next four years as people who bought cars during the economic recovery don’t buy new ones for a while, Dziczek said.