DETROIT – Ford’s tentative new labor agreement with the United Auto Workers is being hailed as a vote of confidence in U.S. manufacturing.
The 4-year deal, which still must be ratified by UAW rank and file, brings to U.S. plants a handful of product programs that have their roots in low-cost countries such as Mexico. The programs include Ford Fusion sedan production that, until now, had been exclusive to the auto maker’s plant in Hermosillo, Mexico.
“Ford and the UAW both think this is a good agreement and we think it is good for America’s manufacturers,” U.S. Chamber of Commerce President and CEO Thomas J. Donohue says in a statement.
Of the 12,000 jobs the deal creates, 5,750 will be new. Others represent previously announced jobs and callbacks issued to laid-off workers.
Most of the jobs are expected to be added by the end of 2012, and all will be added during the term of the new contract, the UAW says.
The deal calls for Ford to invest $16 billion in its U.S. operations. Of that total, $6.2 billion are aimed at previously unannounced programs, John Fleming, Ford executive vice president-global manufacturing and labor affairs, tells journalists during a news conference.
Those programs include accommodating production of the next-generation Fusion at a plant in Flat Rock, MI, Ford now shares with Mazda. Accordingly, the auto maker agrees to invest $555 million in the Flat Rock site – a move that ostensibly saves the plant.
Its future had been cast into doubt earlier this year when Mazda announced it would end production of the Mazda6 there. Flat Rock, known as AutoAlliance International, currently is running at about 40% of its 270,000-unit annual capacity, according to WardsAuto data.
Under terms of the proposed deal, Ford would build 175,000-200,000 Fusions annually at Flat Rock, beginning in 2013. A second shift will be added to the facility, which also is home to the Ford Mustang, to accommodate Fusion production.
UAW Vice President Jimmy Settles hints there is more good news to come. “You don’t add a second shift for overflow,” he tells WardsAuto. “It’s so flexible; we could do a whole lot at AAI.”
At one time, the plant produced cars with front- and rear-wheel-drive architectures, five body styles (sedan, hatchback, wagon, coupe and convertible) and 4-cyl, 6-cyl and 8-cyl. engines.In addition:
- Ford’s Kansas City, MO, assembly plant will benefit from a $1 billion investment to accommodate production of the Transit commercial van, currently produced only in Europe.
- A second shift for F-Series pickup production is being added to the plant next year, and the next-generation F-Series is awarded to the plant, the UAW says.
- The Louisville, KY, plant will produce the next-generation Ford Escape cross/utility vehicle beginning next year, as well as “an exciting new product” to be announced at a later date, the union says. Investment at the site is to total $639 million.
- Ford will add a third shift at its Chicago assembly plant to handle increased production of the Ford Explorer SUV and Taurus fullsize sedan. Police interceptor Tauruses also will be produced at the plant. Ford will invest $117 million to handle the increased workload.
- Kentucky Truck gets the next-generation Super Duty pickup, as well as continuation of the Lincoln Navigator and Ford Expedition fullsize SUV. An investment of $621 million includes a new press line.
Other significant product announcements outlined in the tentative agreement include extra capacity for 2.0L inline 4-cyl. engines at the Dearborn, MI, engine plant; a new flexible small-displacement engine line at the Cleveland engine plant; a new V-6 at the Lima, OH, plant; and crankshaft production at the Woodhaven, MI, forging facility.
“Membership not only wanted wages, they wanted security,” Settles says. “We did surveys and the first thing that came up was ‘jobs, jobs, jobs,’ and I think we met that.”
Gary Chaison, industrial relations professor at Clark University in Worcester, MA, says the contract shows Ford is happy with its U.S. labor force, but notes the auto maker seems more content with entry-level workers.
“I see Ford with a smaller U.S. labor force at a lower rate,” he tells WardsAuto. “They’re finding ways to produce at lower costs and marketing and selling cars that Americans are interested in.”
Chaison says Ford’s hand was forced somewhat to make product and job promises due to its recent success.
“They had to promise jobs in order to have an agreement on wages that were less than normal because they were considered more profitable,” he says.
Although the UAW secured long-term product commitments at most facilities, some could not be saved, including Ford’s Twin Cities, MN, plant, home to the Ranger small pickup.
Settles says the UAW approached Ford about saving Twin Cities, scheduled to close later this year, but “we couldn’t get (Ford) to move on it.”
Of the plant’s 880 employees, some will be relocated, while some will retire, Settles says.
Both Settles and King say the contract was negotiated in good faith on both sides, and stress that in today’s economic climate the union received a fair shake.
In addition to the $6,000 bonus, workers will receive $7,000 in Inflation Protection and Competitive lump-sum payments over the term of the agreement, Settles says.
“Another important gain is the strong improvements we made in transparency and simplicity in the profit-sharing plan,” he adds. “Workers will receive their first payment averaging $3,700 this year. We were also able to increase entry-level wages to $19.28 over the term of the agreement.”
In an effort to get more entry-level workers, even at the increased wage, Ford will offer buyouts of $50,000 to production workers and $100,000 to skilled-trades workers.
Of the 12,000 new jobs announced, 5,750 will be new, while others will be jobs already announced and those called back from layoff.
King says he expects the contract to be ratified by rank-and-file members. Settles says he plans to leave this week on a cross-country trip to Ford sites to push the pact.
The contract “stands on its own, the facts are there,” King says. “We all have family and friends that are underemployed or unemployed. People realize (the economy) is extremely unstable and to wait (to ratify) would not be smart for our membership.”
Ford stock prices steadily trended upward in wake of the news. UAW leaders endorsed the deal about noon after negotiators finalized the agreement overnight. The union hopes to have the contract ratified by Oct. 16.
