Ford and the United Auto Workers negotiators have agreed on a deal earlier today that will “create or maintain 12,000 jobs in the U.S.” Under the agreement, Ford has pledged to hire 5,750 new U.S. workers and invest $4.8 billion in its factories, reports the Associated Press.
Ford Motor Co. has also agreed to pay its U.S. factory workers a $6,000 signing bonus and $3,700 in additional profit sharing as part of a four-year contract deal.
“Many of these jobs will be added by the end of 2012, and all will be added during the term of the new contract,” UAW President Bob King said in a recent Wall Street Journal report. “The American auto industry is on its way back.”
“The key to adding jobs is the lower wage for entry-level workers of around $17 an hour, compared to the $28 an hour wage that veteran UAW workers earn,” reports the Journal. “The lower rate is also competitive with the wages that nonunion workers get at U.S. plants owned by foreign auto makers such as Toyota Motor Corp. and Honda Motor Co.”
“The introduction of the two-tier wage system combined with the UAW’s willingness to keep the fixed costs in check means a win-win for the UAW and the auto makers,” said Morningstar Inc. equity analyst David Whiston in the Journal report. “UAW is adding more members to its ranks while GM and Ford benefit with cheaper labor that allows them to be more strategic in how they use their U.S. plants.”
According to USA Today, these are some of the other details included in the tentative deal:
- Raises over time for so-called “tier two” workers hired after 2007, so that the highest-paid will eventually make $19.28. Those workers currently make roughly half the $28-an-hour their first-tier counterparts earn. The raise in the tier-two wage matches that in the GM deal.
- Buyouts of $50,000 to production workers and $100,000 to skilled-trades workers, in an attempt to replace highly-paid workers with entry-level employees.
- Four $1,500 lump-sum bonuses over the contract term. In total, the lump-sum payments will double the amount GM workers received in so-called “inflation-protection” bonuses in the new contract they recently approved.
- Ford will bring back some production of its Fusion mid-size car from Mexico, returning the jobs to the U.S. The 1,600 workers at Ford’s plant in Flat Rock, Mich., will build the new-generation Ford Fusion, along with continuing to build the Ford Mustang. That factory, which will receive a $500 million investment, had an uncertain future, since its production of the Mazda6 is to end in the coming months.
- Ford will invest $1 billion at a Kansas City assembly plant, which will build the Transit, a full-size commercial van Ford now sells in Europe. It is substantially larger than the current Transit Connect small truck.
- Ford will make a $128 million investment in Avon Lake, Ohio, to build medium-duty trucks and motor-home chassis.
- Workers will receive overtime after eight hours worked in a day, rather than after a 40-hour work week. For instance, Ford could not use a 10-hour/ four-days-a-week work schedule without paying overtime.
“We believe at the end of this that we will be able to improve our overall competitiveness in the U.S.,” said John Fleming, Ford’s executive vice president of global manufacturing and labor affairs said at a press conference Tuesday.
Ford said the deal will bring work to the United States from Mexico, China and Japan. Including design work, engineering and other expenses, Ford said its total investment in the United States through 2015 would be $16 billion, reports The New York Times.
The signing bonus of $6,000 will be paid if Ford workers ratify the agreement. Votes are expected to take place next week.
The Associated Press contributed to this article.