Ford has reached agreement on a new labor contract with the United Auto Workers (UAW), clearing the way for the next step in its restructuring plan, which is likely to include a new round of buyouts for several thousand active employees.
The union released no details of the contract but overall it is expected to follow the pattern the union negotiated with General Motors in September and then again at Chrysler LLC last month. Ratification meetings are expected to begin next week.
Ron Gettelfinger, UAW president, said the agreement was reached at 3:20 a.m. on Saturday.
"Our bargaining committee came through for our active and retired members," said UAW President Ron Gettelfinger.
"We face enormous challenges and we also have enormous potential," said UAW Vice President Bob King, who directs the union's Ford Department. "Our goals for this contract were to win new product and investment, to enhance job security and protect seniority and we made progress in all these areas," King said.
The new pact extends to approximately 56,000 Ford workers. Ford's payroll, however, is burdened by hundreds of employees idled by the liquidation of its once extensive parts operations.
Ford has lost market share every year since 1995 and posted a loss of $12.6 billion in 2006. More than 19,000 hourly employees have already left Ford's payroll this year as part of the company's "Way Forward" restructuring plan, which doesn't contemplate a return to profitability until 2009 at the earliest.
The company is widely considered the weakest of the old Big Three and Ford bargainers were believed to have pressed the union for additional concessions. Ford also is expected to announce plans for closing six additional factories.
Meanwhile, the company is selling off parts of its automotive empire, having sold Aston Martin for $931 million earlier this year. It's also currently studying bids for its Jaguar and Land Rover units.
As part of the contract, Ford, which mortgaged all of its assets last year, will have to come up with an estimated $14 billion to finance a voluntary employee benefit association or VEBA, which will be run by the union and assume responsibility for the company's retiree healthcare obligations.
While details have been withheld, the Ford contract also is expected to include a new round of buyouts. In addition, like those at General Motors, it will reduce the pay of any new employee hired by Ford to $14 per hour and minimize the wage increases for existing employees.
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