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Ford Reaches a Tentative Deal With UAW on New Pact, Averting a Strike

Oct. 31, 2019
The provisional agreement follows the GM contract in including annual raises and lump-sum payments.

Ford Motor Co. reached a tentative agreement with the United Auto Workers union on a new labor contract for its U.S. workers, likely avoiding a strike that cost crosstown rival General Motors Co. billions of dollars.

The accord includes $6 billion of product investment in U.S. facilities and the creation and retention of more than 8,500 jobs, according to a statement. The contract will be subject to review by the UAW’s Ford council, and then a ratification vote. The union will meet on Friday in Detroit with hundreds of local leaders to go over the details.

The UAW turned its attention to bargaining with Ford on Oct. 25 after ending a 40-day strike against GM that the company estimates will lower earnings this year by about $2.9 billion. The Ford deal, reached after three days of talks on economics, is expected to follow the basic pattern set in the GM contract, which included lump-sum payments and annual pay increases that lift production wages up to $32.32 an hour by 2023.

GM workers received a record $11,000 signing bonus. It’s not clear if Ford workers, who didn’t lose wages to a walkout, will receive as large a payout. Four years ago, Ford staff received $10,000 when they ratified the deal. That payment included $1,500 that was pulled forward in profit sharing.

“This was an expensive deal at GM and it’s going to be even more expensive at Ford, depending on what offsets Ford was able to get to tailor it to their needs,” said Kristin Dziczek, vice president of the labor and economics group at the Center for Automotive Research.

The new product commitments might include the Bronco sport-utility vehicle that’s scheduled to go into production at a Michigan factory next year. Ford is overhauling its aging lineup with new and redesigned models such as the Explorer SUV and the Lincoln Aviator.

Ford also has said it will spend $11 billion to bring electric vehicles to market, but the union has been concerned that will result in fewer jobs because battery-powered cars are less labor-intensive.

“Pure electric vehicles require 40% fewer hours to assemble the powertrain than internal combustion vehicles,” said Mark Wakefield, head of the automotive practice at consultant AlixPartners. “So the automakers and their workers have some difficult EV realities to tackle over the next few years.”

Ford can ill afford a strike. After the company last week pared its profit forecast for the year, S&P Global Ratings became the second credit grader to cut its rating on the carmaker in as many months. S&P called Ford’s performance “subpar” and outlined risks to Chief Executive Officer Jim Hackett’s $11 billion turnaround plan, including sluggish industry sales and costly emissions standards.

The UAW also had less reason to take a hard-line approach with Ford. Whereas GM was seeking to close several U.S. plants, Ford entered talks having made commitments to invest in electric and self-driving car facilities in Michigan. The company also employs more UAW members than GM or Fiat Chrysler Automobiles NV.

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