Ford's new deal with UAW gets wages down to $55/hour
Two years ago when Ford was negotiating a new contract with the UAW, the automaker was paying its union workers the oft-bandied amount of $70 per hour. That amount wasn't the actual hourly wage of each employee, though, but rather the employee's hourly wage plus the cost of contributions to current and future benefits for retirees and workers still with the company. Now, due to a newly signed agreement with the United Auto Workers union, Ford projects that total cost per worker will go down to $55 per hour.
That puts The Blue Oval only about $5 away from the total hourly compensation paid by transplanted automakers like Toyota and Honda to their non-union workers. Among measures such as cutting overtime, bonuses, cost-of-living increases, and one paid holiday, Ford reworked its contribution to the VEBA account that will fund retiree healthcare so that it can pay into it with stock instead of cash, the total savings of which could add up to $500 million per year.
Intriguingly, it was remarked that "Ford's deal with the UAW appeared to meet the cost savings targets set out by the Treasury Department for its aid to GM and Chrysler," yet Ford is the one that didn't take government money and so, technically, is the one automaker not compelled to meet those targets. General Motors and Chrysler have also made new agreements with the UAW, but details have yet to be released.
[Source: Reuters, Photo by Larry W. Smith/Getty]
Reader Comments (Page 1 of 4)
Andrew L 11:39AM (3/12/2009)
Good Job Ford!
Reply
Sea Urchin 12:16PM (3/12/2009)
Agree, but never forget that you get what you pay for.
Big Rocket 12:29PM (3/12/2009)
@Sea Urchin: What's that supposed to mean? If you are saying Ford cheaped out on labor costs, so their cars are going to be more craptastic than ever, remember Ford's labor costs are still $5/hr higher than at Toyota or Honda.
On a related topic, it took the near bankruptcy of the Big 3 for the UAW to bring down labor costs from a 40% disadvantage to a 10% disadvantage. What is it going to take to get rid of the remaining 10% disadvantage?
Note on union vs non-union labor, both in the US:
($70 - $50) / $50 * 100% = 40% higher labor cost
($55 - $50) / $50 * 100% = 10% higher labor cost
why not the LS2LS7? 12:34PM (3/12/2009)
Big Rocket:
I'd be shocked if the last 10% disappeared in negotiations. It's not so much because of any structural issue but because Toyota doesn't have any significant number of retired workers on the books collecting health care or pensions.
The 10% will disappear as older workers who retired with higher benefit levels from the big 3 die off and as Toyota's number of retired workers rises, which is inevitable for any aging company like Toyota.
Epyx 12:38PM (3/12/2009)
Sea Urine,
As usual you are making little sense.
1. You say "I agree" to Ford doing a good job getting wages down.
2. You then say.."but you get what you pay for."
So one may infer that you feel Ford should be paying more for higher qualified workers to put on lug nuts or one can infer that you thought they were overpaid and now more in line with what they deserve. Your statements are contradictory.
Also $55 an hour is still more than the transplant workers and you have gone on record many times with your love of the imports. So does Toyota also get what they pay for?
...anyway I am glad to see this concession to help Ford moving forward and remain competitive.
Greg Aryous 12:43PM (3/12/2009)
Sea Urchin, You make absolutely no sense - "you get what you pay for" how !@#$%^ing stupid can a person be! We over pay the UAW and get sh^t quality for years and then renegotiate their livelihood to survive at a "fair" wage while Ford's quality is getting better every day! You are just stupid!
Sea Urchin 12:46PM (3/12/2009)
Big Rocket, Yes the cut will help Ford. But that may force some of the best blue color folks to look for a different job, that pays at least what Ford used to pay. Therefore production will suffer.
Also, i read that newly hired employees get something like $14 an hour, compared to $25+ in the old days (few years ago). I am trying to say you are not getting the same talent at 14 as you do at 25.
Epyx 1:00PM (3/12/2009)
Sea Urine,
Where are they going to go?
Toyota? Nope - they pay less
Honda? Nope -they pay less
Hyundai? Nope- they pay less
BMW? - Nope- they pay less
MB maybe? - Nope they pay less
Ok, so they will defect to the other lucrative manufacturing jobs. Maybe Harley Davidson - oops lay just laid off a bunch.
Unemployment is over 8% and may get as high as 10%. The labor market is flooded with talent.
You are as always...misinformed
Randy 2:25PM (3/12/2009)
@Sea Urchin
I think the majority of your problem posting on AB is that you type as if what you say is fact when it's your opinion, inferences and theory!
The FACT is that with jobs down, people losing their shirts I don't see anyone going "Hey I'm only making 55 bucks an hour right now (or the equiv with healthcare etc) so I'm gonna go look somewhere else". The smart person is going to bunker down and ride out the storm till they have to make a move! And if you're making 10 bucks less (per capita) down at Toyo and everyone across the industry is taking the cut to bring them to realistic income levels, then guess what............. There's nowhere to go!
So friend! Pick your head up out of the water!
By the way, is Lochness real?
Bloke 3:39PM (3/12/2009)
"Agree, but never forget that you get what you pay for."
Indeed. Which is why if U.S. autoworkers are used to a certain living standard at $70 an hour and their Korean counterparts do the same job for half that, you can expect to find Korean cars having enough margins to build more retained profit over a period of time to inject more quality in the product - while still having enough room to maintain an attractive price point. That makes the U.S. equivalent uncompetitive and unattractive.
Earning high incomes en masse is one thing, but for businesses to pass those costs on to consumers and for consumers to actually accept them is quite another. Americans have always wanted cars as inexpensive as possible, but they also simultaneously want high incomes. It's a self-defeating equation and just one of a number of core reasons why the U.S. economical bubble has burst so spectacularly.
Epyx 9:29AM (3/13/2009)
Bloke,
Well there is a new theory that flies in the face of the conventional wisdom of what caused the current financial situation. You know, forget all the sub prime mortgages, credit default swaps, loss of liquidity, housing correction, etc. Yeah, forget all that, it was the American auto industry and overpriced factory workers, and American consumers that caused the whole problem. Well, actually it was American consumers that caused the problem, but not with directly tied to Autos. More to do with living outside of ones means.
However, your theory does not makes little sense at best. Toyota, Honda, and Hyundai all build cars in the US and Canada and pay less than the UAW, yet still manage to build higher quality and better value cars. American do want the most car for the money..what is wrong with that - it is called value. The Domestics have lots of problems and overpay for workers in one of them.
So which firm laid you off? PWC, Deloitte, KPMG, E&Y? You are so filled with vitriol for Americans that it there must be a root cause.
Epyx 9:37AM (3/13/2009)
"It's a self-defeating equation and just one of a number of core reasons why the U.S. economical bubble has burst so spectacularly."
To clarify, I read your post again. I agree with everything you said until you stuffed in the backhand at the bottom.
It may be a contributor but it is not a core reason. Maybe your point is just not clear.
katshot 12:06PM (3/12/2009)
Just another reason why you only see Ford products in my driveway these days. Only a few years ago, it was all GM in my driveway. Declines in both product and customer service changed that pretty quick. Nowadays, there's few GM vehicles I'd even consider owning.
Reply
katshot 12:09PM (3/12/2009)
Oops! Sorry, double-posted.
MemphisNET 11:45AM (3/12/2009)
Good on Ford.
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Colby 11:46AM (3/12/2009)
Good on Ford. I may not be a fan of Ford vehicles, but right now with GM and Chrysler begging for tax payer money, Ford is the only car maker that has my respect.
I will be looking for a new car soon, I think it just might be a Ford :)
Reply
why not the LS2LS7? 11:59AM (3/12/2009)
Ford applied for $11B in government loans for plant retooling.
http://www.autoblog.com/2009/02/20/total-bailout-bill-97-4-billion-with-a-b
Liquid 12:30PM (3/12/2009)
Attn: "why not the LS2LS7?"
Where in your link does it say that about Ford? Educate me.
why not the LS2LS7? 12:36PM (3/12/2009)
Read the linked Free Press article in the link (I linked back to AB as a courtesy even though they didn't have the info in their article). There's a handy graph at the bottom if you don't want to read the text. It shows Ford's bailout money the have applied for (but not yet qualified for or received).
C.W. 12:36PM (3/12/2009)
the plant retooling money comes from the previous administration's energy bill. it is guaranteed to all of the u.s. manufacturing entities, auto and non auto. it is to retool/make more efficient use of older factories. this money is guaranteed money anyways. who cares if Ford applied to get it... it's due to them!
every comment you make LS2LS7 is generally propaganda...