Ford and UAW begin negotiations with a handshake
Detroit — Ford Motor Co. and the United Auto Workers kicked off contract negotiations Thursday at Cass Technical High School as the threat of production moving to Mexico loomed over the talks.
“Mexico continues to be an issue for us,” UAW President Dennis Williams said during the ceremonial handshake event. “I want everything to be built in the United States, including tennis shoes.”
In April, Ford said it was investing $2.5 billion in Mexico for a new engine and transmission plant. And earlier this month it said it would move production of the Focus and C-Max out of Michigan Assembly Plant in Wayne in 2018; Mexico is the likeliest option.
“We have to look at our overall business ... and how we can best improve overall profitability for the company,” said John Fleming, executive vice president of manufacturing and labor affairs for Ford.
“We look at how to best optimize the overall footprint. Mexico is part of that footprint, China is part of the footprint, Thailand is part of the footprint. We’re going to continue to look at what’s best for the global business, but also what’s best for the North America business.”
Ford would not comment on where it was looking to move the Focus and C-Max. It said the announcement earlier this month was part of the company’s normal product cadence and not related to negotiations.
Both sides expressed optimism that Michigan Assembly Plant would not close when the products move in 2018.
“We’re looking for what products are the right products to go in there,” Fleming said. “At the moment, closing a plant is not something we’ve got on the agenda.”
As Detroit’s automakers enter negotiations with the UAW, they likely will use the threat of moving production out of the U.S. as a bargaining chip as they look to keep labor costs down.
The Center for Automotive Research says average hourly labor costs in the United States — including benefits — are $57 at Ford, $55 an hour at GM and $48 at FCA. Honda Motor Co.’s cost is $49 an hour, and Toyota Motor Corp.’s is $48.
Williams said he recently met with U.S. Secretary of Labor Tom Perez and President Barack Obama “about Mexico and what a problem it is.”
Ford’s situation in these negotiations is different than both GM and FCA, which are free from the burden of restructuring after bankruptcies. Besides having the highest labor costs, it has a cap on the number of two-tier workers it can employ before it must pay them a one-tier wage. To date, it’s transitioned nearly 1,000 workers to the higher pay rate.
Ford’s negotiators have expressed their desire to be the lead company the union bargains with, which would help it get a deal that would best benefit its individual needs and set a pattern that would possibly disadvantage its competitors.
A central part of negotiations will be the UAW’s push to bridge the gap between the pay of its tier-one and tier-two workers.
Veteran tier-one workers earn more than $28 an hour, while more recently hired second-tier workers earn up to $19.28 an hour for the same jobs. The union agreed to a lower-paid entry-level job classification in 2007, just ahead of the economic downturn. Partly because of that, automakers have hired thousands of workers.
“There’s some really important work ahead of all of us....we’re very well-prepared,” said Bill Dirksen, Ford’s vice president of labor affairs.
The ceremony had a positive feel, as both side talked about the strides they’ve made since the economic downturn of 2008. It was the first time a handshake event was held outside of a Ford facility, and the first time Ford and UAW negotiators from individual plants were invited.
“We’ve made tremendous gains since 2007,” said Jimmy Settles, vice president of the UAW-Ford department.
Ford promised to hire about 12,000 hourly workers in the last negotiations. It hired more than 15,000.
“I’m absolutely convinced that we’ll continue to build, working together, a stronger Ford Motor Co. going forward,” said CEO Mark Fields.
Autoworkers’ current four-year contracts expire Sept. 14.