Ford-UAW deal includes $9,000 bonus, plan to close Romeo plant
Ford Motor Co.'s proposed contract deal with the United Auto Workers includes plans to close its Romeo Engine Plant — and a $9,000 ratification bonus if workers approve the tentative agreement, The Detroit News has learned.
The 600 hourly employees who work at the Romeo facility would be offered jobs at the Van Dyke Transmission Plant roughly 15 miles away. The engine plant closure is not expected to result in any jobs losses, according to two sources with knowledge of the terms of the proposed deal. The workers would have the option to take a buyout offer similar to that offered to GM employees as part of their new contract approved a week ago.
Romeo is the only plant closure in the deal, sources said.
Ford spokeswoman Kelli Felker declined to comment on details of the tentative agreement, referring to the a statement from Bill Dirksen, vice president of labor affairs at Ford, which confirmed the automaker had reached a proposed tentative agreement with the UAW on Wednesday night.
The $9,000 bonus would be larger than the $8,500 bonus that Ford members received when they ratified the 2015 contract. That $8,500 bonus was composed partly of a profit sharing pull-ahead. The $9,000 in the latest proposal is less than the $11,000 GM plans to pay to UAW members Nov. 8 as a ratification bonus.
The GM bonus, however, pays back the average $6,000 in wages that hourly workers lost during the 40-day strike against the automaker, and the roughly $3,000 members would miss on next year's profit-sharing checks from the Detroit automaker. GM's 2019 profits are expected to decline $3 billion due to the strike.
The plant closure could be seen as a win for Ford, according to Kristin Dziczek, vice president of industry, labor and economics at Ann Arbor's Center for Automotive Research.
"It allows Ford to close a facility, which saves them money," she said. "It's certainly not as much savings as GM got. Going first has its advantages and disadvantages. GM also lost $2 billion and had a big strike. It cost them money to get those things."
GM's agreement confirmed the wind-down of three plants identified last November for closure. Those plants include Lordstown Assembly in northeast Ohio, Baltimore Operations in Maryland and Warren Transmission in southeast Michigan. A customer care and after-sales plant in Fontana, California, also would close during the term of the agreement. That could save GM and at least $4 billion by the end of 2020.
Ford-UAW presidents from around the country are expected in Detroit at 1 p.m. Friday to vote to present the tentative agreement to members for a ratification vote. The UAW officials are expected to meet at TCF Center downtown. Votes would likely be due by the following Friday, Nov. 8.
If those Ford local leaders vote to present the deal to members, there's no guarantee that the contract would be ratified by members. In 2015, Fiat Chrysler Automobiles NV UAW membership voted down the first contract. Once they approved the deal, subsequent deals with GM and then Ford passed with narrowing margins.
The new GM agreement passed with a 57% majority a week ago. That leaves a narrow margin for that percentage to shrink and members still ratify the contract.
"Generally we see the pattern agreement will pass with declining percentages," Dziczek said. "Unless it's way sweeter, we might see something less than 57%."
Negotiators for the automaker and the UAW reached a deal less than a week after UAW members ratified a new contract with General Motors Co. that allowed GM to close four plants in the U.S. over the next four-year contract period.
The Romeo plant closure comes after labor experts and analysts questioned what "wins" Ford would get out of its new contract with the UAW.
GM's wins came from the UAW allowing the automaker to close four plants. Ford hasn't had the same issues with capacity as its crosstown rival, but Ford officials have said they had excess capacity on engine plants in the U.S.
The move to close an engine plant that made big -8 engines for Ford's largest vehicles comes as the automaker plans to invest $11 billion in electrified vehicles over the next few years.
The speedy negotiations between Ford and the UAW show that both sides wanted to move forward without another strike, according to Patrick Anderson, CEO of East Lansing-based Anderson Economic Group LLC.
"Ford and the UAW, with approximately 55,000 hourly workers in the U.S., had more to lose with a costly strike than did GM and its workers," Anderson said. "Furthermore, Ford did not have the same immediate need to close storied plants. It appears both parties took a sane approach, and avoided a painful strike that would have benefited neither of them."