UAW ratifies 4-year contract with Ford
Two down. One to go.
United Auto Workers members Friday night ratified by 56.3% a new four-year contract with Ford Motor Co. guaranteeing raise increases to nearly 55,500 employees, pathways to top wages for full-time and temporary employees, no increased health-care costs and $6 billion in investments.
“Ford’s commitment to job security and assembly in the United States is a model for American manufacturers," acting UAW President Rory Gamble said in a statement. "This is a life changing contract for many and provides a template for all future Ford UAW members to a full-time, top-rate status. There will be no more permanent temporary situations and no more permanent tiers."
A cap on temporary employees is an additional victory for the union since the General Motors Co. contract was ratified last month. Such measures could prove a challenge when the union pivots on Monday to focus on Fiat Chrysler Automobiles NV, which employs a larger percentage of lower-paid hourly workers.
"It's going to be tough but straightforward because this is the third company in the pattern," said Art Wheaton, an automotive specialist at Cornell University's Industrial and Labor Relations School. "You traditionally make very few changes."
A UAW spokesman did not immediately have an overall vote count Friday night.
A few of plants posted results on Friday. A majority of workers at Ohio Assembly in Avon Lake approved the agreement, while majorities at Romeo Engine joined those at Chicago Assembly and Ohio's Lima Engine in voting against the agreement. At Ford's Louisville Assembly and Kentucky Truck plants, a majority of production workers voted against the agreement, while a majority of skilled trades employees voted for it.
Romeo's results were a lopsided 442 to 48. The plant will close under the agreement, but the 600 hourly employees who work there will be offered jobs at the Van Dyke Transmission Plant about 15 miles away.
Full-time employees will receive $9,000 ratification bonuses, and temporary workers will receive $3,500 bonuses. They are expected to cost Ford $700 million in the fourth quarter, the company said in a news release.
“We are pleased that we were able to reach an agreement quickly with the UAW without a costly disruption to production,” Joe Hinrichs, Ford’s president of automotive, said in a statement. “This deal helps Ford enhance our competitiveness and protect good-paying manufacturing jobs. Working with the UAW, we have added flexibility to our operations while keeping labor costs in line with projected U.S. manufacturing labor inflation costs and still rewarded our workers for their important contributions to the company.”
A highlight for many members was retained health-care benefits at no additional cost. UAW-Ford employees pay on average 3% of total health-care costs compared to 28% for the average American household. The contract included some discounts for retail clinics and telemedicine.
"I'm thankful that our health care hasn't been touched," said Jonathon Mason, 43, of Detroit, a production worker at the Dearborn Truck Plant. "That's the best thing going for working at these companies; the health care is great."
But Mason ultimately voted against the agreement, he said, because he has little faith in the international UAW after its top leaders, including President Gary Jones, have been implicated in federal corruption investigation. Jones, who is on paid leave, has not been charged.
"They had no real bargaining position," Mason said. "They threw the company a bone. Certain people in our membership feel disenfranchised. We’re basically being dragged along."
The agreement includes 3% wage increases in the second and fourth years and 4% lump-sum bonuses in the first and third years for eligible permanent employees. Both full-time and temporary employees will be able to receive top wages by the end of the four years of the contract.
Some UAW members like Mason, however, are skeptical: "They gave a lot of false hope to temps," he said. "They feel they can get hired and will be hired full-time, but they can be laid off, and the whole cycle starts again."
The UAW implemented an 8% cap on the number of temporary employees Ford can hire company-wide and 10% at any given facility unless otherwise approved by the national parties. Currently, temps represent 6% of Ford's UAW workforce.
These wage increases and caps could prove costly when the union sits down with Fiat Chrysler next week because lower-paid production workers represent 72% of its hourly manufacturing workforce, which does not include skilled trades. In 2015, UAW-FCA members turned down the first tentative agreement.
"It was wise of the UAW to pick GM first, to go on strike and to solve the problem there, knowing they've got money and are hard-headed," Cornell's Wheaton said. "Then onto Ford because they don't expect too much difficulty. Then they could move onto the problem child, which is Fiat Chrysler."
Fiat Chrysler is in merger talks with Groupe PSA of the Peugeot brand. The combined company with a CEO and an effective board majority controlled by the French automaker contributes to uncertainty at the negotiations table, experts said.
The federal corruption investigation into the UAW has identified Fiat Chrysler as a co-conspirator in the scandal that includes bribes and misused members dues and training center funds, raising questions about the sanctity of labor talks in 2015. Former Fiat Chrysler Vice President Alphons Iacobelli is one of 10 people convicted and 13 people charged in the investigation.
UAW Vice President Cindy Estrada on Tuesday did signal that the union is "making progress" with Fiat Chrysler in a letter to local union leaders, but it came with an addendum: "While we intend to press forward to reach an agreement it is impossible to forecast how long this will take."
Fiat Chrysler's 2015 agreement has been extended indefinitely, though either party can submit a three-day termination notice, which could signal a strike.
"It’s my understanding the parties have been communicating well," said Marick Masters, a management professor at Wayne State University's Mike Ilitch Business School. "If they have been working diligently as possible toward getting an agreement, they shouldn't have too much difficulty once they enter the final stage of negotiations after Ford's ratification.
"Both know it's in their best interest at this point to get as good a deal as possible from both sides' perspectives and move onto the next phase, including consummating its announced partnership and positioning itself for the future."