Ford Aiming To Take Lead In UAW Negotiations To Control Costs
Labor Expenses Higher than GM, FCA
There’s no question Ford’s decision not to take federal bailout money when its rivals FCA (then Chrysler) and General Motors did won them a lot of respect and likely quite a few sales from the American car-buying public. However, not being part of the rescue package also cost them wage and benefit concessions that the United Auto Workers (UAW) agreed to for FCA and GM in order to maintain jobs at those companies. According to Automotive News, Ford is angling to be the company that the UAW decides to negotiate with this year in the hopes of bringing its labor costs more in line with those of its rivals. The UAW typically chooses one company every several years to focus its negotiating efforts on, with those agreed-to terms being adopted by all three automakers.
As part of this year’s negotiations, Ford is hoping to bring its labor costs under control. It currently has an average labor cost of $57 per hour, $10 higher than FCA and $2 higher than GM. High labor costs were likely one of the reasons the production of the low-margin Focus compact is being moved from Michigan to Mexico starting with the 2018 model. Because of their bankruptcies, FCA and GM were allowed to hire a greater number of workers at a lower starting wage of $15.78 an hour, whereas Ford is only able to hire a small number of workers at the cheaper, second-tier rate. The UAW has been working hard over the last several years to eliminate or reduce the wage gap between its more recent hires and veteran workers.
Also likely to be discussed this year is a healthcare co-op and the relative contributions of the automakers and the UAW. A Voluntary Employee’s Beneficiary Association (VEBA) was one of the key factors in the restructuring of the domestic auto industry, shifting some of the costs and burden of contributions away from the automakers and to more of a shared responsibility. The UAW VEBA fund currently holds more than $60 billion in assets.
Source: Automotive News