Perhaps the biggest story of the last week concerning the U.S. automakers has gone by without my fanfare at all. Ford (F) has come to a labor agreement with the UAW that will allow for to compete much more effectively with the foreign automakers. While Ford will never be able to pay workers what foreign manufacturers pay their overseas work force, they are starting to come down to what the foreign makers pay their American plant workers. Some details were released today, according to CNBC’s Phil Lebeau:
“Ford has just ended a conference call outlining details behind the new contract that it has reached with the UAW. Remember just a couple of days ago, 59% of the members agreed to modify their contract with Ford making it the first of the big three to change its labor contracts. The one highlight that is going to get a lot of attention today is how much this lowers the hourly labor costs for Ford. Remember, there’s been some reports in the past that Ford, GM and Chrysler were all paying $70, $80 an hour to UAW members. Ford now believes with this agreement and once you strip out the the retirement healthcare trust, this agreement will lower Ford’s hourly labor costs down to $55 an hour.
For some comparison, the transplant auto companies, the foreign auto companies in the U.S. They’re at $48 or $49 and Ford believes, if you factor in work rule changes and productivity changes in the UAW agreement, that they will be at parity with the foreign automakers in the call that just ended. There’s going to be a buyout offer to Ford UAW members starting April 11th. This is part of the company trying to bring down the number of hourly workers.”
Management at Ford is outshining their counterparts at GM and Chrysler, as they are making the moves that must be made. This is the sort of reorganization that must be accomplished by each of these struggling companies. Ford is going through the same sales troubles that all of the others are, but they apparently did a better job of articulating the importance of UAW concessions to making the company healthy again. Also remember, Ford has rejected government funding to-date.