Ford Strikes a Deal With UAW

November 3, 2007 ( - The United Auto Workers union said early Saturday that it reached a tentative four-year contract agreement with Ford Motor Co. - a deal that includes a union-run trust that would take over the companies' retiree health care obligations.

The new four-year pact (reached at 3:20 a.m. Saturday, according to a posting on the UAW web site ) mirrored the essential terms of deals previously ratified by workers at General Motors and Chrysler LLC, specifically in allowing Ford to offload billions in retiree health-care obligations from its books to a union-run trust fund, in the form of a voluntary employees’ beneficiary association, or VEBA (see GM Puts Out More VEBA Funding Details ). According to the Associated press, Ford said the deal allows it to move its estimated $22 billion in retiree health care obligations to the VEBA, but didn’t say how much the automaker will have to contribute to the trust. GM and Chrysler have similar agreements in their contracts.

The contract, which covers about 54,000 represented employees, would also likely allow Ford to pay a host of so-called non-core workers a lower, second-tier wage, though that and other specific details were not immediately available. An average Ford hourly worker made $28.88 per hour in 2006, according to the WSJ, citing company data.

The UAW said that details of the agreement will be provided to UAW Ford members at explanation and ratification meetings at UAW Ford local unions. A simply majority of Ford’s union workers must approve the contract for it to be ratified.

What’s not sure is how Ford workers will respond to the initiative. In the wake of comparable deals, Chrysler just announced that it would be cutting 8,500 to 10,000 hourly jobs and 2,100 salaried jobs through 2008 (about 15% of its workforce) – while at GM, there were announcements of layoffs of more than 1,700 people at three plants in the Pontiac, Detroit and Lansing areas.