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Ford, UAW Agree On Tentative Deal; Automaker Will Boost Wages, Investment In Plants

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Ford, UAW Agree On Tentative Deal; Automaker Will Boost Wages, Investment In Plants

Ford Motor Company (NYSE: F) will make billions in investments in its workforce and plants as part of a new contract reached with the United Auto Workers that provides pay increases and avoids a strike.

It took just three days for the UAW and Ford to reach the deal, which remains subject to approval of union members, with voting starting Monday and expected to conclude by Nov. 15.

What It Includes

Under the contract, Ford will invest $6 billion in U.S. manufacturing, including pay increases and a $9,000 per employee ratification bonus for full-time, non-temporary employees. Ford will agree to hold worker health care contributions at 3%, similar to the UAW's agreement with competitor General Motors Company (NYSE: GM), and reduce to four years the time it takes Ford's 56,000 hourly workers to reach the top pay tier. Currently, it takes twice that long for workers to get to the top pay scale at Ford.

Ford says it will invest in 19 of its plants and will close only one plant, a Romeo, Michigan, engine plant that employs 600 workers. All those jobs, however, will be retained, and transferred to the nearby Van Dyke transmission plant. The company will put a moratorium on all other plant closures.

Largest US Auto Workforce

"This contract provides over $6 Billion in new product investment creating and retaining over 8500 jobs," UAW Vice President Rory Gamble said in a statement. "We are proud that UAW-Ford members through this contract will continue to be the largest U.S. auto workforce and build the most products here at home."

The contract is fairly similar to the one the UAW reached with GM after a 40-day strike, though Ford's pledged investment in its workforce is smaller than GM's.

What's Next

If the Ford deal is approved by union members, the UAW will next begin negotiations with Fiat Chrysler Automobiles NV (NYSE: FCAU).

Meanwhile, UAW President Gary Jones asked to take a leave of absence starting this past Sunday. Jones is under federal investigation as part of a corruption probe. Gamble is expected to serve as acting president of the union.

Ford's stock rose on Monday, up 1.69% to $9.04.

Related Links:

Sales, Cycle And Strike Expected To Impact Big 3 Auto Earnings

Ford To Cut Production, Jobs At Its Largest Canadian Plant

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