Ford, Union Agree on Contract

Ford Motor and the United Auto Workers union completed a tentative deal on a contract yesterday, averting a strike and capping a watershed period of labor negotiations in Detroit.

Ford said in a written statement that the agreement included a memorandum of understanding to establish an independent health-care trust for retirees. Analysts have estimated that Ford owes as much as $31 billion in future retiree health-care costs.

Ford was the last Detroit automaker to negotiate a contract with the union.

Neither Ford nor the union were providing other details of the agreement, which is subject to a ratification vote by the UAW's 54,000 members at Ford.

"We face enormous challenges, and we also have enormous potential," UAW Vice President Bob King, who directs the union's national Ford department, said in a written statement.

"Our goals for this contract were to win new product and investment, to enhance job security and protect seniority, and we made progress in all these areas."

Ford is considered the Detroit automaker in the deepest trouble, and UAW President Ronald A. Gettelfinger, who once worked in a Ford plant, had promised not to pursue a deal that could put the company out of business. Last year Ford lost its No. 2 position in U.S. sales to Toyota and lost $12.6 billion. It has announced the closing of 10 plants, borrowed $23 billion and is breaking up its European luxury division to raise cash.

Gettelfinger praised the union's negotiating team.

"Our team is proud of each and every negotiator because they have encouraged Ford to invest in product and people while addressing the economic needs of our active and retired members," he said in the union statement.

A major area of contention in the talks was potential plant closings. Analysts have said Ford was using the closings and the promises of new vehicle projects as bargaining chips as it pushed for deeper concessions.

Joe Laymon, Ford's vice president of human resources and labor affairs, said in the company's announcement of the deal: "We believe it is fair to our employees and retirees, and paves the way for Ford to increase its competitiveness in the United States."

General Motors and Chrysler have completed union contracts in the past two months. Both agreements came after short strikes. GM and Chrysler won changes to health-care and retirement benefits and wage cuts for certain workers. In exchange, GM assured the UAW that it would continue to operate many of its U.S. plants. Chrysler's deal lacked such guarantees and was nearly defeated.

Analysts were expecting Ford to push for the same concessions from the union that GM and Ford got, or even for more given its precarious financial condition.

The labor deals contain some of the deepest union concessions in years. The contracts allowed the companies to shed the burden of retiree health care for much less than the $100 million projected cost. The UAW has agreed to new wage systems at GM and Chrysler that will allow them to pay new workers half the $28 hourly rate that current workers make.

Plant jobs at Ford, GM and Chrysler are among the most sought-after in industrial America because of the high wages and rich benefits. But foreign automakers' steady inroads into the U.S. market have put the brakes on growth in wages and benefits for UAW members.

Toyota, at a new plant in Mississippi, will start workers at $20 per hour. The sport-utility vehicles produced there starting in three years will go head-to-head with SUVs made by workers earning the UAW's $28-an-hour wage rate at Ford, GM and Chrysler.