Weary negotiators for Ford Motor Co. and the United Auto Workers reached tentative agreement on a new four-year contract yesterday after nearly 30 hours of nonstop bargaining that averted a walkout by the company's 101,000 UAW-covered employees and allows a spinoff of a Ford parts unit.
The proposed settlement was announced at 1:30 p.m. EDT yesterday.
A breakthrough in the talks, which took place at Ford World Headquarters in Dearborn, Mich., came late Friday after the two sides accepted a compromise on the spinoff of Ford's in-house components manufacturer, Visteon Automotive Systems, where an estimated 23,500 UAW members hold jobs.
Under the terms of the proposed settlement, current UAW-covered employees at Visteon would remain Ford employees for life, if Visteon were to become independent. That effectively gives them the same wages and benefits as covered Ford workers and makes them eligible for available jobs at Ford, if Visteon has layoffs.
Bargaining sources, who asked not to be identified, emphasized that the new contract also contains "strong protections," as one of them put it, for Visteon workers hired after the new agreement takes effect.
"We did not create a subordinate group of employees" who would, for example, be hired at a lower wage rate than those already working at Visteon, that source said.
The agreement includes 2,180 workers at Ford's F-Series pickup truck assembly plant in Norfolk, which continued operating Friday past an 11:59 p.m. strike deadline. The deadline was extended because the parties were close to agreement.
Ford, the only major car company with a captive supplier, is under Wall Street pressure to let go of the marginally profitable Visteon. Investors believe the auto-parts maker can get bigger cost savings, more customers and better earnings as an independent.
But the UAW feared that any savings from a Visteon spinoff would cost the UAW jobs, which caused the union to oppose divestment altogether.
Visteon reported $703 million in earnings last year on sales of $17.8 billion, 92 percent of which were sales to Ford.
Both company and union officials declined comment on the tentative new agreement, pending ratification meetings by the UAW-Ford membership. But according to sources familiar with the deal, the Ford agreement is an almost-pure pattern pact, reflecting almost every important detail of new contracts reached within the past three weeks with General Motors Corp. and DaimlerChrysler AG, Ford's biggest rivals in the United States.
"Look at the GM and Daimler contracts. That'll give you your answer," said a source involved in the Ford talks.
That means Ford is offering the UAW a four-year contract in place of a three-year agreement originally scheduled to expire at midnight Sept. 14. The new contract would offer annual 3 percent wage increases over the life of the agreement; improved cost of living adjustments to help offset interest rate increases; improved pension benefits; and a onetime, upfront signing bonus of $1,350.
The Visteon-settlement provisions of the Ford contract, according to other sources, closely resemble those in a new agreement between the UAW and Delphi Automotive Systems, a giant $28.5-billion parts manufacture spun off by GM on May 28.
There was a lot of main table talk about the possibility of paying Visteon employees a one-time "goodbye bonus" if they chose to stay with a divested Visteon. But negotiators on both sides eventually scuttled that idea, saying it would be unfair to Delphi's 59,000 UAW members, who were not offered that bonus equivalent of a bronze parachute.