Ford Says Labor Costs to Rise 1.5% Annually – Wall Street Journal

Posted: Monday, November 30, 2015

Ford Mustangs go through assembly at a plant in Flat Rock, Mich. Ford’s new labor contract with the United Auto Workers union covers about 52,900 U.S. hourly workers.

Ford Motor Co.


said its labor costs will grow about 1.5% annually over the next four years under a new labor agreement with the United Auto Workers union, less than the company’s projected rise in inflation.

The company also said early Monday it will incur a $600 million charge in the fourth quarter related to the contract, which will pay each worker $10,000 in bonuses this year for ratifying the deal earlier this month. The contract covers about 52,900 U.S. hourly workers at Ford.

The No. 2 U.S. auto maker noted the latest agreement will help bring Ford’s labor costs closer to those at GM and Fiat


Chrysler. Fiat Chrysler’s have long been the lowest of the U.S. auto makers, largely because the company has a greater number of lower-paid workers.

”This agreement enables us to further strengthen our business and continue investing in manufacturing in the U.S.,” said Chief Executive Mark Fields in a statement. Ford will hold a conference call Monday at 9 a.m. EST to further discuss the contract costs.

The auto maker’s labor costs are closely watched by Wall Street for their impact on the bottom line. All three U.S. car makers secured new four-year agreements with the UAW over the last two months.

UAW leaders have touted the Ford agreement as one of the richest in the union’s history giving workers raises and securing $9 billion in new U.S. factory investment.

However, according to Ford, the pact does include some offsets, such as the ability to use more lower-paid temporary workers and greater flexibility to move production around globally.

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