Future of Focus plant looms over start of Ford-UAW talks – Detroit Free Press – Detroit Free Press
Top UAW officials and some of Ford’s highest ranking executives will meet today to formally mark the start of contract talks exactly two weeks after the Dearborn automaker said it would move production of the Focus compact car to Mexico.
Typically, the ceremonial event to kick-start contract negotiations is a warm and fuzzy event designed to underscore the close working relationship between the union and the automaker as they begin to renegotiate a contract that expires on Sept. 14.
It was all smiles when at a similar events held last week between the UAW and General Motors. The next day, Fiat Chrysler CEO Sergio Marchionne hugged UAW President Dennis Williams. Today’s event, to be held at Cass Technical High School in Detroit, will be a similar staged event designed to highlight relationships that are far better now than the acrimonious tensions that historically existed between the union and the automakers.
But the future of Ford’s Michigan Assembly plant in Wayne, where the Focus is currently produced, along with a number of other thorny issues will be simmering just below the surface when Ford Executive Chairman Bill Ford, Ford CEO Mark Fields, UAW President Dennis Williams and UAW Vice President Jimmy Settles attend the event.
Ford’s decision to end Focus and C-Max production at its plant in Wayne comes as a host of automakers, including Ford, are building new plants in Mexico instead of in the U.S., and is a growing concern for the UAW.
“I will save my comments for Ford when we open up Ford,” negotiations, Williams said last week during the GM event. “I will say it’s always concerning to me when any corporation invests outside of the U.S….there are a variety of reasons to do it…we will address Ford at the right time.”
Historically, Ford has prided itself on having the best relationship with the UAW out of the Detroit Three.
Settles told the Free Press that the timing of Ford’s decision to relocate the Focus, just days before the official start of contract discussions, was “very, very unusual.”
The move also raises questions about which products could replace the Focus — a car that symbolized Ford’s transformation in 2011 from a company dependent on truck sales to one aimed at building better passenger cars for a global market. Ford promised it will not close the plant but did not say what car or truck could replace the Focus and C-Max.
Despite that decision, Ford is able to to say it vastly exceeded a commitment it made in 2011 when it agreed to add 12,000 jobs over the life of the four-year contract. Since the 2011 agreement, Ford has hired more than 15,000 employees in the U.S. and has invested more than $6.2 billion in its U.S. plants.
During contract talks, the automaker will argue that the agreement reached in 2007 that allows the Detroit Three to hire workers at a a lower, entry level wage was among the key factors that led to the company’s ability to add jobs and invest in plants in the U.S.
In 2007, the UAW agreed to allow Ford, GM and Chrysler to hire new workers at a lower, Tier 2 wage that currently starts at $15.78 per hour tops out at $19.28 per hour after four years. That’s a lot less than the workers hired before 2007 who earn $28 per hour.
Ford argues that the entry level wage, along with the creation of a voluntary employees’ beneficiary association to manage retiree health care benefits, has helped Ford dramatically lower its labor costs.
The cost of Ford’s wages and benefits for U.S. hourly workers have shrunk from $68.35 per hour in 2007 to $56.33 in 2014, according to a fact sheet published by the automaker.
Still, Ford says it still “operates at a competitive disadvantage verses other automakers….in fact, Ford’s gap to the transplants is larger now than in 2011, due largely to the fact that the transplants have significantly increased their temporary workforces.”
Asian and German automakers with U.S. plants pay workers an average $47 per hour when wages and benefits are combined, according to the Center for Automotive Research.
Ford’s labor cost disadvantage exists even though it now employs 15,115 entry level workers, which is 29% of its overall U.S. hourly workforce. This year, the automaker has bumped 800 workers up to the higher wage wage rate to comply with a cap that only allows it to employ 20% of its workforce at the lower wage rate.
That cap puts the Dearborn automaker is at a disadvantage compared with FCA and GM, which did not have to comply with a cap under the current contract. In this round of talks Ford will either strive for that cap to be eliminated or, at a minimum, will want GM and FCA to be forced to comply with the same requirement.
And that will put Ford on a collision course with Williams, who has said one of his top goals is win a pay raise for entry level workers so he can bridge the pay gap between the with workers hired before 2007. Williams also has said he hopes to win a base wage increase for the workers hired before 2007.
“Ford and the UAW have come a long way since 2007, and have both benefited from working together,” Ford said on a Web site dedicated to contract talks. “The UAW has taken a constructive approach in working with Ford. Meanwhile, the company has made, kept and exceeded our promises on job creation, in-sourcing and investment.”
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