Ford Hangs Workers Bonuses to Uaw

The Ford Motor Co. will be giving workers bonuses tied to company performance. This will be made in return for union concessions.

According to a source familiar with the situation, the Dearborn-based automaker is proposing annual bonuses for union workers based on the company's performance as part of its effort to win more favorable contract terms from the United Auto Workers (UAW).

Detroit News reported the bonuses would be similar to those CEO Alan Mulally authorized in March to reward workers for their efforts to turn around the company's struggling U.S. automobile operations. The automaker intends to formalize the bonus system so hourly workers are evaluated by the same criteria as salaried employees.

Ford’s new system is aimed at replacing the current profit-sharing formula of the company. Nonetheless, Ford’s workers will still receive the same annual lump-sum payouts that the union negotiated with General Motors Corp. and Chrysler LLC.

If the bonuses become part of the Dearborn automaker’s contract, it would mean a significant break with terms offered by both GM and Chrysler. But the Dearborn automaker will also be demanding more in return. It would not be putting a halt to the issue as swift as EBC Redstuff.

The report said that Ford wants more restrictions on its jobs bank program, which continues to provide pay and benefits to idled workers. Additionally, the automaker wants to make sure the retiree health care deal that was the backbone of the GM and Chrysler agreements is structured to give it as much relief as possible as fast as possible.

Ford also wants to make some provision for approximately 7,500 former Visteon Corp. workers that it agreed to take back as part of a 2005 bailout of its former parts subsidiary. That is likely to cover another round of voluntary buyouts for UAW members.
"Both Ford and the UAW are indicating that these discussions will be to the point and that they will be able to avoid a strike," said labor expert Harley Shaiken of the University of California-Berkeley. "The union wants to see a successful Ford. There is no question about that."

Analysts say a successful Ford turnaround will require significantly different contract terms than the UAW agreed to with GM and Chrysler. They added that it will take a couple of years for the real benefits of that deal to kick in.

"I don't think Ford has that kind of time. They need the money now," said Sean McAlinden, the chief economist at the Center for Automotive Research in Ann Arbor. "There has to be a significant change in the pattern to get Ford out of the hole."

He said that it is unlikely Ford will be able to completely close the approximately $30-per-hour labor cost gap with its Asian rivals with this contract, but it likely will be able to narrow it even more than GM and Chrysler have with their agreements.

The plan is easy to comprehend. Bonuses would be based on the company's progress on four goals – profitability, market share, cost performance and quality.

Those bonuses were seen as nothing short of revolutionary in an industry where the partition between hourly and salaried employees has been deep and wide. "One of my priorities is to bring us together as team," Mulally said at the time. "Only as a team will we achieve what we all desire - a new, more competitive and more viable Ford Motor Co. that works for everyone."

No final date was set for resuming formal negotiations with Ford. Ford execs said that they want time to study the terms of the tentative agreement the UAW reached Wednesday with Chrysler and compare them with the ratified GM pact.