Ford talks with UAW are critical
Reuters
Posted Friday, June 15, 2007
DETROIT — Ford Motor Co. heads into a round of contract talks with its major union as the automaker seeks sweeping changes worth billions of dollars that would transform it into a strong contender, according to people familiar with the upcoming negotiations.
After losing a record $12.6 billion, cutting 27,000 factory jobs and borrowing against its plants, Ford sees an opportunity to emerge this fall with a new contract with the United Auto Workers. It seeks to bring its labor and manufacturing costs toward parity with profitable Japanese rivals such as Toyota Motor Corp., they said.
Such steep concessions would be unprecedented in decades of past UAW agreements with the major U.S. automakers, but analysts caution that the crisis in the industry has changed the tone and raised the stakes for all sides.
“This is a totally unprecedented type of negotiation,” said Dave Cole, chairman of the Center for Automotive Research, adding that it is possible that one or more auto companies could fail if the industry does not get broad-scale changes from the UAW.
U.S. automakers currently carry a labor cost disadvantage of $30 to $35 an hour against Asian rivals, according to auto executives and industry experts.
Ford could save $3.9 billion if it manages to cut $30 per hour in wages and benefits, Brian Johnson, an analyst with Lehman Brothers, said in a note issued Thursday.
Ford spokeswoman Marcey Evans would not comment.
A UAW spokesman also declined comment.
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