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Ford Books $600 Million for Labor Contract Bonuses
Ford Motor Co. says it will book a $600 million expense this year to pay for $10,000 worker bonuses under the company’s new four-year labor contract with the United Auto Workers union.
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Ford Motor Co. says it will book a $600 million expense this year to pay for $10,000 worker bonuses under the company’s new four-year labor contract with the United Auto Workers union.
The new agreement will increase Ford’s U.S. hourly labor costs by about 1.5% per year, to $60 from $57, according to Chief Financial Officer Bob Shanks. He tells analysts the cost is $8-$10 per hour more than is paid by foreign carmakers which operate non-union plants in the country.
But the deal brings Ford’s labor costs into alignment with those of General Motors and narrows the gap with Fiat Chrysler Automobiles. It also gives Ford more flexibility about where it produces vehicles. And it enables the company to hire more temporary help and an unlimited number of entry-level workers, both of which are paid less than veteran workers receive.
Analysts say the new deal will raise Ford’s labor costs per vehicle by about $200 to $2,600 by 2019 when the new contract expires.
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