Ford exec indicates desire for level playing field on labor costs

Wed Apr 1, 2015 3:40pm EDT
 
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By Ben Klayman

DETROIT, April 1 (Reuters) - Ford Motor Co's Americas chief indicated on Wednesday that the No. 2 U.S. automaker will be looking to bring its labor costs in line with those of its smaller rival Fiat Chrysler Automobiles when it opens talks this summer with the union representing its hourly workers.

Joe Hinrichs, speaking at a Bank of America Merrill Lynch conference, said the subject of entry-level workers, who are paid less than their veteran co-workers, will be a subject of talks with the United Auto Workers. Ford, Fiat Chrysler and General Motors Co will negotiate new deals to replace ones expiring in mid-September.

Hinrichs, who declined to discuss the pending talks in detail, said Ford needs to remain competitive in order to maintain its investment in U.S. plants, and pointed to the UAW's desire for a deal that is similar at all three automakers in helping Ford lessen the advantages Fiat Chrysler gained during its 2009 bankruptcy.

As part of the bankruptcy reorganizations at GM and FCA, the UAW agreed to no cap on the number of entry-level workers those automakers could hire, while Ford, which did not enter bankruptcy, has a limit.

"Ideally, some of those discrepancies that exist because of the bankruptcies at two of our competitors will play themselves out as part of that pattern bargaining process," said Hinrichs, who added the talks would be a "delicate balance."

Asked what Hinrichs meant, a Ford spokeswoman said, "We need to have a total labor cost that is competitive with other automotive manufacturers producing in the U.S. We're open to discussing many options with our UAW partners."

Entry-level workers earn about $16 to $19 an hour compared with veteran workers, who make up to $28.50 an hour. Twenty-eight percent of Ford's hourly U.S. workforce are entry level, while GM is at 19 percent and FCA is at 43 percent.

UAW leaders have said they want to bridge the gap between the entry-level and veteran workers' pay.

Labor cost estimates show that Ford pays its workers an average of $57 an hour, including benefits, compared with $58 at GM and $48 at FCA, according to the Center for Automotive Research.

"There's certainly an understanding that for the investment levels to continue and the great job growth numbers that we've had in the U.S. to continue, we have to maintain a level of competitiveness that makes sense," Hinrichs said. (Additional reporting by Bernie Woodall in Detroit; Editing by Richard Chang)