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Ford deal OK’d that brings 2,000 jobs to Chicago

John Fleming Ford executive vice president (left) Marty Mulloy Ford vice president field questions earlier this month. |  Gary

John Fleming, Ford executive vice president (left), and Marty Mulloy, Ford vice president, field questions earlier this month. | Gary Malerba~AP

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Updated: November 20, 2011 9:02AM

Ford Motor Co.’s U.S. factory workers approved a new four-year labor contract late Tuesday that secures the addition of roughly 2,000 new jobs at Chicago area plants. The deal promises profit-sharing checks and billions in U.S. plant investments while keeping the company’s labor costs under control.

A local union in Louisville, Ky., was one of the last to vote on the contract Tuesday, and its large size ensured that the agreement will go into effect. The workers approved the contract with a 53 percent “yes” vote, according to a post Tuesday evening on the local’s Facebook page.

Nationally, 63 percent of workers voted yes, according to a union official.

Workers at Ford’s Chicago area plants had voted against the contract. At Ford’s Torrence Avenue assembly plant in Chicago, 77 percent of workers voted to reject the contract, UAW Local 551 plant Chairman Grant Morton said last week. The plant employs 2,700 UAW workers.

The roughly 900 workers at the Chicago Heights stamping plant rejected the contract by a more than two-to-one ratio, according to figures released by UAW Local 588 President Bill Jackson.

The deal calls for Ford adding a third shift and roughly 1,100 jobs at the Chicago assembly plant next year. That would bring the plant to full operational capacity.

The agreement also calls for adding about 900 more jobs at the plant and the company’s stamping plant in Chicago Heights within the next four years.

Ford also pledged to invest in factories, including $117 million at the Chicago assembly plant and $86 million at the Chicago Heights stamping plant.

With the completion of voting nationally, UAW Local 551 Plant Chairman Grant Morton said Wednesday, “That’s the wonderful part of a democratic union, that everyone has a voice. All the votes were counted, and now we speak as one voice. Over the course of this contract, it will be proven to be a more than fair deal for the members that I represent.”

Illinois politicians were pleased the contract was approved.

“I am pleased that Ford is making this additional investment in Chicago,” Mayor Rahm Emanuel said in a statement Wednesday. “Ford’s increased presence in Chicago bolsters our economic competitiveness and demonstrates that Chicago is a city on the move where businesses are growing and creating new opportunity.”

Gov. Pat Quinn said the investment will boost the local economy and “ensure the next generation of Ford vehicles are built by Illinois workers.”

Nationwide, most workers won’t get annual raises under the contract, but they will get profit-sharing checks, inflation adjustment payments and other bonuses worth at least $16,700 through 2015.

Despite the payouts, analysts expect a minimal impact to Ford’s labor costs, in part because most of the new workers will be hired at lower wage rates than the company’s longtime workers. Ford promised $4.8 billion in new investments in its U.S. plants and 5,750 new jobs. Tuesday’s agreement covers 41,000 Ford workers in the U.S.

Workers who opposed the Ford deal were angry that the contract doesn’t give back some of the things they lost in previous agreements, including annual raises, cost-of-living increases and additional holidays. They also were mad about Ford CEO Alan Mulally’s $26.5 million pay package for 2010 and the continuation of a two-tier pay system that pays entry workers much less than veteran Ford workers make.

UAW President Bob King said he understood workers’ anger, and pointed out that UAW workers haven’t gotten annual raises since 2003. But he said last week that he was confident all three agreements would pass because of the jobs they promise. When the 5,750 jobs in Ford’s new contract are added to 6,250 Ford already announced, the company is adding 12,000 jobs to its U.S. facilities by 2015.

With the Ford contract approved, the UAW has now reached successful agreements with two of the three Detroit automakers. General Motors Co. workers approved a contract similar to Ford’s last month. Chrysler Group LLC workers began voting on their agreement Tuesday and expect to wrap up voting next week. Chrysler’s agreement is less generous than GM’s or Ford’s, in part because it’s not yet making a profit. Ford earned $6.6 billion in 2010.

UAW Vice President Jimmy Settles, the union’s top Ford negotiator, said in a statement that workers at Ford were frustrated with the economy, a lack of pay increases and what he called “outrageous” pay packages for executives, yet they still approved the pact. Eighty-five percent of the union’s 41,000 members at Ford cast ballots, he said.

“As the nation’s economy remains stalled and uncertain and its employment rate stagnates, we were able to win an agreement with Ford that will bring auto manufacturing jobs back to the United States from China, Mexico and Japan,” union President Bob King said.

Ford and the UAW reached the agreement on Oct. 4, but workers had to ratify it with a majority vote.

Brian Johnson, an auto analyst with Barclays Capital, estimates the contract will add around $70 million to Ford’s labor costs each year. If large numbers of older workers leave the company, Ford will spend even less, he said.

Ford could see immediate benefits in the form of a ratings upgrade, which would help lower its borrowing costs, he added. Standard & Poor’s Ratings Service has said it expects to raise Ford’s corporate credit rating to “BB+” — which is one notch below investment grade — if the labor agreement is ratified and is competitive with agreements at GM and Chrysler.


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