Ford Motor Company (NYSE:F) would sit with UAW officials across the table for negotiations and could end up paying more bonuses and wages. The United Auto Workers (UAW) is asking for a pie of the fat profits recorded by the automakers Fiat Chrysler and General Motors Co.
UAW settles issues with General Motors
After ending a six-week strike, the UAW officials have negotiated with General Motors on a range of issues like an increase in bonuses, wages, and converting temporary jobs into permanent. The same pattern would set for the upcoming negotiations with Ford, which has less presence in Mexico. However, Ford enjoys better relationships with UAW.
Around 18 to 20 subcommittees exist at Ford and have tentative agreements in place. They might have already negotiated with Ford and paving the way for a better route. Ford could settle the wage and bonus issues with UAW quickly.
UAW notifies Ford for talks
According to Kelli Felker, a spokeswoman for Ford, UAW has informed the company for negotiations. She said Ford expects to reach a fair agreement with UAW that improves its competitiveness and protect/ preserve high paying production jobs. Ford is at the number one slot in the production of auto in the US. UAW represents a large chunk of the workforce at Ford.
In a settlement agreed with UAW on Friday, General Motors agreed to pay higher bonuses apart from making the temporary jobs permanent. The company also agreed to increase wages and pay higher when compared to its peers. If the same pattern is followed, it would be expensive for Ford. According to experts, the agreements could be tweaked for a better deal with Ford. President (Labor), Arthur Schwartz, said Fiat and Ford feel they could end up paying more. However, UAW may soften its stand for a less expensive deal with Ford.
General Motors has a larger footprint in Mexico when compared to Ford, which is not burdened with issues like excessive capacity. Earnings of Ford are lesser in Mexico when compared to that in the US. Hence, Ford would end up paying more in terms of bonuses and lump-sum payments.
The auto giants are aiming for a reduction in manufacturing costs because they anticipate a slowdown in the future. Cost reduction helps them to sustain and improve competitiveness.