Bloomberg News

Ford-UAW Will ‘Probably’ Need to Extend Current Contract

September 12, 2011

(Updates with analyst’s comments in fifth paragraph. For more on the Frankfurt motor show, see SHOW <GO>.)

Sept. 12 (Bloomberg) -- Ford Motor Co. and the United Auto Workers will “most probably” need to extend their labor contract beyond its Sept. 14 expiration date, Mark Fields, the company’s president of the Americas, said in an interview.

Talks between the automaker and union are “going smoothly,” said Fields, who is in Germany for the Frankfurt auto show. “We’re meeting regularly but I would expect that if we don’t get a contract, we’ll agree on an extension.”

The UAW’s contracts with General Motors Co. and Fiat SpA- controlled Chrysler Group LLC also expire at 11:59 p.m. on Sept. 14. Ford is the only one of the three where a strike can occur. UAW members at GM and Chrysler, as part of U.S.-backed bankruptcies in 2009, agreed to a no-strike pledge and to take unresolved issues to binding arbitration.

Ford, based in Dearborn, Michigan, did not receive a U.S. bailout. Union members there rejected a strike ban.

There is a “very, very, very slim” chance of a strike at Ford, said Kristin Dziczek, a labor analyst at the Center for Automotive Research in Ann Arbor, Michigan.

“The deadline is useful to promote action, but it’s not like all hell will break loose if they go past it,” Dziczek said in an interview. “Most definitely, Ford will be looking at an extension, but that is not in any way a sign that the wheels are falling off.”

GM’s Progress

GM, which is furthest along in negotiations with the UAW is likely to set the pattern for wages and benefits for the U.S. automakers, Dziczek said.

“Ford will craft their own version of the pattern once the other two are done,” she said. The UAW’s current contracts at GM, Ford and Chrysler were reached in 2007.

Workers at Ford have filed an “equality of sacrifice” grievance against the automaker for restoring raises, tuition assistance and 401(k) matches to salaried workers last year. An arbitration hearing on that dispute is schedule for Sept. 15, the day after the company’s contract with the UAW expires.

“The grievance is a mechanism to give Ford workers more money,” Dziczek said. “There are 35,000 signatures on that grievance and a lot of them have a vote on this contract.”

Ford rose 6 cents to $10.11 at 4:15 in New York Stock Exchange composite trading. The shares have slid 40 percent this year.

Fields’s remarks go beyond comments made by Chief Financial Officer Lewis Booth on Sept. 9 at a UBS investor conference in London.

“Our contract formally expires on Sept. 14, but if those discussions are still going on, we expect to continue working and continue the discussions,” Booth said at that time.

--With assistance from Alexander Webb in Frankfurt. Editors: Bill Koenig, Jamie Butters

To contact the reporters on this story: Tim Higgins in Detroit at thiggins21@bloomberg.net; Keith Naughton in Detroit at knaughton3@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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