Ford, UAW reach tentative labor deal

DETROIT (Reuters) - Ford Motor Co said on Saturday it had reached a tentative labor deal with the United Auto Workers union, capping a historic round of bargaining between the union and the embattled U.S. auto industry.

Ford, the last of Detroit's three automakers to reach a contract, said the tentative four-year deal included establishing an independent health care trust to take over its costly obligation for retirees.

Both sides declined to disclose details of the contract, which now faces a ratification vote by Ford's 58,000 UAW-represented workers.

"We believe it is fair to our employees and retirees and paves the way for Ford to increase its competitiveness in the United States," Ford's chief negotiator Joe Laymon said in a statement.

The deal, reached early on Saturday, came after a bargaining session of more than 40 hours at Ford's Dearborn, Michigan, headquarters.

In recent weeks, the UAW has concluded new four-year contracts with General Motors Corp. and privately held Chrysler LLC.

Both Ford and the UAW had said those cost-saving contracts provided a framework for Ford's parallel deal with the union.

The UAW, which has long enjoyed wages and benefits considered as a gold standard for union workers, agreed to sweeping concessions in this contract round with the struggling Detroit-based automakers.

Ford, which lost a record $12.6 billion last year, has indicated it was looking for approval to cut between 8,000 and 10,000 factory jobs. That would be in addition to the 27,000 union jobs it had eliminated through voluntary buyouts and early retirement offers as of June.

The Detroit Free Press reported that Ford had agreed to scale back planned plant closings -- saving six plants -- in exchange for other concessions from the UAW.

"EXCESS CAPACITY"

Ford had said it planned to close 16 U.S. plants but had identified just 10 of those, leaving the fate of the remaining dependent on the outcome of the UAW talks.

"I don't see how they can keep that much capacity," Argus Research analyst Kevin Tynan said. "Looking at how their market share is going, having that much excess capacity doesn't make sense."

Ford's U.S. sales have fallen almost 14 percent so far this year and it has lost the No. 2 spot in U.S. market to Japanese rival Toyota Motor Corp.

At just over $70 per hour, Ford's hourly wage and benefit costs have been the lowest of the Detroit-based automakers but still well above an estimated $48 per hour for the U.S. operations of Toyota. Ford had said it wanted a contract that would narrow or eliminate that gap.

For its part, the UAW had faced pressure to win pledges of improved job security from Ford, especially after Chrysler angered union-represented workers this week by cutting up to 10,000 factory jobs just days after clinching its labor deal.

"Our goals for this contract were to win new product and investment, to enhance job security and protect seniority -- and we made progress in all these areas," Bob King, the union's chief Ford negotiator, said in a statement.

With the Ford deal, the Detroit automakers and the union agreed to transfer billions of dollars to pay for health care for retirees to a trio of trust funds -- known by the acronym VEBA for Voluntary Employee Beneficiary Association.

The Detroit-based companies had blamed spiraling U.S. health care costs for adding an estimated $1,500 to the price of each vehicle and saddling them with a burden that their faster-growing rivals, such as Toyota, do not face.

Ford's obligation for retiree health care had been estimated near $22 billion.

It was not immediately clear how much Ford had agreed to pay into the trust. Last year, Ford pledged all of its major assets, including its familiar blue oval logo, as collateral in a $23 billion borrowing program to fund its restructuring.

"I think the independent VEBA is a great idea," said Kell Quantz, vice president at UAW Local 900, which represents Ford workers at two Detroit area plants. "It's a good thing for the union, because it helps the company be competitive. It saves jobs and it saves communities."