UAW says in talks with Ford on competitiveness

DEARBORN, Mich (Reuters) - The United Auto Workers union is in ongoing talks with Ford Motor Co aimed at ensuring the No. 2 U.S. automaker remains competitive with domestic rivals that have been reorganized with federal funding, a union official said on Tuesday.

"We are always in meetings with Ford," UAW Vice President Bob King told reporters on the sidelines of an event at the automaker's engineering campus.

"Are those formal negotiations? You could say yes or no."

King, the union official who led a round of concession talks at Ford earlier this year, said it was uncertain whether the talks would result in a formal set of contract changes that would have to be taken to UAW workers for ratification.

The comments by the UAW's chief Ford negotiator were the first update on the union's talks with Ford since autoworkers ratified a set of deeper concessions for its cross-town rivals in deals brokered by the Obama administration.

Ford, the only U.S. automaker that has avoided bankruptcy and a reorganization under the oversight of the Obama administration, has estimated the concessions ratified by the union in March will save it some $500 million per year.

But Ford's rivals General Motors Corp and Chrysler have both won agreements that prohibit the union from striking when negotiations on a new contract begin in 2011.

Some analysts have suggested those provisions and more favorable terms on the payments due to a union-affiliated trust fund for retiree health care could put Ford at a disadvantage compared with GM and Chrysler.

Ford's most recent agreement with the UAW trims average wages and benefits for UAW hourly workers to about $55 per hour this year, from more than $70 per hour when the automaker was negotiating a watershed contract with the union two years ago.

That figure is expected to drop to about $50 per hour by 2011, or roughly on a par with what Japanese automakers led by Toyota Motor Corp will be paying their nonunion U.S. factory workers.

"We're going to continue working together," King said of Ford. "Whether that means a new contract or not, at this point, I don't know. But more importantly, we're working together to keep jobs in the United States of America and we understand that to do that long-term we've got to be part of building profitable vehicles."

Ford is in the process of retooling two of its plants to make small cars, part of an effort to shift toward a more fuel- efficient line-up that includes a $14 billion investment in advanced technology vehicles.

The automaker was given $5.9 billion in low-interest loans by the U.S. Department of Energy on Tuesday to help offset the cost of retooling facilities.

King said the UAW was committed to seeing Ford succeed with its effort to build small cars profitably in the United States, an effort Detroit automakers had dismissed as unrealistic earlier this decade in part because of high labor costs.

"We all know that our long-term security, our pensions, our healthcare are dependent on a profitable Ford Motor Co," King said. "I think the partnership we have means that we can build small cars profitably in the U.S."

Ford has targeted 2011 for a return to profitability. The automaker has posted losses totaling $30 billion for the last three full years.

Ford shares were up just over 2 percent, or 12 cents, at $5.50 in early afternoon trading.

(Reporting by Kevin Krolicki; editing by Maureen Bavdek and Andre Grenon)