UAW approves new Ford contract, could bring 5,750 new workers

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The United Auto Workers have approved a new contract with Ford Motor Co. that the No. 2 carmaker said will increase its labor costs by less than 1% a year.

Ford said it planned to pay for the deal by increasing efficiency at its factories and hiring new workers at lower wages.

Marty Mulloy, Ford’s chief labor negotiator, told BusinessWeek the automaker’s hourly labor costs, including wages and benefits, will go from $58 to $59. Ford estimates that Toyota pays $50 an hour in wages and benefits to the company’s U.S. workers.

Union workers voted nearly 2-to-1 to approve the four-year deal, which clears the way for 5,750 new workers and investment of more than $6 billion in the automaker’s U.S. plants.

Instead of getting annual pay raises, union members will get a $6,000 signing bonus and about $3,750 in profit sharing this year.

The agreement is likely to help Ford in the financial markets. Analysts say the contract will increase the company’s chances of a credit-rating upgrade to investment grade, which would reduce borrowing costs.

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-- Pat Benson