F Ford Motor Company

By Christina Rogers 

The United Auto Workers wrapped up months of contract talks with the Detroit car makers Friday, getting approval of new labor deals at General Motors Co. and Ford Motor Co. that boost pay for workers but add higher costs to the companies' balance sheets.

Ford's rank-and-file narrowly approved the new four-year agreement by a 51% majority, handing UAW President Dennis Williams a much-needed victory after worker resistance to earlier deals caused negotiations to drag on for much longer than many had anticipated. The Ford contract covers 52,900 U.S. hourly workers.

The UAW also declared its contract with GM ratified Friday, overriding a rejection by a smaller group of skilled-trade workers. Approval of the deal had been put on hold for the past two weeks as union leaders worked to resolve skilled-trade concerns.

"Our UAW members have ratified the national agreement after a long process and much debate," said Mr. Williams in a statement. "The voice of the majority has secured a strong future that will provide job security and economic stability for themselves and their families."

The contracts at all three U.S. car makers provide workers raises, extensive production commitments and generous bonuses in exchange for ratifications.

Rick Hofmann, a worker at Ford's Dearborn truck factory, said he voted in favor of the deal because it included giving veteran workers raises and closing a pay gap between entry-level and more senior workers.

"There are some things I'm not happy about," Mr. Hofmann said. "But I've been through a lot of agreements, and I feel this one was fair and equitable."

UAW officials have struggled throughout these talks. Members rejected the initial contract negotiated with Fiat Chrysler Automobiles NV in September, marking the first time the rank-and-file had turned down a major UAW labor deal in a contract year since the early 1980s.

The two sides eventually reached a contract that gradually eliminates the pay gap between entry- and senior-level workers, and pays out hefty bonuses. That deal set the template for subsequent agreements.

GM's hourly labor and benefit costs would rise to $60 in 2019 under its proposed UAW contract, up from $55 this year under the prior contract, according to a joint forecast provided by Kristin Dziczek and Art Schwartz, president of consultants Labor & Economics Associates. Ford Motor's hourly costs would rise to $60 from $57 over the next four years, the researchers estimated.

Fiat Chrysler will see the biggest increase in average hourly labor costs, to $56 from $47, over the next four years, according to the two researchers. The Italian-American auto maker has a higher share of entry-level workers who will quickly graduate to the top pay during the agreement, Ms. Dziczek said.

Hourly labor costs include wages ranging between $19 and $29, health care benefits that are estimated to rise to $13 an hour by 2019, from $8 currently.

The U.S. auto makers' labor costs are closely watched by Wall Street for their potential impact on the bottom line. Over the past several years, and particularly during the bankruptcies of GM and Fiat Chrysler, the companies managed to win significant cost savings to make their U.S. labor costs more competitive with Asian rivals building cars in the U.S.

Despite the improved pay, UAW leaders ran into significant resistance getting workers to back the deal. Ford's vote came down to the wire with worker's at the company's historic Rouge manufacturing complex in Dearborn, Mich., providing the crucial swing vote Friday.

With the auto industry now flourishing and the companies making healthy profits, some Ford workers had been calling for bigger raises and a faster progression to the top wage bracket for newer workers. Under the recently ratified contract, those workers have to wait eight years to reach top pay.

"For the last decade, we have given up concession after concession in order to keep the company viable," said Timothy Arnett, a 16-year Ford assembly plant worker in Louisville, Ky., who was among the workers disappointed in the Ford proposal.

Mr. Arnett said union leaders set expectations high, pointing to a speech by UAW President Dennis Williams last year when he proclaimed "it's our time."

Write to Christina Rogers at christina.rogers@wsj.com

(END) Dow Jones Newswires

November 21, 2015 00:26 ET (05:26 GMT)

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