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Ford Says UAW Contract Boosts U.S. Labor Costs Less Than 1.5%

Automotive News (11/30/15) Nick Bunkley

Ford Motor Co. has a new contract with the United Auto Workers union that permits the use of more temporary workers and offers greater flexibility to move production to lower-cost countries if necessary. Ford said it expects no more than a 1.5% increase in costs related to the contract in each of the next four years. Labor costs will increase by less than the projected rate of inflation in each of those years, even though it will give veteran workers their first raises in a decade and enable lower-paid employees to reach top-tier wages within eight years.

“We have a good amount of flexibility to adjust the workforce if needed in the future,” says Joe Hinrichs, president of the Americas at Ford. Meanwhile, the company says it will move production of the Focus and C-Max out of Detroit and to a “lower-cost location.” It will build mostly SUVs and pickups in the U.S., and import lower-margin cars.