Ford has revised its agreement with the union to increase labor costs in the next four years.
Fords Motors has signed a deal with the United Auto Workers union that has raised eyebrows of rivals in the auto industry. According to the deal, the giant is expected to report an increment in the labor costs that it pays to the union and the rise is to come around 1.5% by the end of the contract, which is based on four years, ending in 2019. It is believed that the labor wages paid by the other companies, including the organization currently, are much less and do not seem to rise anytime soon. However, this has now changed with the emergence of this new deal.
Fords management, with the help of this deal, has turned down the previously run two-tier wages program that was followed for the laborers of the auto company. According to news, it looks like the smart carmaker will be increasing its costs of labor from $57 per hour to an estimated $60 effective by the year 2019. This, as per Bob Shanks’ belief, who is also the CFO of the company, is exactly how the car manufacturer planned its objectives to be. This increment in the wages has turned out to not only surprise rivals in the auto making industry but it has also raised concerns, as to where the giant could be headed with such an expensive payment plan to follow.
Reports have informed that Fords business has decided to spend a massive $600 million in bonuses it provides to its customers in the current fiscal quarter, whereas the other bonuses for employees encompass a monetary value of $500 per person. In order to deal with the excessive wage payment plan, it has been informed that the giant will be working towards getting temporary labors instead of full time ones, so that the cost can then be saved. These temporary employees will also be hired than on a lower payment plan.
On November 20, 51.5% Ford’s union workers signed the agreement presented by UAW, which was also backed up by positive comments from Marks Fields, the CEO of the hybrid car manufacturers. As per a statement by Fields, the agreement has been deemed as an important step towards the company reaching out to its long-term priorities in an effective way, which is exactly how he wishes the giant to go forward. Analysts are of the opinion that is just another step forward taken by the auto giant, which will ensure a higher place for it as compared to its rivals.