Ford to clean out the UAW cobwebs

Ford, in an effort to minimize labor costs, is offering members of the UAW a new buyout option. The offer is aimed at workers under the current contract, earning as much as $28 per hour. Much like other auto manufacturers this year Ford is targeting labor costs for potential savings.

If current UAW workers at Ford take the buyout, they will receive large cash payments, and pensions (if eligible). Additional laborers hired after the buyout would start at $14 per hour, about half that of the highest paid current UAW members.

Once a union is voted in to a place of business, the employer must agree on negotiated contract terms. The employer is often at the mercy of the demands of the union in order for production to continue smoothly. This has traditionally resulted in high labor costs for some companies with union workers. It can be difficult to negotiate new wages and benefits before the contract has reached its full duration.

This is a good option for the UAW members, and if enough of them accept, it could free up a lot of Ford’s cash being sucked out by the union. Ford has survived a tough year without adding a bankruptcy to its resume, and this would be a positive next step. The economy hasn’t recovered yet, and Ford can’t be too careful with its finances.

Reuters [via AutoBlog] has the details of the buyout.

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