The UAW deal/ Ford's end of cash position...

[TStag]

Just wondering how much will the UAW deal cost Ford to implement (e.g how much money will Ford need to contribute to the healthcare fund) and also how much Ford will then have in the bank? I guess I'm really asking does Ford take the hit this year or over a number of years?

[g48150]

This is a pretty easy answer to this question.

 

Imagine you had a deal all worked out where the new hires made <50% of what current employees make.

 

I'll spare the story and cut to the punchline.

 

Dump the current workers and load up on new hires, cash position solved.

[TStag]

This is a pretty easy answer to this question.

 

Imagine you had a deal all worked out where the new hires made <50% of what current employees make.

 

I'll spare the story and cut to the punchline.

 

Dump the current workers and load up on new hires, cash position solved.

 

I know that. But surely Ford will take a hit financially for the contribution somewhere. Will it be this year or over a few years?

[jpd80]

This is what you're after, and was discussed in this thread LINK

You'll be happy to know Land Rover was sacrificed for the greater good.

 

In exchange for increased investment in new cars, trucks and Ford's manufacturing operations, according to a source familiar with the negotiations, Ford would fund an independent trust for retiree health care with $6.9 billion in cash, a smaller percentage of cash than GM or Chrysler are putting into similar trusts.

 

For Ford, that represents roughly 40 percent of the $17.3 billion the automaker agreed to pay toward its total $23-billion retiree health care obligation, with the remainder financed by convertible notes. GM, by contrast, paid roughly 54 percent of its obligation in cash.

 

In a novel twist proposed by Gettelfinger and quickly embraced by Mulally, Ford will invest the cash it would have paid into the trust, known as a voluntary employees' beneficiary association, or VEBA, in its U.S. assembly plants. Factories that do not already have flexible body shops will get them, making Ford a far more nimble manufacturer than it is today. The cash also will be used to upgrade equipment in older facilities.

 

The trade-off appears to be a win for factory-level UAW locals worried that Ford would close as many as six more factories across North America, including two assembly plants. It also reinforces a mantra Gettelfinger repeated during the talks, according to a source familiar with the situation: "If Ford is stronger, that will make our membership more secure."

 

Additionally, unlike the GM and Chrysler deals, Ford's contract does not define hourly jobs as "core" assembly line jobs and "non-core" manufacturing jobs, such as materials handling, to justify permanently lower wages for new hires. Ford and the UAW agreed that 20 percent of the automaker's hourly work force would be second-tier workers -- meaning, effectively, that virtually all new hires, no matter what their job, would be paid the lower wage-and-benefit package until the 20 percent cap is reached.