Ford US-foreign auto plant pay gap narrowing: exec

Ford Motor Co (F.N) has narrowed the gap on labor costs with foreign automakers at U.S. plants to less than 10 percent and will look to trim it more, its top labor and manufacturing executive said on Friday.

"My view is we have to continue to look at our labor costs to be competitive, and that will continue to be an area of focus in our overall efficiency," John Fleming said in a webcast presentation at a Goldman Sachs conference in London.

Ford is in preliminary discussions, months away from meatier U.S. contract talks with the United Auto Workers union, and it must stay vigilant on labor costs, said Fleming, the company's executive vice president, global manufacturing and labor affairs.

The gap between Ford's U.S. labor costs, and those of rival automakers from Japan and South Korea that operate nonunion U.S. plants, is a lot closer than people think, said Sean McAlinden, president of the Center for Automotive Research.

Ford's total wage and benefit cost for U.S. hourly plant workers is about $59 per hour, not far from the $56-per-hour cost for a worker at a Toyota Motor Corp (7203.T) U.S. plant, McAlinden said.

Chrysler's all-in labor cost is about $59 per hour and General Motors Co's (GM.N) about $58 per hour, he said.

The gap was immense -- Ford and Chrysler had all-in labor cost of about $75 per hour and GM about $78 per hour -- before UAW concessions in their 2007 contracts with U.S. automakers and again in 2009 amid the near collapse of the industry.

The 2007 pact allowed Ford, GM and Chrysler to pay new line workers less than $15 per hour, about half the wage of veteran workers, but the industry downturn made hiring unnecessary.

Ford has not yet hired any "second-tier" workers, but expects to hire more than 1,000 in the coming year as it adds workers at its U.S. plants.

NO TALK OF LABOR STRATEGY

The deal also allowed the creation of trusts to cover the healthcare costs for union retirees.

Removing UAW retiree healthcare costs from their balance sheets was the key to making U.S. automakers more competitive with Japanese and Asian companies, McAlinden said.

The average all-in labor cost for Nissan Motor Co (7201.T), Hyundai Motor Co (005380.KS), and Kia Motors (000270.KS) is about $48 per hour, McAlinden said.

Fleming did not comment on Ford's strategy for the talks on a new contract to follow the one that expires in September.

He said only that it was too early to tell whether the normal practice of pattern bargaining would apply after 2011, in which what is agreed for one automaker is applied to all three U.S.-based automakers.

Ford's position is radically different heading into the 2011 contract talks than it was in 2007, when the automaker was thought to be the weakest of the U.S. car companies and chosen by the UAW as the target for negotiations.

The automaker had posted a then-record company annual net loss of $12.6 billion in 2006. It lost $2.7 billion in 2007 and nearly $14.7 billion in 2008 as it dug into a restructuring.

Fortunes change. Ford was the only major U.S. automaker to avoid bankruptcy in 2009 and has reported profits for the last six quarters, including its best third-quarter result ever.

Ford's stock also has been on a roll. The stock has jumped 67 percent since the start of the year and closed Friday at $16.73 -- about double where it was in September 2007.

UAW President Bob King told Reuters in November that workers at Ford and other U.S. automakers should share in the success of the companies as they accepted concessions in recent years. The UAW expects to give no further concessions.

UAW workers at Ford also have refused to match concessions granted by workers at GM and Chrysler. They rejected further cuts in a lopsided vote in the fall of 2009.

The UAW does not have the right to strike GM or Chrysler for the 2011 contract, leaving much of the focus on Ford.