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November 2, 2009

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Ford workers reject contract changes to slash labor costs

FORD Motor Co workers have overwhelmingly rejected contract changes that would have allowed the auto maker to cut labor costs, leaving Ford at a disadvantage to its Detroit rivals as it continues its struggle to return to profitability.

The United Auto Workers union had given local unions until today to complete voting. But a person briefed on the voting said on Saturday that the contract changes have been rejected by large margins. The person asked not to be named because the UAW hasn't announced the results yet.

The UAW and Ford agreed to the contract changes several weeks ago, but Ford workers needed to ratify them. Ford has 41,000 UAW workers.

Two large union locals in Kentucky and Ford's home city of Dearborn, Michigan, rejected the contract last Friday, sealing its fate. Those unions together represent 13,000 Ford workers. Exact tallies weren't available, but at least 12 UAW locals representing about 27,500 workers have vetoed the deal, many overwhelmingly. Only about four locals with 7,000 members favored the pact.

Ford sought the deal to bring its labor costs in line with Detroit rivals Chrysler Group LLC and General Motors Co, both of which won concessions from the union as they headed into bankruptcy protection earlier this year. Under pattern bargaining, the three auto makers usually match pay, benefits and other contract provisions.

But workers weren't convinced they should make more concessions, since Ford avoided bankruptcy and is considered healthier than its rivals. At least two Wall Street analysts are predicting that Ford could report a profit today when it announces third-quarter earnings.

Rocky Comito, president of UAW in Louisville, Kentucky, said last Friday that workers felt they were being asked to sacrifice more than the company's executives.

Ford CEO Alan Mulally made US$17.7 million last year.


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