The Canadian Auto Workers (CAW) union at
Ford Motor Co.
) has voted in favor of the four-year labor agreement with the
company. The union stated that 82% of its Ford members accepted the
deal. However, it did not reveal how many of its 4,500 workers at
Ford cast ballots.
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The CAW union also reached a tentative agreement with
General Motors Company
) last week. The ratification meetings for that agreement will
begin on September 26. The wages would take 10 years instead of 6
years to reach the highest level.
Under the Ford and GM agreements, workers will be paid 60% (instead
of 70% previously) of the highest hourly wage rate of C$33.89
(US$34.74), which means $20.33. They also include lump-sum bonuses
for workers but Ford suspended the cost-of-living adjustment bonus
for the first three years.
Ford said the deal would create 600 jobs in Canada and help the
company save costs by paying lower hourly wages to new hires. The
CAW union is yet to reach an agreement with Chrysler, controlled by
). Chrysler operates the largest facility in Canada.
According to the Detroit automakers, Canada is considered to be the
most expensive country in the world for manufacturing cars. The CAW
union represents about 21,000 workers in Canada and contributes 16%
of vehicle production in North America.
Ford, a Zacks #3 Rank (Hold) stock, posted a 39% fall in profits of
$1.20 billion or 30 cents per share in the second quarter of the
year from $1.98 billion or 49 cents in the corresponding quarter of
2011 due to lower operating results in all the regions except North
America. However, the company's profits were higher than the Zacks
Consensus Estimate of 28 cents per share.
Revenues in the quarter dipped 6% to $33.3 billion, due to the same
factors mentioned above. However, it exceeded the Zacks Consensus
Estimate of $32.0 billion. In the first half of the year, Ford's
U.S. total market share was 15.4% in the U.S. and 8.1% in Europe.
For 2012, Ford continues to expect industry volume in the range of
14.5 million-15.0 million vehicles for the U.S. and about 14
million units for the 19 European markets covered by the automaker.
Ford anticipates market share in the U.S. and Europe to be lower
than 16.5% and 8.3%, respectively in 2011. It also expects the
overall pre-tax operating profit to be lower than 2011 compared
with the prior guidance of tallying. Operating margin in the
Automotive segment is anticipated to be equal or lower rather then
the prior guidance of improve over 5.4% in 2011.
Ford reiterated its guidance of Automotive structural costs to
increase by less than $2 billion in 2012 in order to support higher
volumes, new product launches and global growth plans. The
automaker now expects capital expenditures of $5 billion compared
with the prior guidance of $5.5 billion-$6.0 billion in 2012. It
expects to meet challenges in Europe and South America by executing
its One Ford plan.