DETROIT TheStreet) -- Ford ( F) said its new contract with the United Auto Workers will increase its annual costs by less than 1%, and that the increase will be offset by new operating efficiencies. "We expect the cost will be more than offset by increase operating flexibility and continued commitment to focus on ongoing efficiency agreements," Mark Fields, Ford president of the Americas, said Thursday on a conference call with analysts and reporters. In mid-morning trading, Ford shares were up 10 cents to $11.68. General Motors ( GM) were down 4 cents to $23.05.
The biggest impact from the deal is likely to be felt in the current year, when Ford will spend $280 million on lump sum payments to most of its 41,000 hourly employees. Also this year, the company faces a $10 million increase in compensation benefit costs and an undetermined impact from buyouts. Looking ahead, the cost of lump sum payments in 2012 falls to $80 million, with an additional $10 million cost for changes in compensation and benefits and little change in buyout costs. In 2013, the cost of lump sum payouts is projected to be $80 million, with lower buyout costs. Meanwhile, in each of the three years, Ford sees an undefined benefit from "alternative work schedules, additional production shifts and improved (plant) utilization." The
contract was approved in voting that ended Wednesday. This year, Ford will pay most of its 41,000 hourly workers a $6,000 signing bonus, $3,750 in profit sharing and a $250 competitive bonus, the UAW has said. In future years, Ford will make annual $1,500 inflation-protection lump sum payments to UAW workers. Ford also said it would add 12,000 hourly workers annually in the U.S. Some will be hired at entry level wages that will rise from $15.78 hourly to $19.28 hourly during the life of the contract, while others will be workers who are called back. By the end of the contract, new hires will account for about 8% of the work force. -- Written by Ted Reed in Charlotte, N.C. >To contact the writer of this article, click here: Ted Reed >To follow the writer on Twitter, go to http://twitter.com/tedreednc. >To submit a news tip, send an email to: firstname.lastname@example.org.