DETROIT — Ford is adding 1,550 jobs at four plants to meet demand for the new 2015 F-150 pickup, and the influx of new entry-level workers will bump up the wages of as many as 500 lower-paid employees already on the automaker’s payroll.
The reason for all the hiring and pay bumps: Demand is high for the 2015 F-150, which is still ramping up to full production. Some customers are waiting months for their orders to be filled.
“It is important to get as many of the new vehicles on the road as possible,” said Michael Robinet, managing director of IHS Automotive Consulting. “Ford needs to pull out all the stops. The vehicles at the beginning of the cycle are the most profitable. They have customers waiting for them and are highly contented.”
The 1,550 jobs are at three plants in Michigan and one in Kansas City, Mo.
Each new hire boosts the number of employees who earn a lower wage. Under the Ford-United Automobile Workers collective agreement, Ford is allowed to hire 20 percent of its workforce at a second-tier wage, with exemptions for in-sourced work, temporary workers and those employed at two plants.
Ford exceeded the cap this week and 55 employees hired in 2011 will see their hourly rate increase from $19.28 to $28.50. With each new hire, the person at the top of the lower-tier seniority list will bump up to the senior pay scale. Approximately 300 to 500 workers will get the upgrade by the end of March, said Bill Dirksen, Ford vice president of labor affairs. The majority of these employees work at Kansas City, Mo., Chicago and Louisville assembly plants.
It shows how important the entry-level agreement is to us,” Dirksen said. “It allowed us to invest in U.S. plants and hire people.”
Ford stock was trading up about 20 cents this morning on the news, at $15.84.
With a new aluminum body and a raft of new features and technologies, the 2015 F-150 is a complicated truck to build and demand was high before it even went on sale in December. More than 200,000 would-be customers used an online tool to configure and price a truck.
The new trucks are being sold within 12 days of arriving on dealer lots and the top-of-the-line versions: the Platinum and King Ranch models, are selling in 10 days or less. Normally a vehicle spends about 70 days on the lot before being sold.
Ford sold 54,370 F-Series in January – up almost 17 percent from a year ago – the strongest January since 2004, which was a record year for the truck. The bulk of the sales were the F-150 and 18 percent were the new 2015 model, said Erich Merkle, Ford’s U.S. sales analyst.
“As a result of how well we’re doing, we need to make more trucks,” said Dirksen,
Complicated and high-end vehicles require more workers, Robinet said. Adding employees also makes it easier for an automaker to speed up the assembly line to make more vehicles per hour.
To strike while the iron is hot, Ford is training and adding workers now, Dirksen said. The new hires have all been identified and all will be in place by the end of March.
-900 new jobs are being added at the Kansas City, Mo., assembly plant that has been retooled and is now gearing up to make the new 2015 F-150. With the Dearborn Truck Plant in Michigan, Ford has the capacity to make more than 700,000 trucks a year for sale in 90 markets.
-500 new jobs at the Dearborn Stamping and Dearborn Diversified plants, both in Michigan.
-150 new jobs at Sterling Axle in Michigan.
When Ford signed the current labor agreement in September 2011, the company promised to hire 12,000 hourly employees over the course of the four-year contract. More than 15,000 have been hired, Dirksen said, including 5,000 last year and potentially more this year. Ford has invested more than $6.2 billion in U.S. plants.
“This is very exciting news and these additional jobs will have an impact in communities all across our nation,” said Jimmy Settles, UAW vice president, in a statement. “This also represents a major milestone for employees hired under the entry-level agreement, as many will now begin to convert to ‘new traditional’ wage status, as negotiated in the 2011 collective bargaining agreement.”
Two-tier wages will be a key issue in labor talks this year. Dirksen said Ford will work with the UAW to come up with a solution “that works for both of us and is fair and competitive in the marketplace.”
About 43 percent of Chrysler workers receive a lower wage and Fiat Chrysler Automobiles CEO Sergio Marchionne has said he does not like paying different wages for the same work in the same plant. General Motors has about 20 percent of the lower-wage workers in its U.S. plants.
Dirksen said Ford did not know if it would exceed its low wage earner cap during this contract – the automaker did not know it would hire 3,000 more hourly workers than originally forecast.
Automakers are always making calculated guesses on how well a vehicle will sell to determine the level of production and number of workers needed. There are dangers in overestimating: a glut forces automakers to use incentives to sell off extra inventory and poses the risk of having to shut down plants and lay off workers. Underestimating demand is the lesser of the two evils but there is always the danger that a shortage could prompt an impatient buyer to turn to the competition.
Japanese automakers are known for erring on the conservative side and it is not unusual for Toyota, for example, to announce an additional shift right after a new plant starts production.
Detroit’s automakers historically have been more aggressive with their production forecasts at launch, Robinet said, and tend to have longer periods of downtime to prepare for new models while many Japanese competitors switch over on the fly without losing production.
Ford lost about 90,000 units of production in the 13 weeks of downtime to retool the two plants to be able to make the new truck with aluminum. And the 2015 F-150 has a number of new features such as a 360-degree camera to better park and navigate tight spaces; integrated loading ramps and cargo management system and a remote tailgate.
Now that the truck has been launched, “we sell every truck we can build, and we plan to build more,” said Joe Hinrichs, executive vice president and president, the Americas.
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