DETROIT (AP) - United Auto Workers President Ron Gettelfinger urged union members to vote for contract concessions to Ford Motor Co., saying the automaker can't survive in the long term without major restructuring.
Gettelfinger said in a letter to 42,000 hourly Ford workers that the company lost $14.6 billion last year and is burning through $1 billion per month to stay in business because revenue has dropped so dramatically.
He recommends that members vote for concessions and points out that the union was able to preserve base pay, keep current health benefits and pensions and prevent further plant closures.
But the union has also agreed to give up cost of living pay raises and cash bonuses, and the company will offer another round of buyout and early retirement incentives to shed more workers.
Ford shares rose 4 cents to $2.04 in morning trading Wednesday.
On Tuesday, local union leaders were told that Ford would make buyout or early retirement offers to all 42,000 U.S. hourly workers. The union also agreed to take as equity 50 percent of the payments that Ford is required to make into a union-run trust fund that will take over retiree health care expenses starting next year.
In addition, the company's top two executives, Chief Executive Alan Mulally and Executive Chairman Bill Ford Jr., will take 30 percent pay cuts.
Ford has used up $21 billion of its cash reserves last year, Gettelfinger said in the letter.
"The company cannot continue to sustain this level of losses and stay in business," he wrote.
Ford mortgaged all its assets to borrow roughly $25 billion and has been able to avoid taking government loans, unlike its U.S. competitors, Chrysler LLC and General Motors Corp.,
With U.S. auto sales running at an annual rate as low as 9 million to 10 million units, down from 16 million or 17 million in past years, "no auto company, including the transplants, can continue operations without significant modifications," he wrote.
(Copyright 2009 by The Associated Press. All Rights Reserved.)