November 8, 2012 / 7:38 PM / 8 years ago

Entry-level wages, higher output cut Ford costs

WAYNE, Michigan (Reuters) - Ford Motor Co (F.N) has been able to lower its manufacturing costs this year by hiring more entry-level workers and boosting its capacity utilization in North America to 114 percent.

So far this year, the second-largest U.S. automaker has hired 4,800 entry-level workers, who start at $15.78 an hour. In all, Ford has hired 5,200 workers this year.

“Our manufacturing costs have gone down this year one is capacity utilization and the other is entry level,” said Jim Tetreault, head of manufacturing in North America. “There’s no question, those two things have lowered our costs this year.”

Entry-level workers make about $12 less than veteran workers under a two-tier wage system enshrined in the 2007 contract between the United Auto Workers and the three U.S. automakers.

Workers can earn $19.28 an hour after two years. Traditional unskilled UAW workers at Ford earn an average of just over $28.

At the Chicago Assembly Plant, for example, Ford new workers are, on average, 25 years old, “lower than we’ve ever hired in the past,” Tetreault said. In general, many of them have never worked in a factory before and must be trained on all aspects of the job, including on how to hold a tool that screw in bolts.

“We have to teach them what a quality job is,” he said.

Chicago Assembly is one five Ford plants operating on a three-shift schedule. Ford’s other North American plants are on two shifts with many of them also including overtime.

Based on a two-shift, eight-hour schedule, Ford’s capacity utilization is about 114 percent, higher that at any point in Tetreault’s more than 30 years at Ford, he said.

Reporting By Deepa Seetharaman;editing by Sofina Mirza-Reid

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