Ford, PSA Land New Labor Deals in Spain

MADRID – Ford and PSA Peugeot Citroen seal new agreements with workers at key factories here that cut starting wages in return for the promise of new jobs.

Ford’s deal covers 2014-2018 at its Almussafes plant near Valencia and calls for a significant €2,000 ($2,600) reduction in annual salary and work-rule changes. It was approved by two of the plant’s unions, the UGT and CCOO, and rejected by two others, the CGT and STM.

Some 68.6% of the 4,179 workers who voted – Almussafes has a total of 5,700 employees – backed the contract, which will create 1,000 new jobs and reinstate a third shift in mid-2014. That shift was cut at the beginning of the economic crisis in 2009.

Sources from the unions are confident the new-jobs figure could reach 2,000, depending on demand for the Kuga, C-Max and Transit Connect models assembled at the plant. But analysts are skeptical Ford will be able to meet the contract’s provisions due to the sharp downturn in the European car market.

Under the deal, worker salaries will be frozen in 2014 and increase 0.5% over the cost-of-living index in 2015-2017. Pay will rise 1% over the cost of living in 2018.

New workers will be paid a lower scale, with starting salaries of €20,750 ($27,100) for the first two years, €22,900 ($29,900) for the third and fourth years and €25,000 ($32,600) for the fifth year, matching the current entry-level salary.

Ford has been in negotiations with the unions since December 2012.

PSA’s new agreements at its Madrid and Vigo plants were approved by 88% of employees and limit salary increases to 1.5% for 2013 and 2014.

Currently, the PSA Madrid plant is running an 80-day idling program for 2013 and 2014.

As of this month, Madrid is assembling 40 vehicles per hour on its first shift and 20 hourly on the second shift. Company sources say the rate could be cut to 32 and 16 units per hour, respectively, in May.

Workers at PSA’s critical Vigo operation have agreed to a lower-tier salary for entry-level employees, set at a maximum of €17,000 ($22,200) annually.

Plant Manager Juan A. Munoz recently said Vigo could add 1,000 jobs this year due to launches of the electric versions of the Berlingo and Partner LCV and the new Peugeot 301 and Citroen C-Elysee.

The slump in the European market could make it difficult for PSA to meet its projections as well.