Nov. 3 (Bloomberg) -- Ford Motor Co. and the union representing its U.S. factory workers agreed on a new contract today, wrapping up a third labor deal for Detroit's automakers after more than three months of negotiations.

Ford and the United Auto Workers announced the four-year agreement covering 54,000 employees after bargaining for more than 36 straight hours. Ford said its deal will create an independent trust to manage retiree health care, the centerpiece of accords at General Motors Corp. and Chrysler LLC.

The settlement, which must be approved by union members at Ford to take effect, means the second-largest U.S. automaker will avoid the strikes the union called before agreeing to terms with GM and Chrysler.

``My analysis is the UAW thought Ford was probably in too fragile condition to do a strike,'' said Gary Chaison, a labor professor at Clark University in Worcester, Massachusetts.

Chief Executive Officer Alan Mulally sought a contract that would reduce labor costs for Dearborn, Michigan-based Ford, which had a record loss of $12.6 billion in 2006. The Detroit- based union bargained with a company in the midst of a restructuring plan that included shutting down factories with UAW-represented employees.

Selling the Agreement

``Our goals for this contract were to win new product and investment, to enhance job security and protect seniority -- and we made progress in all these areas,'' said UAW Vice President Bob King, who led the bargaining at Ford, in a statement.

Details were withheld until a ratification vote by Ford's union members. About 66 percent of GM's production workers and 56 percent of Chrysler's approved their contracts.

At Ford, ``I think the UAW is going to have a busy time trying to sell an agreement to members,'' Chaison said. The ratification vote, he said, may be ``the more difficult part.''

The agreement includes provisions for Ford to reduce the number of plants it will close, the Detroit Free Press reported on its Web site. Tom Hoyt, a Ford spokesman, declined to comment. Roger Kerson, a UAW spokesman, didn't immediately return a telephone message seeking comment.

Billions in Obligations

The company last year announced plans to close 16 of 41 factories in North America. Ford has only identified 10 of the factories so far, with most to be shut down by the end of 2008.

The agreement reached today will prevent closing six plants at least temporarily, the Free Press reported, citing a person directly involved in bargaining. Ford would have flexibility to idle the plants if necessary, the Free Press reported.

The GM and Chrysler health-care funds will take billions of dollars of obligations off the companies' books and help close a compensation gap with Toyota Motor Corp. The Japanese automaker has passed Ford and Chrysler in U.S. sales and is threatening to overtake GM as No. 1 in the world.

GM agreed to provide $29.9 billion in funding and Chrysler $8.8 billion. The contracts also provided guarantees of future work at UAW-represented plants, with some of GM's commitments extending beyond the 2011 expiration date.

Shares

Ford gained 19 percent this year through yesterday on expectation that the company and the union would create a retiree health-care fund. The shares rose 45 cents, or 5.3 percent, to $8.95 in New York Stock Exchange composite trading yesterday. GM advanced 12 percent this year before its settlement.

GM reached its accord on Sept. 26 after a two-day strike. Chrysler, the U.S. automaker owned by private-equity firm Cerberus Capital Management LP, came to an agreement with the union following a six-hour walkout on Oct. 10.

Chrysler, announced plans on Nov. 1 to almost double planned job cuts, five days after its workers ratified their UAW contract.

The company, which lost $680 million last year, will fire as many as 12,100 more employees through 2008, after saying in February that it would eliminate 13,000 positions over three years.

Possible Cuts

Ford may make additional job and spending cuts because of declining U.S. sales, three people familiar with the strategy said yesterday.

The company may pare additional hourly and salaried positions on top of 40,000 announced last year, two of the people said. Some departments may see budget reductions of as much as 25 percent, the two people said.

Deeper cuts are ``justified on the basis that the market is soft right now,'' said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan. Ford's U.S. sales are down 13 percent this year, and the industry is headed to its lowest total since 1998.

Ford's Hoyt declined to comment on potential cuts.

Ford's inability to stop a 12-year slide in U.S. market share is threatening Mulally's plan to restore profit in 2009. Ford last year borrowed $23.4 billion to pay for cutting jobs and closing plants while investing in new cars and trucks to win back buyers.

The three automakers, all based in metropolitan Detroit, began negotiations in late July to replace contracts that were to expire Sept. 14. In June, Ford said it had 58,500 UAW employees. Its workforce has been shrinking because of buyouts.

To contact the reporters on this story: Bill Koenig in Southfield, Michigan, at wkoenig@bloomberg.net ; John Lippert in Southfield, Michigan, at jlippert@bloomberg.net