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Latest News - March 2011

March 20, 2011
Labor showdown likely between U.S. automakers and UAW
By: Brent Snavely

DETROIT -- As the UAW prepares to head into labor talks this summer with the newly profitable Detroit automakers, several top union leaders say a showdown is brewing -- especially at Ford, which has made $9.3 billion over the past two years.

“If they don't restore everything (we) gave up, the membership is going to knock it down,” said Bill Johnson, plant chair for UAW Local 900, which represents workers at the Focus plant in Wayne, Mich. “The bonuses that were just announced are just ridiculous.”

The accumulated pay package for Ford President and CEO Alan Mulally, who is credited with rescuing Ford after arriving in 2006, is now valued at more than $300 million.

Despite the demands, Ford, like its crosstown rivals, is expected to try to hold the line on labor costs or seek to lower them to remain competitive. To do that, Ford could make future product promises and offer ratification bonuses.

“It all comes down to competitiveness in every element of our business,” said Mark Fields, Ford President of the Americas.

This week, more than 1,200 UAW delegates will meet in Detroit to plan for the upcoming talks. The current contract expires on Sept. 14.

But the clash of goals is potentially problematic. While GM and Chrysler have no-strike clauses because they took U.S. loans, Ford does not. Ford workers haven't gone on strike since 1976, but they rejected the last contract change proposed in late 2009.

Automakers' objectives

During this year's contract talks with the UAW, Detroit's automakers want to hold the line on fixed labor costs or further close the wage gap that remains with their foreign competitors operating in the U.S. -- goals that aren't likely to go over well with the union's rank-and-file.

After a decade of contracts filled with concessions to save the Detroit Three -- such as plant closures, the diversion of performance bonuses to cover health care costs, the loss of some holidays and the suspension of cost-of-living increases -- frustrated workers are eager to regain what they've lost.

They see the automakers earning billions and executives cashing in on the profits. Last year, Ford earned $6.6 billion and General Motors earned $4.7 billion. Chrysler still lost $652 million but made an operating profit and is projected to be in the black this year.

“In 2009, when we adopted some modifications, there were a number of things that were suspended. 1 / 8 Hopefully those will be back on the table and restored,” said Jeff Manning, president of UAW Local 31, which represents GM workers at the Fairfax assembly plant in Kansas.

Union objectives

UAW Vice President Jimmy Settles, who leads the union's Ford department, said product commitments and job security will be top priorities with Ford.

“Obviously people want their concessions back, but people have a lot of anxiety because they don't know what is going to happen to them,” Settles said. “There are a lot of plants still in jeopardy.”

But there are other objectives.

Many expect the union to pursue a rollback or tweak of the entry-level wage to which the UAW agreed in 2007. That so-called second-tier started new hires at $14 to $16 per hour and was hailed as a major breakthrough that would help the Detroit Three become competitive with plants operated by Asian automakers in the U.S. Between 20 percent to 30 percent of the automakers' work force was allowed to be hired at the lower tier.

Many UAW workers were against the entry-level wage structure and said it would breed dissension between new and old workers, who on average earn $28 per hour.

“I think what the UAW will try to do is try to get a pay increase for the second-tier workers,” said Arthur Schwartz, former GM labor negotiator and president of Labor and Economics Associates.

Only 1,300 of GM's 49,000 hourly workers are full-time entry-level workers. Ford hasn't hired any permanent workers at the lower tier but does employ 2,100 “long-term supplemental,” or temporary, workers hired at the lower wage.

Chrysler declined to say how many workers it has hired at the lower wage but it said it has added “a significant number” at two plants .

“Hiring people at the new entry-level wage 1 / 8 makes the overall labor cost more competitive with the transplants and is the basis of the future labor cost model,” Chrysler said in a statement.

Schwartz expects the automakers will vigorously fight any permanent wage increases, especially in the face of little to no inflation.

Instead, Schwartz believes the UAW will offer the lure of ratification bonuses and performance bonuses. But that could be a tough sell.

“I don't like these lump-sum payments,” said David Baker, a hi-lo driver at Chrysler's engine plant in Trenton, Mich. “I would much rather have a raise.”

UAW goals for 2011 contract talks

Secure product commitments at plants to ensure job security.
Restore cost-of-living adjustments.
Restore daily overtime after eight hours -- rather than weekly overtime after 40 hours.
Restore performance and Christmas bonuses.
Improve compensation for workers making the entry-level wage or eliminate the second-tier wage altogether.
Compensate retirees or improve pension plans.
Improve the profit-sharing formula.
Create more U.S. jobs at Detroit Three plants.
Hold the line on labor costs or further close the wage gap with U.S. plants operated by foreign competitors.
Change profit-sharing formula to tie it to performance goals such as quality and productivity rather than U.S. profits.
Preserve gains made in prior contracts.
Offer new products at factories, which will give some job security, in return for meeting goals.



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