Top officials from the UAW union and General Motors were all smiles Monday as they officially kicked off contract talks and promised to work together even as sharp differences percolate just beneath the surface.
This year, the union wants to win wage increases for autoworkers after years of rising sales and profits among U.S. automakers, while the manufacturers will want to hold down labor costs so they can remain competitive with Asian and German rivals.
Those opposing goals potentially put the union and the companies on a collision course despite a desire by both sides to solve their differences.
UAW President Dennis Williams noted that entry-level workers hired under the two-tier wage structure adopted in 2007 do not earn enough to be considered “middle class in the way they should be,” and reiterated the UAW’s goal to close the pay gap with those hired before 2007.
For those hired after 2007 (the Tier 2 workers), the 2011 contract lifted their hourly pay from $15.78 to $19.28. Those hired before 2007 are still making $28.50, if they work on the line, and about $33 if they are in skilled trades such as electricians, pipe fitters or carpenters.
“These negotiations will not be easy. But they are no more difficult than those we’ve had in the past,” Williams said. “We have a membership that has, because of the economy, had stagnant wages, and we plan to address that. We all plan to bridge that gap.”
Most members of both negotiating teams wore khaki pants and matching blue dress shirts with the GM and UAW logos side-by-side in a symbol of unity.
GM CEO Mary Barra struck an optimistic tone, saying she has confidence that the parties will reach a new contract that will be good for both the company and its employees.
“For long-term job security the company has to do well and we have to be able to reinvest in new products,” Barra said.
The UAW and Detroit Three have made progress in recent contract talks to lower the automakers’ overall labor costs from $78 per hour to $54 per hour for wages and benefits, according to the Center for Automotive Research. Fiat Chrysler is now equal to the German and Asian automakers’ U.S. plants ($47 an hour including wages and benefits), while General Motors and Ford are slightly higher.
“We recognize that the competition is intense and it will only get more intense, that we will face many challenges,” Barra said. “But I believe we can deliver an agreement that will benefit the business and our employees.”
Monday’s ritual handshakes will be replicated Tuesday with Fiat Chrysler and with Ford on July 23.
The four-year contract between the UAW and the automakers expires at midnight on Sept. 14.
_ _ _
What the UAW Wants
- Eventually to erase the gap between Tier 1 and Tier 2 workers’ wages.
- Better medical coverage for Tier 2 workers.
- An opportunity to compete against lower-paid Mexican workers for companies’ future investments.
- Commitments to train more members for the technical skills future manufacturing will require.
What the Automakers Want
- To preserve the cost advantage of the Tier 2 wage structure.
- To continue tying workers’ pay to incentives such as profit sharing, quality and productivity.
- To reduce the rise in health-care costs.
- Flexibility to shift workers among various types of jobs.