With the announcement last Monday that UAW members had approved the use of work stoppages against all three auto companies, the UAW named General Motors (GM) as its first negotiations party. Being the lead company puts GM in first seat to be the one to set the pattern and possibly set their own terms before the other Detroit Three auto contracts are settled.
Some were expecting Ford Motor Company because it has had a better relationship with the UAW in past negotiations. But to many General Motors makes the most sense. It has made the most profits of the Detroit Three in past years and more concerning to the UAW, has closed domestic manufacturing plants, including its Hamtramck, Michigan plant. And because it is closing plants it will not be as sympathetic a party to the public in general, and UAW members, thereby giving the UAW a bit of a “high ground” to leverage during negotiations.
For its part General Motors stated it looked forward to constructive talks with the UAW. Their initially stated goal is more flexibility in its contract, but as noted above it needs to keep its plant re-structuring going to continue reducing its costs. Right now, GM has the highest per worker cost per hour in the auto industry estimated above $63/hr. Ford is just below that and Chrysler (FCA) is in the mid-$50 range. This average worker cost per hour includes the base wage and all benefit costs. Compared to the Detroit Three’s international competitors all domestic autos are above the hourly costs of the off-shore auto manufacturers (Toyota, Nissan, Hyundai, etc.) – also known as the transplant autos.
General Motors points out it has invested $23 billion in its U.S. plants in the last ten years. And according to GM its investments amount to a quarter of all U.S. manufacturing investment since 2010.
The current contracts expire September 14th, but typically negotiations continue past the contract expiration date. The three domestic auto contracts cover over 150,000 workers. The UAW is currently reported to have a $767 million-dollar strike fund. Workers on strike would receive $250/week in strike pay. This weekly rate was increased 25% by the UAW.
In addition to the overriding plant closing concern, the UAW would like to see all or some of the following:
- Pension benefits to increase
- The elimination of two-tier wages. It takes a younger worker up to eight years to “grow into” the $31/hr. base wage rate that a fully eligible worker earns per hour.
- A solution to the lesser known concern about the growing number of temporary workers, who also do not receive the same pay and benefits the regular UAW workers are entitled to. The number of temporary workers at GM is estimated to be about 10% of the hourly workforce currently.
ASE Will Host 2019 Auto Talks Briefing
As ASE has done for close to 50 years, after the completion of every national auto industry contract negotiations, it will host a briefing by auto industry labor representatives to provide key information on the contract settlement terms. Please keep your eyes on EPTW for program announcements as the 2019 auto talks proceed.
Sources: General Motors to lead contentious negotiations with UAW Union Michael Wayland CNBC, UAW authorizes strike; union targets General Motors first in contract talks Detroit Free Press (9/3/3019), General Motors : UAW, GM Open 2019 Contract Talks (7/16/2019) Marketscreener Wards Auto UAW Ready for a Fight in 2019 Contract Talks Joseph Szczesny (3/20/2019)