Analysts: GM likely UAW target, small strike probable – The Detroit News
General Motors Co. likely will be selected as the lead for UAW negotiations as contracts expire with the Detroit’s Big Three next week, according to Buckingham Research Group auto analysts, who also believe there is a high probability of a small strike.
“We view GM as a probable target, given new CEO Mary Barra is likely more labor friendly vs. Mark Fields and Sergio Marchionne,” analysts from the research firm said in a presentation to investors Wednesday. Barra’s late father Ray Makela worked as a die maker for GM’s Pontiac Motor Division for 39 years and was a longtime UAW member.
Usually, the UAW selects and announces a target company by Labor Day. That did not happen this year, with UAW President Dennis Williams on Monday indicating he was negotiating with all three. “Have I picked a target? Yes,” Williams said. “General Motors … Ford … and Chrysler.”
Williams is expected to make a decision on a lead company by the Monday deadline. GM declined to comment Wednesday.
Buckingham Research says Fiat Chrysler Automobiles NV is the least likely to be selected as a target, given it has the highest percentage of tier-two workers (near 45 percent), lowest average hourly wage rate and lowest North American margins of the three companies.
The UAW typically selects a lead company to first finalize a contract and the other two automakers have their contracts extended. The two companies’ new contracts are based on the outcome of the first agreement.
Buckingham believes there’s a strong chance one of the companies this year will go on strike after the contract expires.
“We believe there is greater than a 50 percent chance of a punitive strike that is short term in nature,” the Buckingham Research report said.
Buckingham says a strike is most likely to occur at a truck plant, given the high profitability trucks and SUVs bring the automakers. It suggests large truck and SUV plants such as GM’s Fort Wayne Assembly Plant in Indiana and Arlington Assembly Plant in Texas, or Ford’s Louisville Assembly in Kentucky or its Kentucky Truck Assembly Plant — also in Louisville — may be most vulnerable.
Last September, the UAW staged a one-day strike against Lear Corp. at an Indiana seating plant. The UAW has a sizable strike fund of about $600 million that could fund a four-week work strike, the analysts say.
GM and FCA workers have the ability to strike for the first time since 2007. But the research firm said certain factors may discourage walkouts: the UAW’s efforts to organize plants in the South; the threat of more production and jobs moving to Mexico; and that Williams appears “less confrontational” than past presidents such as Stephen Yokich and Ron Gettelfinger.
The UAW is seeking a wage increase for its legacy workers; wants to eliminate the tier-two system in which newer workers are paid a lower hourly rate; seeks better medical coverage for members; more jobs and investment in the U.S.; and more technical training for employees. The automakers, however, want to preserve the current wage structure and continue with bonuses and profit-sharing instead of wage increases; reduce health care costs; want flexibility to shift workers into various types of job classifications and seek less restrictive work rules; and to reduce legacy pension liabilities, according to Buckingham Research.
It says potentially the new contracts will close or eliminate the wage gap between tier-one and tier-two workers, the companies will create new job categories and varying rates of pay instead of having tier-two wages by adding a new category for subassembly workers with wages maxing out around $25 an hour. Other possible outcomes could include creation of a health care pool to help reduce health care costs for the automakers, crafting a policy restricting carmakers from expanding or adding jobs in Mexico, and offloading pension obligations to an insurance company.
The firm expects the UAW will argue against profit-sharing in favor of cost of living wage adjustments based on annual wage increases given the near peak of U.S. auto sales at about 17 million this year.
Analysts and other labor experts expect both sides will compromise on some of issues.