Talks continue as UAW-GM midnight deadline approaches – Detroit Free Press
Two big questions are on the minds of 52,700 UAW-General Motors workers today – will they go on strike by day’s end? And if an agreement is reached tonight, what will their pay and benefits look like for the next four years?
Talks continue today after the union on Saturday set a deadline of Sunday at 11:59 p.m. to reach a new tentative labor agreement. After that the union could call a strike, extend the current agreement or shift its attention to Ford.
Most analysts say a strike is unlikely but any disruptions in production would be felt quickly in today’s hot and competitive market. Sales of new cars and light trucks are expected to reach 17.4 million in 2015, tying the industry’s previous peak recorded in 2000.
The last GM strike was in 2007 and only lasted two days. In 1998, a strike at some GM plants in Flint lasted 54 days, closed most North American plants and cost the company about $2 billion.
A strike also hurts workers who replace a paycheck with a weekly payment of a few hundred dollars from the union’s $600 million strike fund.
While the agreement the UAW reaches with GM is expected to follow the same pattern as the FCA deal there also are likely to be key differences.
UAW President Dennis Williams has said he expects to win larger gains for members at GM and Ford than he secured for workers at Fiat Chrysler Automobiles who ratified their agreement last week.
GM is financially stronger than FCA, having earned a record $3.3-billion North American pre-tax profit for the three months ended Sept. 30. FCA only earned a pre-tax profit of $2.1 in North America over the first half of this year and will report its third quarter earnings on Wednesday. For even more perspective: GM’s third-quarter North American profit is larger than FCA expects for its full-year global profit, which the company projects will be between $1.1 billion and $1.32 billion.
Workers are hoping for a larger signing bonus than the $4,000 FCA offered workers with more than eight years of seniority. There could be other lump sums based on company performance targets that differ at GM from FCA.
“I am hoping to get a pay rate, or a compensation package, that recognizes all of the sacrifices that have been made from back in 2007 until now, and that recognizes the fact that these companies are now enormously profitable,” said Darin Gilley, 52, who works at GM’s plant in Wentzville, Mo.
Gilley, who argues workers don’t make as much money as the general public often thinks, has worked for the automaker for four years. He also will be working Sunday on the night shift when the deadline approaches.
“So, if we are told to walk, I will be walking,” Gilley said.
But workers’ high expectations will be balanced against the following factors:
- The UAW, through the trust which manages health care benefits for more than 700,000 union retirees, is GM’s largest investor with 140.15 million shares, according to a regulatory filing. That trust, also known as the union’s Voluntary Employee Beneficiary Association (VEBA) also reported earlier this month that it was $20.7 billion underfunded at the end of 2014. The UAW doesn’t want to jeopardize the value of its stake in GM.
- GM is making a large enough profit in the U.S., Canada and Mexico to more than offset losses in Europe and South America, as well as slowing growth in China. But it also is investing in new mobility ventures, including ride-sharing and fully-autonomous cars. Those investments likely won’t generate the robust profit margins as $40,000 to $60,000 pickup trucks and luxury cars.
- Veteran workers complain about not having a raise in 10 years, but they likely will receive 2015 profit-sharing next spring that almost surely will exceed last spring’s $9,000 pre-tax payout for full-time UAW workers. The current contract allows a maximum profit-sharing payout of $12,000.
- Pressure won’t ease on GM and its competitors to shift production of small cars to Mexico and other lower labor-cost countries because Americans aren’t buying enough of them to make them profitably in the U.S.
“There are ways they can structure an agreement that delivers more for GM workers than the FCA agreement,” said Kristin Dziczek, director of the labor and industry group at the Center for Automotive Research in Ann Arbor. “They may get a larger singing bonus, and they may get inflation protection bonuses that FCA workers did not get.”
In 2011, GM workers received a $5,000 signing bonus compared with a $3,500 signing bonus at FCA. Workers at GM also received three $1,000 lump sum “inflation protection bonuses,” in the 2011 contract. FCA workers did not get inflation protection bonuses in 2011 or in the contract ratified last week.
What’s unlikely to be different, Dziczek said, is the eight-year pathway to a top wage for entry level workers that essentially eliminates the much-hated two-tier wage structure established in 2007 when the Detroit Three were in a financial tailspin.
The contract ratified last week by FCA workers sets a new wage range for workers hired after 2007 that starts at $17 per hour and tops out at $29 per hour instead of a four-year wage progression that starts at $15.78 per hour and tops out at $19.28 per hour after four years. Under the new wage progression all FCA workers will get to at least $22.50 in four years but it could take eight years to get to the top wage.
“I think everything is going to be pretty much the same as they negotiated at Chrysler,” said Anthony Kotlarczyk, a pipefitter at GM’s Detroit-Hamtramck plant. “GM’s going to say that times are good now, but when they turn we don’t want to take a hit like we did in the last recession.”
On Sunday, the UAW posted a primer on the history of pattern bargaining which has been the union’s negotiating strategy since 1955.
“Pattern bargaining serves an important purpose: It levels the playing field so companies compete based on the quality of their products or services — not on how much they pay (or don’t pay) their workers,” the union said on its Facebook page.
Art Schwartz is a former GM negotiator. “Usually the wage rates are the same, pensions are the same,” said the labor consultant. Where companies can break pattern is one-time payments such as signing bonuses, lump sum payments and other performance payouts.
Profit sharing also differs between companies. The FCA agreement changed the formula it will use to calculate profit sharing, a move that GM and Ford might not want to follow because it is more complicated than the one it replaces.
“I’m puzzled why FCA went to a new formula which is harder to figure out,” Schwartz said.
The UAW and GM must also reach an agreement on what is likely a more difficult issue — the 25% cap GM currently has on the number of entry-level workers it can carry.
For years, entry-level workers hired at GM and Ford have looked forward to the time when they would be immediately bumped up to a higher wage. The new FCA contract eliminates the cap — a move that angered many workers and contributed to the defeat of the first contract the UAW recommended in September. FCA says a cap is not necessary if there is a path to eliminating the wage gap altogether.
Already, some GM workers are saying eight years is too long for all workers to achieve wage parity. Dziczek, however, argues that it is better to ensure that all workers get a raise and eliminating the cap is in the best interest of more workers.
“Retaining the cap in a market where sales production and employment is likely to be flat or falling over the next four years does not provide mobility for everyone to move up,” she said.
Contact Brent Snavely: 313-222-6512 or email@example.com. Follow him on Twitter @BrentSnavely.
What to look for in the GM-UAW agreement
1. Is the signing bonus larger than $4,000?
2. Is there a cap, or limit, on the percentage of Tier 2 workers GM can hire over the next four years?
3. Is there more for UAW retirees than the $1,000 voucher on a new vehicle that FCA offered?
4. Is there any change in the profit sharing formula?
5. Is there any new information about where future vehicles will be assembled?