Top officials from the UAW 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 puts 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 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 automaker’s 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.”

Today’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.

One of the issues hanging over the discussions is the rapidly increasing investment by all three companies in Mexico to take advantage of lower labor rates and Mexico’s free trade deals with many other countries.

Just last week Ford announced it will move production of the Ford Focus and C-Max out of the country in 2018 and cease production at its Wayne Assembly Plant.

Williams declined to comment directly when asked about Ford’s decision, but he did say, “It’s always concerning to me when any corporation invests outside of the U.S.”

Barra was asked if GM can still produce a small car profitably in the U.S.

“We have some very important small cars such as the Chevrolet Sonic and others built at the Lake Orion plant. We have no plans to change that,” Barra said. “We don’t talk about individual car line profitability.”

Williams also noted that this year will be the first year since 2007 that the UAW has the right to strike, but said that changes very little about the way the union will approach negotiations.

In 2009, when GM and Chrysler went through Chapter 11 bankruptcies, the union agreed to give up its right to strike until this year.

“To me a strike is failure,” Williams said. “I am not afraid of confrontation, but I don’t want one and our member’s don’t want one.”

Here are seven crucial points that will help frame this year’s talks:

• For the first time since 2007, the UAW has the right to strike. In 2009, as a condition of the bailouts of Chrysler and GM, the union agreed to submit to binding arbitration if negotiations failed with any of the three companies. That provision, which all parties extended i in 2011, expires at Sept. 14.

• The companies would rather reward veteran UAW workers through profit sharing and lump-sum bonuses for achieving quality and productivity goals before raising base wages.

• The union wants to close the gap between members hired before and after 2007. But the latter group wants a raise in their base wage for the first time in eight years.

• Asian and European automakers produce 46% of the new vehicles made in the U.S. Their workers (nearly all of whom don’t belong to a union) are nearly one-third (32%) of all auto production workers (assembly, stamping and powertrain).

• These negotiations come as a national debate over income inequality and declining wages for most manufacturing workers takes center stage. The UAW’s younger members have enjoyed modest raises since 2011, their more experienced coworkers have not. A National Employment Law Project study released in November 2014 showed real wages for manufacturing workers fell 4.4% from 2003 to 2013.

• This will be the UAW’s first contract negotiated since Michigan Gov. Rick Snyder signed the state’s right-to-work legislation. Indiana passed similar legislation in 2012. UAW members in those states who are dissatisfied with the agreements their leaders negotiate can opt out of paying union dues next year.

• Finally, there is Fiat Chrysler’s interest in selling or merging with another company, likely an automaker, to spread the cost of capital and technology required to survive.

What the UAW wants

1. Eventually to erase the gap between Tier 1 and Tier 2 workers’ wages.

2. Better medical coverage for Tier 2 workers.

3. An opportunity to compete against lower-paid Mexican workers for companies’ future investments.

4. Commitments to train more members for the technical skills future manufacturing will require.

What the automakers want

1. To preserve the cost advantage of the Tier 2 wage structure.

2. To continue tying workers’ pay to incentives such as profit sharing, quality and productivity.

3. Reduce the rise in health care costs.

4. Flexibility to shift workers among various types of jobs.