Big 3, UAW explore profit sharing

December 8, 2010

Big 3, UAW explore profit sharing

Changes could reward workers after recent concessions

Bloomberg News

General Motors Co., Ford Motor Co. and Chrysler Group LLC, in advance of next year’s labor contract negotiations, are exploring with the United Auto Workers changes that could give workers a bigger piece of growing profits.

“We want to find the best possible bang for all of the employees, across the board, not a program that would pay some and not the others,” said General Holiefield, head of the UAW’s Chrysler department under President Bob King.

While formal negotiations haven’t begun, union leaders and executives from the automakers have broached profit-sharing changes, said two people familiar with the efforts. High-level discussions began months ago because it was deemed a significant issue that would require more time, said one of the people, who asked not to be identified because the talks were private.

All of the companies have been “hinting” at profit-sharing changes, Holiefield said yesterday in an interview.

It was “not just within Chrysler but the Big Three,” he said. “Bob King has got to get his arms around it.”

The union made mid-contract concessions last year, such as giving up full pay for idled workers, before the bankruptcies of Chrysler LLC and General Motors Corp.

The UAW’s four-year labor agreements with three automakers expire Sept. 14, 2011, the union has said. Formal negotiations typically begin several weeks before the contracts expire.

GM, Ford and Chrysler go into next year’s negotiations seeking a deal that keeps the companies competitive with foreign rivals, while the union aims to ensure workers share in the upswing after making sacrifices, labor experts said.

“The companies want to try and reward the hourly workforce without bringing back some of the cost items that made them noncompetitive,” said Art Schwartz, a former GM negotiator now doing labor management consulting based in Ann Arbor.

Chris Lee, a GM spokesman, and Shawn Morgan, a Chrysler spokeswoman, declined to comment.

“At this point, it’s premature to talk about 2011 negotiations seeing that they are several months away,” John Stoll, a Ford spokesman, said in an interview. “We believe all stakeholders should benefit from the company’s success.”

Ford, the world’s most profitable automaker, in October reported a third-quarter net income of $1.69 billion and GM, which went public again in November, reported a third-quarter net income of $2.16 billion.

While Chrysler reported a net loss of $453 million through three quarters, the Auburn Hills-based automaker’s results have been improving and the company has said it will be profitable in 2011.

The UAW is probably having similar conversations with the three automakers, said Arthur Wheaton, a Cornell University labor expert.

“It’s been the historical trend,” said Wheaton, who is based in Buffalo, N.Y.

“For basically the last 60 years it’s been pattern bargaining, so whatever one gets, the others follow along. There have been some minor exceptions.”

Companies like profit sharing because it’s a cost only if they’re making money, Wheaton said.

“The current profit-sharing formula has been pretty ineffective,” he said in a telephone interview.

Payments have been small and sporadic because the companies haven’t been consistently profitable. “Part of it’s also the formula and how they base it,” Wheaton said.


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