Labor peace — and workers foot the bill

Labor peace — and workers foot the bill
David Barkholz
Automotive News | October 10, 2011 – 12:01 am EST

The Detroit 3’s price for labor peace with the UAW was modest. Very modest.

The new four-year agreement at General Motors and the tentative one at Ford Motor Co. raises the automakers’ hourly labor costs just 1 percent annually over the course of the contracts, as the companies replace higher-paid experienced and skilled workers with entry-level employees.

GM officials recently noted that the new UAW accord will cost the carmaker a microscopic $20 million in additional expense in 2012 and 2013, not even a rounding error in a company the size of GM.

We just witnessed GM and Ford negotiators skillfully using the offer of new jobs to get UAW President Bob King to accept mediocre contracts for his current members.

GM promised 6,400 new and retained jobs over the four years. Ford committed to 5,750 new jobs.

Certainly, the jobs are nice additions in a tough economy. Those jobs mean crucial new members to a union whose ranks have been decimated over the past decade.

Also, King wants to organize the transplant automakers. He had to be reasonable — and show a collaborative spirit — to have a chance at those factories in right-to-work states. For the record, King denies pulling punches in these negotiations to bolster his transplant campaign. Many in the rank and file don’t believe him.

At GM, the 49,000 UAW hourly workers came away with a signing, quality and inflation bonus amounting to $9,000. That translates roughly to an annual increase of about 4 percent, assuming about $7,000 a year in overtime.

While that’s decent money in the current economy, they would rather have had a wage increase or cost-of-living allowances so the increase would be compounded. Plus, the workers since 2006 have made total pay concessions of $7,000 to $30,000.

A new profit-sharing formula at GM, touted by King, is marginally better for union members. The $3.7 billion in GM profits earned last year yielded a profit-sharing payment to hourly workers of $3,400. Under the new plan, that profit would yield a $3,500 profit-sharing check.

The industry will soon see whether King’s partnership approach to labor negotiations helps persuade transplant workers to join the union.

For now, though, GM and Ford firmed up their competitive positions in the new contracts at the expense of hourly workers.


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