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GM, UAW Reach Late Night Deal; Chrysler Next?

Workers make modest but significant gains.

by on Sep.17, 2011

GM CEO Dan Akerson and UAW President Bob King shaking hands at the start of the latest round of contract talks, in July.

The United Auto Workers Union and General Motors said Friday they had reached agreement on a new labor contract late Friday night that includes a new profit-sharing formula and other modest gains for workers – but which also appears to promise improvements for the automaker.

Details of the settlement were being withheld, pending ratification meetings with local union leaders. The UAW’s existing contract with the GM expired Wednesday but the union was barred from striking under the terms of the $49.5 billion federal bailout of GM in 2009.

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“We are proud of this tentative agreement,” declared UAW President Bob King.

The UAW will now have to work out settlements with both Chrysler and Ford.  Talks with the latter maker were put on hold earlier in the week.  A settlement with Chrysler seemed imminent, several days ago, before a clash between union President Bob King and the maker’s CEO Sergio Marchionne became public.

“In these uncertain economic times for American workers and faced with the globalization of the economy, the UAW approached these negotiations with new strategies and fought for and achieved some of our major goals for our members, including significant investments and products for our plants,” said UAW President King in a statement late Friday after the settlement was reached.

Going into the final stretch before the original midnight September 14 deadline, the UAW was reported to be seeking profit-sharing checks of as much as $10,000 per worker.  The final number is significantly less but still better than what workers were given in 2007, according to insiders.

Meanwhile, the UAW should be able to claim at least a modest victory on a key demand, increasing the livelihood of new workers hired in under the industry’s two-tier wage structure.  They’re currently earnings about $14 to $16 an hour, roughly half what veteran workers get.  Some improvements in health care are also supposedly in the new pact.

“When GM was struggling, our members shared in the sacrifice. Now that the company is posting profits again, our members want to share in the success. To be clear, GM is prosperous because of its workers. It’s the workers and the quality of the work they do, along with the sacrifices they made, that have returned this company to profitability,” said UAW Vice President Joe Ashton, who directs the union’s General Motors Department. “The wages and benefits we negotiated in this tentative agreement reflect the fact that it was UAW members who helped turn this company around,” he said.

The Big Three, each of which negotiates a separate agreement, had taken a generally unified stand going into the current round of contract talks.  The makers gained modest concessions from the UAW in 2007 – including the two-tier wage system – and more in 2009 as GM and Chrysler plunged into bankruptcy.  This time, Detroit makers were looking to hold onto the changes, which had slashed their labor costs from as much as $76 an hour in 2006 to somewhere between $50 and $58 an hour this year.

Indications are that the UAW will grant GM creative ways to further improve GM’s productivity – reflecting earlier statements by King that the union is looking for “creative solutions” that would avoid running up labor costs.  There could be subtle changes in other areas, perhaps medical care, that will also counter-balance any gains provided UAW members.

“We wanted a contract that provides our members with a real share of the success of the company and ensures its continued success. Our members cannot succeed unless the company succeeds, and we are strongly committed to that joint success, as this contract demonstrates,” said the UAW’s Ashton.

“We used a creative problem-solving approach to reach an agreement that addresses the needs of employees and positions our business for long-term success,” said Cathy Clegg, GM vice president, labor relations. “We worked hard for a contract that recognizes the realities of today’s marketplace, enabling GM to continue to invest in U.S. manufacturing and provide good jobs to thousands of American,” Clegg added.

Ashton said the UAW turned aside the company’s demands for major changes that would have altered its pension plan and rejected major concessions in health care.

“As everyone knows, we have had, and will continue to have, some real differences with GM,” he said. “We proved again today that through the collective bargaining process, we can provide decent wages, benefits and employment rights for workers while ensuring quality products and healthy profits for employers. We stand recommitted to our goal of organizing and fighting for all workers in the entire U.S. auto industry.”

Observers note that the ongoing labor talks had a silent partner sitting in on negotiations.  The Detroit makers have repeatedly said they must remain competitive with the so-called “transplant” auto factories – operated by most major foreign brands including Toyota, BMW and Hyundai – that now account for about a third of the vehicles sold in North America.

Though the cost gap has been narrowed, it has not been completely closed, outsiders caution.  And, if anything, “There will continue to be a downward pressure on the wages and benefits of all autoworkers,” King acknowledged.

If anything, that is only likely to encourage the UAW to now ramp up efforts to organize the transplants, a process that has been stymied since the first opened a quarter century ago.  Only two of the facilities now have UAW representation – and those only because they were originally opened as part of joint ventures between Japanese and U.S. makers.

Those organizing drives will have to wait, however, until the UAW completes its contract talks in Detroit.  The maker agreed to an indefinite extension with Ford – the only maker it can legally strike – while it focused on GM and Chrysler.

Hours before the Setpember 14th deadline it appeared Chrysler was ready to settle.  Indeed, that likelihood led CEO Sergio Marchionne to return from Europe, where he had addressed media at the Frankfurt Motor Show and was next to meet with German Chancellor Angela Merkel.  But UAW President King reportedly missed a meeting with Marchionne after the executive’s return, leading the CEO to fire off an angry letter that has since gone public.

Nonetheless, it is likely that the UAW will now press Chrysler to accept the same “pattern” contract GM has, and will then push Ford to sign on, as well.

Paul A. Eisenstein contributed to this report.

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2 Responses to “GM, UAW Reach Late Night Deal; Chrysler Next?”

  1. r123t says:

    Good news… glad to get this behind us. Finish with Chrysler, finish with Ford, and then on to the transplants, which perhaps will eventually alleviate some of that “downward pressure” that King acknowledges. Bring those companies up to our standards, rather than constantly force us down to theirs, for a change. Someone, somewhere has got to put the brakes on (with apologies to Toyota) in this race to the bottom. I am tired of the UAW being a “quasi-union” for Toyota in particular, although that one will be a tough nut to crack.

    • Paul A. Eisenstein says:

      Well, it’s interesting to see a settlement that suggests both sides negotiated both well and wisely. Now, we see what happens at Ford and Chrysler, where similar goals are clearly in mind. Should the UAW come through equally well it can at least position itself as a viable union that: 1) can achieve gains for workers; 2) without necessarily crashing the corporations in return. If that be true then they have at least a chance to beginning a dialogue at the transplants. Whether they can actually organize the plants is, of course, another matter entirely.
      Paul A. Eisenstein,
      Publisher, TheDetroitBureau.com