AUBURN HILLS, Mich. — To help American carmakers stay in business, autoworkers grudgingly gave up pay raises and some benefits four years ago.
Now that General Motors, Ford and Chrysler are making money again, workers want compensation for their sacrifice. Just how much they get is the central question hanging over contract talks that start this week between Detroit and one of the nation’s largest and most powerful unions.
The negotiations, the first since Chrysler and GM took government aid and emerged from bankruptcy, will set wages and benefits for 111,000 members of the United Auto Workers, including those at Ford, which avoided bankruptcy by taking out massive private loans. The UAW’s four-year contracts with the Big Three expire Sept. 14.
There’s more at stake than pay. After the industry’s brush with financial ruin in 2008 and 2009, both sides know how quickly Detroit’s sales and profitability could vanish. Sales are on pace to reach nearly 13 million cars and trucks this year, better than the 10 million in 2009 but still below the 17 million peak in 2005. Americans are worried about buying cars when wages and the job market are weak. The workers and Detroit companies can’t leave themselves vulnerable to rivals.
Chrysler, which is run by Italian automaker Fiat, wants to hold the line on wages and benefits, while GM and Ford want to cut labor costs even more. There’s friction inside the union, too. Many workers are eager to get a share of company profits and restore pay raises and some benefits given up during the financial crisis.
“You want to get something back,” says Hans Smith, a worker at GM’s pickup plant in Flint, Mich., who knows they won’t get back all the concessions.
That could create problems for the UAW’s new leader, Bob King, who preaches cooperation over confrontation.
King wants to “make sure our members get their fair share of the upside” but also keep the companies competitive.
Wall Street is watching too. Stock prices at Ford and GM and a potential Chrysler public offering could be hurt if the companies end up with higher costs.
Key issues
Reward for risk: Workers want a bigger cut of the profits now that the Big Three are making money again. They got profit-sharing checks in January but gave up guaranteed raises while executives got big packages, particularly Ford chief executive Alan Mulally’s $26.5 million for 2010. Striking is banned at GM and Chrysler under terms of the government bailout, but the union could still strike at Ford.
Matching rivals’ costs: Even with big reductions in labor costs since 2007, GM and Ford still pay more in wages and benefits than Toyota, Honda and Hyundai, which aren’t unionized. Al Lacobelli, Chrysler’s chief negotiator, says the company won’t use previous formulas for pay raises.
Keeping U.S. jobs: United Auto Workers membership has fallen to 376,612, about a quarter of the 1.5 million it had at its peak in 1979. The companies, though, are reluctant to hire with auto sales and the economy still sputtering. UAW leader Bob King concedes that reopening plants would have to be justified by increased sales.
The Associated Press
