The Truth About Cars » Two Tier The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Fri, 18 Jul 2014 13:00:30 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Two Tier UAW Wants to End Two-Tier Wages in Next Contract Wed, 18 Dec 2013 12:00:57 +0000 DetNews Photo

Norwood Jewell, a nominee to become a UAW vice-president, said that the autoworkers want to eliminate the two-tier wage system that pays new hires at a lower rate than higher seniority workers. The wage system was agreed to by the union to help the domestic automakers as they went through financial troubles when the economy turned down in 2007. New workers are paid slightly more than half of what veteran autoworkers earn.

“The international executive board hates two-tiers,” Jewell told Automotive News at a General Motors Co plant in Flint, Mich.  as the automaker was announcing $1.3 billion in investments in some of its plants in the U.S. midwest, mostly in Michigan. Jewell is currently director of UAW’s Flint region. “We didn’t do two tiers because it’s a wonderful thing,” he said, explaining that the financial circumstances six years ago more or less forced the two tier wages on the union. “We hate them. We intend to eliminate them over time.”

Current UAW contracts with GM, Ford and Chrysler expire in 2015. The union’s resentment of the current two level wage structure combined with strong profits at all three domestic automakers in recent years along with the fact that higher tier workers haven’t gotten a pay raise in ten years means that negotiations on the new contract will be difficult.

The car companies say that the lower tier entry level wages are necessary for them to be able to compete on labor costs with the transplant assembly plants operated by German, Japanese and Korean automakers. New hires start at just under $16/hr, rising over time to over $19/hr. Veteran workers make about $28/hr.

Jewell said that a key tactic in eliminating the two-tier wages will be the unions organizing those non-union transplant facilities, mostly located in the southern U.S. “If we don’t organize them and bring them up to our standard, we’re never going be able to totally eliminate the second tier,” he said.

Jewell also said that the companies’ profits will help the union make its case when contract talks are opened.

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Marchionne Wants End Of Two Class System Fri, 28 Oct 2011 20:56:53 +0000

Chrysler CEO Sergio Marchionne wants an end of what he called “two classes” of employees represented by the United Auto Workers union. The two-tiered system “creates the kind of environment that doesn’t appear to work in the same direction that we’ve been trying to use to establish the new basis of Chrysler,” Marchionne told Reuters. He continued:

“The whole notion of trying to get this organization to work in unison when you’ve got this kind of economic disparity between the people on the line is not something that can go on forever.”

Marchionne hopes the matter can be settled during the next round of contract talks in 2015.

Knowing Marchionne, his idea of parity won’t be to upgrade everybody to First. He probably wants everybody to fly Economy.


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Bob King Defends UAW Contract Priorities Thu, 27 Oct 2011 14:18:38 +0000

Watch UAW President Bob King on New Contracts: Top Priority Was Creating Jobs on PBS. See more from PBS NewsHour.

Though UAW boss Bob King has said that organizing transplant factories is a life-or-death struggle for the union, but the real make-or-break issue this year was the contract negotiations with the Detroit Automakers. And though King roundly denies that a rift has been formed in his union over two-tier wages, the facts simply don’t back that position up. In the last contract to be ratified (with Chrysler) for example, only 54.8% of the union approved the deal… hardly the “overwhelming support” that King claims. Moreover, 55.6% of the skilled-trades workers at Chrysler rejected the contract, according to the Detroit Free Press. King’s narrative of experienced workers “demanding” higher wages for the Tier Two brothers “in the greatest spirit of solidarity” just doesn’t hold up to scrutiny.

The divide between skilled-trades and other workers at Chrysler was a particular problem for the union because its contract allows the 5,000 skilled-trades workers to reject their own portions of the contract even if the union as a whole approved it… which is precisely what happened. But, after meeting with skilled-trade representatives, King decided to do what the union has often been loath to do: trample the better-paid workers in favor of newer hires. The Freep reports:

On Wednesday, the UAW held two meetings to resolve the split vote. If the skilled-trades workers had voted against the contract because of changes that specifically affect only their work, then the UAW would have tried to renegotiate a portion of the Chrysler agreement, King told reporters Wednesday.

“It was overwhelmingly clear that the issues were economic issues and not skilled-trades issues,” King said.

King said he doesn’t anticipate a major backlash from skilled-trades workers after the decision. “We did not go against what the skilled trades voted for,” King said. “We went with what the majority of members said — that they thought this agreement should be ratified.”

That was probably the right decision to make, and King should be commended for it, but it exposes his rhetoric of solidarity as pure farce. In recent years the union has already created a backlash by approving the “innovative labor practices” that threaten to push Tier 1 workers at the Orion Assembly plant into the lower wage tier without a union vote. Once again, King is going against the rules of engagement, which say that any union decision must be ratified by members. The only difference: now he’s backing lower-paid workers. Again, it’s a commendable stand and it shows King’s commitment to returning to some form of solidarity, but it also demonstrates and exacerbates the union’s internal divisions.

Meanwhile, at Ford, King admits that negotiations were “very rocky,” which is something of an understatement. Even though Ford offered the most generous contract of all the Detroit OEMs, the contract got off to a bad start, as workers at several of the first plants to vote refused to ratify the contract. Only after Ford said it would hire strike breakers if the contract failed did the UAW leadership threaten that the deal wouldn’t get any sweeter for members, and the contract eventually passed. But at the Ford plants where the contract failed, there are still signs of internal pressure at the union. At Local 900, which represents three Ford Detroit-area plants, workers were most troubled that more Tier Two hires would be brought in in lieu of giving established workers more overtime.

Meanwhile, at GM the Orion Plant’s “innovative labor practices” seem set to spread to the soon-to-be-reopened Spring Hill plant, even though GM and the UAW insisted that Orion would be a one-off deal in order to build subcompact cars in the US. Automotive News [sub] reports

About 40 percent of Orion’s 1,500 workers make an entry level wage. Under the new contract, they’ll be paid $16 to $19 an hour, a little more than half of what traditional UAW workers make.

A 100 percent entry level work force won’t happen. Several hundred former Spring Hill workers who are either still laid off or relocated to other GM plants should get first shot at the new jobs.

But it’s likely that the vast majority of the 1,710 new jobs will be filled by new employees – and there’s no restricton on the use of entry level wage earners.

If that doesn’t inflame divisions between the UAW’s tiers, it’s hard to say what will. The Orion agreement inspired picketing of the UAW’s headquarters, even though it was made as GM was going into its bailout-bankruptcy and was sold as a necessary move for survival. With GM making profits again, it’s proving that the dissidents who said that Orion-style rollbacks would spread across the workforce were right. As details emerge from Spring Hill, expect more protests and further breakdowns in UAW solidarity.

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GM, UAW Reach New Contract, Spring Hill Plant To Re-Open Sat, 17 Sep 2011 16:24:05 +0000

As predicted, the hand-wringing over Sergio Marchionne’s letter to Bob King was not enough to derail the basic motivations for the UAW to reach new deals with the automakers. Last night the union agreed to a tentative agreement with GM, its pattern target for this, the first round of negotiations since the bailout. That agreement must be approved by the union rank-and-file, but if ratified, Reuters reports that it includes

  • The re-opening of the idled Spring Hill, TN plant to build an unspecified “new product”
  • $5,000 signing bonuses (at a cost to GM of $245m)
  • According to the NYT, “significant improvements to health care benefits” are also part of the deal
  • According to AN [sub], the union “successfully fought back efforts to make major changes — and weaken — our retirement plan.”

What’s not yet clear is whether entry-level “Tier Two” workers, who make half what their “Tier One” brothers make, got a raise. Though it’s clear that GM and the UAW worked to avoid major increases to fixed costs by concentrating on jobs and profit-sharing bonus checks, the NYT confirms that the union was asking for some kind of entry-level raise. Given that no outlet is confirming any such Tier Two raise, though, it seems as though the UAW’s culture of seniority-over-solidarity has won out. We’ll report on details as they emerge, which is likely to happen as locals ratify the contract over the next ten days.

And though the UAW still faces battles with a feisty Marchionne and a wary Ford negotiating team, union President Bob King still has an eye on the big picture. Telling Bloomberg that he’s “re-committed” to the goal of organizing non-union transplant factories, he argues

As long as unionized workers are being forced to compete with nonunion workers who in most cases receive lower pay and benefits — many in temporary jobs — there will continue to be a downward pressure on the wages and benefits of all autoworkers.

In a recent conversation with Bloomberg, CAW President Buzz Hargrove essentially argued that the automakers would give up little in this round of negotiations. The key then, was finding things the union wanted that didn’t really cost GM that much. In that light, the re-opening of Spring Hill makes a lot of sense. It’s considered one of GM’s better, more modern plants, and it gives the UAW a bastion in Tennessee, where Nissan and Volkswagen both have new, non-union plants. The problem: unless the union was able to negotiate an entry-level wage hike, new hires at Spring Hill will make less than many of their non-union counterparts [sub] at VW Chattanooga and Nissan Smyrna. At that point, having a UAW plant in the South doesn’t especially help the union’s cause.

Caught between bailed-out automakers that it can’t be too aggressive with and non-union workers who show no signs of wanting or needing representation, this agreement doesn’t change the UAW’s basic predicament. We’ll see what the final details look like when the locals approve the deal, but it might not be too early to say that Detroit’s automakers will have four relatively easy years on this contract.

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GM: 100 Days Of Truck Inventory Ain’t No Thang Sun, 05 Jun 2011 17:02:50 +0000

At the end of May, GM had no fewer than 288,000 pickup trucks sitting on its dealers’ lots (up from 275k in April). With gas prices on a short-term dip, but in the midst of a long-term increase, and with the season of traditional gas price spikes upon us, that could give The General cause for concern. After all, even a short-term spike in gas prices could cause a sharp falloff in truck sales, stranding huge numbers of trucks on dealer lots. But, GM North American boss Mark Reuss tells Bloomberg,

We’re not going to run big incentives to clear inventory. We’ll adjust inventory on a production basis.

That’s good news for GM’s financial position, and a promising sign of a new spirit of responsible pricing. But in an industry as complex as this, even good decisions could have troubling consequences. If GM “adjusts inventory on a production basis,” the “Tier One Gypsies” who fled Orion Township to avoid a 50% pay cut could find their temporary refuge at Flint Truck drying up, as HD pickups are likely the first to undergo “adjustments on a production basis.” And though that’s not explicitly GM’s problem, it could ratchet up the pressure to roll back the two-tier system in the upcoming negotiation session, and generally fire up the UAW’s dissidents and hard-liners. Meanwhile, with CAFE and gas prices converging on Detroit’s BOF bread-and-butter, we’ll be watching for signs of trouble as GM adjusts to the larger issue of likely long-term declines in truck demand.

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Orion Workers To Picket UAW Over “Innovative” Labor Deal Fri, 08 Oct 2010 16:48:25 +0000
I took some flack from TTAC’s Best and Brightest on Monday when I suggested that the UAW’s deal to give 40 percent of Orion Assemblys returning workers a 50 percent pay cut was “cowardly and despicable.” What I didn’t make clear enough was that I have no problem with the UAW working for a lower wage as long as the burden was spread evenly. Instead, the union has arbitrarily divided its existing workforce into the old guard “haves” and the relatively-recently-hired “have nots” as a ploy to make the union seem capable of profitably building subcompact cars in America. It’s bad enough to prop up the old guard by paying new hires less, but cramming down recalled Tier One workers is totally contrary to the very concept of a union. And I’m not the only one who finds the lack of solidarity and shared responsibility within the union troubling.

The Detroit News reports that dissident UAW workers of Orions Local 5960 are calling for a picket, arguing that

[UAW Boss] Bob King and Mike Dunn have forgotten who they work for

The only problem: the UAW signed a “no strike” clause with GM as part of last years bankruptcy-bailout, so instead of stopping work, the workers will simply rally in front of the UAW Solidarity House. But then, one can only do so much when ones union owns the company one works for. Hopefully this rally will help prove that the UAW has outlived its usefulness, and will drive either its reform or its dissolution. Until the UAW loses its motivation to screw its own workers and commits to shared responsibility among all of its members, it can only expect more turmoil like this going forward.

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