UAW Saves Aveo Profitability By Pushing Workers Into Tier Two

Edward Niedermeyer
by Edward Niedermeyer
uaw saves aveo profitability by pushing workers into tier two

Another day, another story on the ever-growing conflict between the UAW’s ownership stake in GM and responsibility to its members. Pre-bankruptcy, GM didn’t have to deal with the fact that the UAW is incapable of building fuel-efficient subcompact cars profitably. As a result, the outgoing Aveo was built and designed in Korea as the Daewoo Kalos, before being fitted with a bowtie and shipped to the US. But now that the General has promised to build the next-gen Aveo in Michigan’s Orion Township plant in exchange for nearly $800m in local tax credits (not to mention the political benefits of “saving or creating” hundreds of union jobs), it’s up to the UAW to square the circle and make the damn thing profitable. Which, according to Automotive News [sub] is just what they’ve done… by bumping 40 percent of the plant’s previous workers to the new “tier two” wages. Which is a nice way of saying “cutting their wages in half.” How is that possible?

The UAW’s 2009 amended contract with GM just before bankruptcy called for “innovative labor agreement provisions” that would allow GM to make a small car profitably in the United States.

Under those “innovative provisions” (which just happened to be conjured up when the government task force was elbow-deep in GM), Orion workers can neither appeal the decision nor go on strike over it. Either the UAW wants to be a union capable of building small cars profitably, or it doesn’t. Screwing less-senior “brothers” so politicians and union bosses can crow over the “green jobs” at Orion is cowardly and despicable.

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  • Cwp Cwp on Oct 05, 2010

    I applaud the UAW for their willingness to pare back wages in tough times, but I can't say I care for the way they've gone about it. It would seem more equitable for everybody to take a more modest pay cut. Which, now that I think about it, sounds familiar. Isn't this really the Union - Management conflict writ somewhat smaller? If we wouldn't expect the UAW to take pay cuts when management isn't, shouldn't we feel the same way here? And if we're okay with that, what's to object to here?

  • Buickman Buickman on Oct 05, 2010

    bottom line is GM is run by self serving, lying, dishonest pretenders that occupy executive offices and would sell their own souls in a New York minute. of course that is only my opinion and I could be wrong (disclaimer provided in self defense) I know this to be true from first hand personal experience. they are crooks, dishonest, immoral, and not to be trusted. they take very advantage possible regardless of their own fellow employees. it is a corrupt and divisive group that is destined to fail. I don't believe anything they say and neither should you. take it from the top GM salespesron in history....until such time as there is a wholesale housecleaning, do yourself a favor and buy a Ford...America's car company.

  • Jkross22 Jkross22 on Oct 05, 2010

    While this is a short term gain, I'm guessing it will ultimately be a long term loss to both GM and the UAW. What will this do to morale of the new guys coming in? I guess the senior guys don't really care, as it doesn't affect them. Or maybe I'm misunderstanding - it seems like only the new hires get the Tier 2 pay and work alongside those that are more senior but doing the same job for more money... regardless if the new guy is better than the old guy at the job. Give the union props, though. They're making lemonade out of this... rational thing to do... for now.

  • Musiccitymafia Musiccitymafia on Oct 05, 2010

    I wasn't at the UAW meeting to hear the reasons, but it strikes me that it would be "fairer" to have given everyone a haircut instead of selecting the 50% with lesser tenure and chopping them in half? Maybe some would get a larger haircut than others, but at least everyone shares the pain involved with bringing jobs back to the US. Again, there must have been reasons.