UAW, Detroit Gear Up For Contract Battle

With its effort to organize transplant manufacturers stalled, the UAW is turning all of its attention to what may be one of its toughest contract negotiations ever. The union’s rank-and-file is pushing hard to take back concessions given during the bailout, but at the same time, the union has to avoid burdening the recovering US automakers with competitive disadvantages. And because the three Detroit automakers have performed so differently over the last year (Ford made a $6.6b profit last year, GM made $4.7b and Chrysler lost $652m), the tradition of pattern bargaining will only make negotiations even tougher. But it’s huge bonuses for executives at Ford that is getting the war of words started early, as Bill Johnson, plant chairman for UAW Local 900, threatens

If they don’t restore everything (we) gave up, the membership is going to knock it down. The bonuses that were just announced are just ridiculous.

And that’s a good place for the UAW to begin negotiations, but they’re realistically not going to get everything back. So how is this going to play out?

The UAW’s head negotiator with Ford Jimmy Settles tells the Detroit Free Press that new products and job security will dominate the union’s priorities when it comes to FoMoCo, saying

Obviously, people want their concessions back, but people have a lot of anxiety because they don’t know what is going to happen to them. There are a lot of plants still in jeopardy.

But reasonable quotes from negotiators don’t change the facts: Ford was hugely profitable last year, gave large bonuses to its executives and it is the only Detroit automaker that the UAW does not have a no-strike contract with. In short, Ford could continue to suffer as the exception to pattern bargaining, and could become the test case for one of the UAW’s more ambitious plans:

I think what the UAW will try to do is try to get a pay increase for the second-tier workers,” said Arthur Schwartz, former GM labor negotiator and president of Labor and Economics Associates.

Repealing two-tier wages or giving second-tier workers a raise would be extremely helpful for the UAW, which has suffered bitter internal divisions over the unequal treatment inherent in the two-tier system. The automakers will likely fight anything but a modest pay increase for tier-two workers as the system is crucial for reducing fixed costs over time. But even if the union secured some kind of victory on the two tier front, it would be largely symbolic as

Only 1,300 of GM’s 49,000 hourly workers are full-time entry-level workers. Ford hasn’t hired any permanent workers at the lower tier but does employ 2,100 temporary workers hired at the lower wage.

Another big union ask: the return of Cost Of Living Adjustments (COLA). But with inflation at low levels and the future still uncertain, the automakers aren’t going to commit to steady increases. Instead, Bloomberg c reports that the Detroit automakers

may seek to start providing as much as 15 percent of union workers’ compensation in performance bonuses and lump-sum payments, emulating how their Japanese counterparts and salaried employees are paid.

And the automakers have already made a strong case for this bonus-drive model by distributing some of their biggest profit-sharing checks in history to workers.

With these profit-sharing checks, it’s the hope of all three automakers that they are making a down payment on a more incentive-based pay system,” said Harley Shaiken, a labor professor at the University of California-Berkeley. “There’s nothing like that check to show that it can be done.

It’s still not clear if the automakers will get the union to go along with its big bonus idea, or if the union will make any progress on its two-tier issues. But perhaps the most important issue to watch for is the further degradation of pattern bargaining. If Ford is asked to make significantly more concessions than GM or Chrysler, it could end for good the era in which the Detroit firms could at least count on labor parity with their cross-town rivals. Once that happens, the competitive picture could start getting very interesting…