By on February 23, 2015


Though the UAW would like to see wages go up as part of its upcoming talks with the Detroit Three, it also wants for the automakers to remain competitive.

UAW president Dennis Williams said as much during an interview with Reuters last week, when he discussed what the union has in store when it comes time to sit down with the management at Ford, FCA US and General Motors this summer.

The main issue will be the two-tier wage system that has been in place since 2007, just before the start of the Great Recession. The policy has been applied at varying rates since the division took hold, with 42 percent of FCA US’ UAW workers — 35,720 — being paid at the second-tier rate of $15.78 to $19.28 an hour; second-tier workers at Ford and GM make up 28 and 20 percent of their respective 50,700 and 49,900 represented employees.

While the union is facing pressure to get as much for its membership as it can, it also has to make sure the Detroit Three remains viable over the long-term. With GM in particular, the UAW has a major political and institutional stake in the automaker’s well-being, as the union is its largest shareholder via its retiree health care trusts.

That said, should push come to shove, Williams says his membership is ready to strike, following in the footsteps of workers at oil refineries and those along the West Coast ports. The UAW hasn’t conducted a major industrial action since the 1990s, and were barred from striking at all at GM and Chrysler as a result of the agreements made in 2009.

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16 Comments on “Williams: UAW Must Balance Member, Corporate Demands In Detroit Three Talks...”

  • avatar

    The UAW needs to make up at least half of the difference between tier one and tier two in this contract. They know this. They know that the two-tier system will destroy the union.

  • avatar

    It will be interesting. Even coming half way to bridging the gap between tier 1 and 2 would be costly for each automaker. It would be telling to see what the projected labor costs are for each automaker vs competition to see exactly how much wiggle room there is. I suspect there is ZERO and that the Detroit automakers already have higher labor costs. Doubtful that would stop the UAW from making demands though.

    I assume that the UAW wants to hold the GM stock in the VEBA so it has board representation?? I think disposing of it and investing in higher yield stocks may be a better long term option.

    • 0 avatar

      The VEBA originally held 260 million pref shares that carried a fixed 9% dividend rate, and 140 million common shares. The pref shares have been redeemed (bought back) by GM, but it seems the VEBA still holds the common shares.

      There is a strong argument to be made that the VEBA should sell most of the GM common it owns, to spread its risk. GM, though, would not want these shares to come onto the market – unless a bought deal is prearranged, the weight of all those shares looking to be sold would depress the stock price.

  • avatar

    To be fair, the oil strikes in the gulf coast are openly about safety issues that have not been addressed since before the Deepwater Horizon incident. The USW has stated this repeatedly and the local papers have picked up on it but the oil companies keep repeating the line that it’s about wages and not safety or merely a subterfuge. From what few connections I have in the USW it seems to honestly be about safety though, more than anything else.

    That being said, the rebound of the economy and the way the two-tier system works just need to be seriously overhauled. Either build a system slope to support it or review just how much capacity you need. The system is flawed to the point of a complete failure but it was a great way to cut off the union at the knees when they knew they had them over the barrel.

    • 0 avatar

      The two-tier wage system was the UAW’s way of making a concession but placing the entire burden on workers who had not yet been hired. In most bankruptcy proceedings, all workers get a wage and/or benefit cut. The two-tier wage system enabled the UAW leadership to avoid that scenario.

      As for “reviewing how much capacity” the Big Three need – the UAW hasn’t been too enthusiastic about plant closures or capacity reduction by GM, Ford or Chrysler in general.

      • 0 avatar

        “In most bankruptcy proceedings, all workers get a wage and/or benefit cut.”

        I’m not certain about this, but I believe that isn’t typical when there are collective bargaining agreements in place. Job cuts, yes, but not the wage rates.

        The two-tier wages were management’s idea; the union didn’t have a choice.

        Marchionne would like to get rid of two-tier wages, too. But his idea is for the more expensive workers to receive wage cuts, and to use profit-based bonuses to cover the difference.

        • 0 avatar

          That doesn’t sound like a good idea, particularly since the company has been making some solid sales gains over the past 2-3 years. The company can’t say that its back is up against the wall.

          • 0 avatar

            From Marchionne’s standpoint, the idea would be to reduce the company’s compensation requirements when it can least afford to pay them.

            In other words, some of the business risk is transferred to the employees, instead of the company eating the entire cost of downturns in the business cycle. The auto industry is more cyclical than most, hence the motivation.

        • 0 avatar

          It would be very strange, that a Union would have come up with discriminatory wage structure. Strange they accepted it from Management

      • 0 avatar

        “Placing the burden on workers not yet hired” – i.e. Making a stop-gap measure with a massive-multibilion dollar organization that was threatening to fight further to deny any benefits and shift more burden onto the union. As stated by Pch, it was the big-3’s idea and basically represented the ‘middle-ground’ between the two. The fact that weird anti-union loons keep trying to spin this argument to seem like the UAW wanted two-tiers is just lazy fact-checking. I’ll admit I’m pro-union but atleast the facts of reality are on my side in both economics & this discussion.

  • avatar

    The UAW was decertified at an Alabama supplier. The NLRB fought the will of the workers relentlessly, but the workforce wouldn’t give up until they kicked organized crime out of their workplace.

  • avatar

    Solidarity Forever? not with Two Tiers it isn’t. shame on the unions for allowing this to continue.

  • avatar

    Buickman is right, there is a huge conflict between two-tier and the principle of solidarity. Eight years ago the UAW had a really weak bargaining position. There financials of the big three were very weak, and wage cuts were needed, but the union couldn’t sell across-the-board wage cuts to the rank and file. They ended up selling the new guys and gals down the river. That’s how the cancer that is two-tier got introduced in the system.

  • avatar

    Rote human labor is no longer worth the costs. Keep pushing and more automation will be developed. Robots function just as well in Mexico as they do in Detroit. Even McDonalds is working hard to get rid of their useless liabilities, aka, Employees. Surprisingly, people are willing to pay $5 for a cup of caffeinated sugar mud at Starbucks…So there is some rote labor job security there. Maybe the UAW Parasites can organize[crime] them.

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