U.S. Union, Automakers Gear Up For Tough Bargaining

July 18, 2007
Negotiations start on July 20.

Struggling automakers launch key negotiations with the sector's main union the United Auto Workers on July 20 jockeying to keep hold of generous wage and benefits packages. GM, Ford and Chrysler enter the talks for a new four-year labor contract in a weakened condition, having lost nearly $30 billion in 2005 and 2006, and with foreign competition slicing into their market. They can ill-afford any confrontation.

The union however, which has traditionally won well-padded deals, has seen membership fall by almost half in the major three U.S. automakers since the last agreement was forged in 2003.

"Everything is very uncertain right now," agreed labor official Gloria Jean Morgan from Pontiac, who represents some 2,400 members at a GM assembly plant building pick-up trucks.

Although the talks are due to start with a handshake, labor expert Harley Shaiken predicted some difficult times ahead as the sector seeks to trim labor costs, which they say has given the competitive edge to Asian manufacturers. "A confrontation with the union just becomes an advertisement for Toyota and Honda," Harley Shaiken, from the University of California-Berkeley. "For the Detroit Three to survive, they first of all have to design a product people want to buy. Then they have to build it with great quality and productivity. For the latter two things, they need the union's help and I think the executives in Detroit know that," Shaiken said.

Top of the list of Ford's worries is the widening wage gap between the domestic companies and the Asian transplants operating in the U.S., Ford officials have said privately. Ford's gross average hourly earnings or the money, which actually shows up in the pay packets, have risen from $22.95 in 1997 to $32.38 in 2006 -- an increase of 41%. By comparison, all manufacturing average hourly earnings increased 31%, Ford officials noted. Eliminating the gap is critical and somehow negotiators have to find a way to reduce labor costs by as much as $30 per hour, they said.

GM and Chrysler have been focusing on health care in the run up to the negotiations, which would be one way to relieve some of the pressure by both preserving many of the benefits of union members and retirees, while creating a new mechanism for financing them. The UAW recently agreed to set up a Voluntary Employee Benefit Association at Dana Corp. and the creation of similar trust also helped end a bitter strike in December at the Goodyear Tire & Rubber Co. of Akron, Ohio.

Also, GM, Ford and Chrysler now have about 8,000 extra employees on their payrolls whose jobs should be eliminated by changing work rules and tightening up provisions for time off, estimated John Hoffecker, a managing director of Southfield-based Alix Partners.

Copyright Agence France-Presse, 2007

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