(LR) Supporters Ryan Sullivan and United Auto Workers members Chris Sanders-Stone, Casey Miner, Kennedy R. Barbee Sr. and Stephen Brown demonstrate outside the Jeep factory in Toledo, Ohio on September 18, 2023.
Sarah Rice | Getty Images
DETROIT – With the deadline looming for extended strikes by the United Auto Workers against Detroit automakers, the “serious progress” the union is demanding appears all too elusive.
The UAW and General Motors, Ford Motor and Stellantis are all sticking to their demands, and it appears likely that the union will strike more plants at some, if not all, automakers by midday Friday – as has been warned.
While talks are ongoing, there has been little movement on proposals since strikes began Sept. 15 at assembly plants in Michigan, Ohio and Missouri. Sources familiar with the talks describe a “big” gap in demands and a “wide distance” between the parties.
Important economic issues and benefits such as hourly wages, pension benefits, cost of living adjustments, wage trends and work-life balance remain at the center of discussions. All topics interplay and can change depending on demand priority.
Each automaker has its own unique problems, but overall companies want to avoid fixed costs and so-called “anti-competitive practices” like traditional pensions. In contrast, the union is trying to regain benefits lost in previous talks and secure significant raises and other benefits while maintaining members’ health care at platinum levels.
In the end, it comes down to money and how much a deal will cost companies. According to Wells Fargo, Wall Street is currently expecting record costs from a deal, but still less than the $6 billion to $8 billion sought by the union.
Here’s a general overview of where the union and companies stand on important issues.
Union leaders have been extremely transparent in this year’s collective bargaining with automakers. However, they largely did not comment on possible compromises related to the demand for a 40% wage increase over four and a half years.
According to media reports, the union has adjusted this demand to the mid-30 percent range. UAW President Shawn Fain said last week that the union had not made an offer below 30%.
Automakers countered with wage increases of about 20% over the life of the contract – which would still be a record – to a top wage of more than $39 an hour for the majority of workers.
Sources familiar with the talks say that if companies raise hourly wages above the 20 percent mark, they will likely cut other benefits or cut jobs in the future to make up the difference.
A Ford source said the company’s current proposals would offer entry-level salaries of about $60,000, potentially rising to $100,000 or more over the life of the contract. This includes base salary, expected overtime, profit sharing and other cash bonuses.
Under GM’s latest proposal, President Mark Reuss said about 85% of currently represented workers would earn a base wage of about $82,000 a year. That compares with the average median household income of $51,821 in nine areas where GM operates large assembly plants, he said.
Pay scales – the division of autoworkers into different pay groups or classifications – are a tricky, moving target.
The companies and the union have defined the tariffs differently both in previous negotiations and in this year’s talks. Tiers can represent the following scenarios: workers doing the same work for different wages and benefits; similar but different job responsibilities; or differences between workers in assembly and component factories, depending on the conversations.
The UAW has generally called for “equal pay for equal work.” It is a cornerstone of the group’s platform, while automakers have in the past advocated for pay to be based on seniority, job classification and responsibilities.
In 2007, as a union concession, so-called tiers were introduced to give lower wages and benefits to workers hired after the contracts were ratified that year – what became known as the second tier. These employees’ starting salaries were approximately half of the salaries of incumbent employees, and they were not entitled to the same active health insurance benefits, pensions, or retiree health insurance.
The union has regained some similar benefits for newer workers compared to veteran or “legacy” workers, but differences in worker classifications and pay levels remain, resulting in “in-progressive” wages where the more a worker earns , the longer he works are employed.
For this year, automakers have broadly proposed halving the existing eight-year pay increase and eliminating some pay differences between workers who do similar work, such as parts and components.
The union wants to completely abolish the progressive wage structure and ensure that employees receive the same wage throughout the contractual relationship (after a 90-day adjustment period), including temporary or additional employees.
A source familiar with the talks said there was a “philosophical difference” between the sides. Ford, which employs the fewest temporary workers, has agreed to convert all current 90-day temporary workers to full-time employees.
The UAW suspended cost of living adjustments in 2009 as companies sought to reduce costs. COLA helps employees protect the value of their compensation from inflation.
The union now wants to reinstate COLA, especially after a period of decades of high inflation. But automakers have generally proposed either flat payments or using calculations based on inflation rates, which the union says would not be enough to offset the increased costs.
Automakers have also argued that profit-sharing payments, traditionally based on companies’ North American profits, have helped offset inflation.
Companies are trying to change or reduce profit-sharing payments to offset other increased costs, while the union wants an improved formula.
The UAW has previously outlined a calculation that would set aside $2 for every $1 million spent on stock buybacks and increases in ordinary dividends.
32 hour week
The union has proposed a better work-life balance, including a possible 32-hour week with a 40-hour wage. It was argued that workers would be allowed to work remotely or hybridly, allowing them to spend more time at home with their families.
A shorter work week was out of the question for automakers; they responded with additional vacation, additional vacation pay, such as for Juneteenth, and in some cases with two weeks of paternity leave.
For the UAW, product commitments equal jobs and mean more members for the union.
UAW leaders are particularly concerned about vehicle production commitments at Stellantis, which has proposed closing, selling or consolidating 18 plants. The locations included the North American headquarters, ten parts and distribution centers, and three component manufacturing facilities (two of which have already been fully or partially shut down).
A source familiar with the discussions said GM had delivered product to all of its plants after three closures four years ago.
Retirement planning and savings
The UAW has called for a “significant” pay increase for retired workers. The union said last week that the companies had rejected all such increases. However, GM CEO Mary Barra said the automaker included a flat $500 cash payment for retirees in its offer.
A Ford source said the company’s current offering includes a health care retirement bonus program with lump sums of either $50,000 or $35,000 upon retirement, depending on seniority, for newer workers.
Automakers have also resisted returning to traditional pensions instead of 401(k) plans.
According to a company source, a proposal from Ford last week called for a company contribution of 6.4% and $1 per hour for every hour worked, eliminating a previous cap.
GM also offered an unconditional 6.4% corporate 401(k) contribution for employees who are not eligible for pensions.
Source : www.cnbc.com