The United Auto Workers union is set to start bargaining new contracts covering 150,000 workers at Detroit’s Big Three on Monday in what could be the most contentious negotiations the auto industry has seen in years.
The union will be looking to make significant gains over the most recent four-year contracts with the companies, ratified in 2015. Automakers are looking to cut labor costs relative to foreign competitors building cars and trucks inside the U.S. with lower-earning workers. Industry-watchers believe the starkly different expectations create the possibility of a major strike.
Several years of rising and near-record auto sales have made companies flush, but workers have not forgotten the sacrifices they made to stabilize the industry during the financial crisis, including by lowering the pay scale for new hires. Meanwhile, Ford, General Motors and Fiat Chrysler will point to a burgeoning sales slowdown and the need to invest in electric and automated vehicles as reasons they can’t afford higher costs.
Observers viewed GM’s decision late last year to idle several U.S. plants as a shot across the bow aimed at weakening the union’s position heading into talks.
“Right now we’re at or near the peak in auto sales, and forecasters are showing some softening. That could mean the profits for the next couple years won’t be what they were,” said Kristin Dziczek, who tracks labor and economics in the auto industry at the Center for Automotive Research.
At the same time, Dziczek said, “It’s a different environment after four years of pretty successful operations. Workers are going to want to see money in their paychecks.”
It’s a different environment after four years of pretty successful operations. Workers are going to want to see money in their paychecks. Kristin Dziczek, Center for Automotive Research
Autoworkers’ contracts are determined through “pattern” bargaining: The union negotiates separately with each company, but the final agreements tend to include more or less the same wages and benefits. Each company will make its case for why its contract should be settled before the others so it can have the most influence and dictate the terms.
Just as the contracts often look similar, so do the main sticking points in negotiations. The UAW and all three automakers declined interviews for this story. But it’s clear both sides expect some of the biggest fights to revolve around the use of temporary workers inside the Big Three’s plants, as well as how long it takes newer employees to earn traditional wage rates.
The UAW’s contracts put caps on the number of temps the automakers can employ at a given time. The companies will probably want to expand their use in the name of “flexibility” ― i.e., filling vacancies or ramping up production on the cheap relative to permanent employees. The U.S. auto companies often point out the high share of temps at foreign competitors manufacturing in the U.S. South, such as Nissan, saying it puts them at a disadvantage.
In a statement to HuffPost on the negotiations, Ford said, “Our focus is reaching a fair agreement with the UAW that allows the company to be more competitive so we can continue to preserve and protect good-paying manufacturing jobs and maintain our track record of investing in our U.S. plants.”
Both sides expect some of the biggest fights to revolve around the use of temporary workers inside the Big Three’s plants, as well as how long it takes newer employees to earn traditional wage rates.
But what’s flexible to the automakers is exploitative to the union. While the union contracts cover temp workers, those workers do not enjoy the same wages, benefits or job security as their full-time counterparts. Union members ― even those who have permanent positions ― would see it in their own interest to limit the companies’ use of temps.
Another likely point of contention is how long it takes workers with less tenure to start earning the top pay of $29 per hour. When the industry foundered amid the economic slowdown, the UAW agreed to a controversial two-tier system in which new employees would be on a lower pay scale than veterans. The union generally succeeded in eliminating that system in its 2015 contract.
But members barely approved that deal, in part because of what the two-tier system was replaced with: an arrangement known as “in progression” in which it takes workers hired after 2007 eight years to reach the top pay scale.
The UAW might make a push to tighten up or eliminate that timeline to more quickly rid plants of the remnants of the two-tier system. It’s also possible one or all of the automakers tries to lengthen the progression to keep pay for newer workers down.
“It’s a very long bridge,” said Scott Houldieson, the vice president at UAW Local 551 and an electrician at Ford’s plant in Chicago.
Houldieson noted that the eight-year progression does not include the time a worker might be employed as a temp, too. His local passed resolutions urging the union to go to bat for temporary workers in the contract talks.
Those issues don’t even touch upon health care, another likely point of contention. The automakers will almost certainly be looking to shift more of those costs onto employees through higher deductibles and other out-of-pocket costs.
The UAW referred HuffPost to a March speech by the union’s president, Gary Jones, who took the helm last year. Jones announced that the union would be raising its strike pay ― the money workers receive from the union in the event of a work stoppage ― from $200 to $250 and eventually $275 per week.
“The raise in strike pay is an important signal to all our members that the international executive board has their backs,” said Jones. “We are ready to put in the work and we are ready to make the plans. And we are ready to set the bar high.”
The automakers took it as a sign ― or as posturing ― that the union would be willing to call a strike if its demands aren’t met. The fund the UAW would tap into to weather a strike is deep, totaling more than $720 million as of 2018.
The negotiations start on Monday, with the union expected to take a series of strike votes sometime in August. The current contracts expire in September, though it’s possible new ones wouldn’t be ratified until November ― or later if workers end up going out on a prolonged strike.
“It’s going to be hard,” said Dziczek. “Nothing is done until everything is done.”