UAW, General Motors confident they can reach contract deal

It was all smiles and optimism Monday as the United Auto Workers union opened contract talks in an official handshake ceremony with General Motors.

But the glad-handing may not last long with both sides a long way apart on a number of financial issues.

GM and Ford want to cut labor costs that are $8 to $9 per hour higher than at U.S. plants owned by Honda and Toyota, while Fiat Chrysler wants to keep its costs stable. But the union wants pay raises for longtime workers, an end to lower pay for entry-level workers and new product guarantees what would create jobs at U.S. factories.

Despite the differences, union officials and GM executives said they were confident at a Monday ceremony that they could negotiate a deal that will make both sides happy.

“A successful GM is good for shareholders, but it’s also good for employees,” CEO Mary Barra said.

Yet workers want to “bridge the gap” between longtime workers who make $29 per hour and entry-level workers who top out at $19.28, UAW President Dennis Williams said.

“Some of them are not part of the middle class like they should be,” he said of the lower-paid workers.

The union agreed to the lower-tier wages to help the companies as they were headed into financial problems in 2007. Hourly pay rates have been essentially frozen since 2005.

“The UAW says it’s our turn. We’ve sacrificed,” said Kristen Dziczek, head of the industry and labor group for the Center for Automotive Research, an industry think tank. “The companies say we can’t go back to old ways; we can’t go back to getting locked into wage increases that multiply over time.”

In the 1970s, the talks set wages for 1.5 million UAW members and were the benchmark for blue-collar America. The negotiations now cover only 140,000 workers but still set the bar for workers in auto parts, agriculture and heavy equipment. About 3,800 work at GM’s Arlington Assembly Plant, where the company builds large sport utility vehicles, including the Chevrolet Tahoe and Cadillac Escalade.

Although members want to do better, they also want job security, Williams said. Companies have talked about moving production to Mexico, especially in lower-margin small cars. Last week Ford said it would stop making the compact Focus and C-Max hybrid at a factory in Wayne, Mich., a Detroit suburb.

Presumably the production would be moved to Mexico with the plant getting a different product. Also, earlier this year, GM announced that it would start building the Chevrolet Cruze compact in Mexico in addition to a factory in Lordstown, Ohio, east of Cleveland.

The union’s contracts with GM, Ford and Fiat Chrysler expire Sept. 14. Talks with Fiat Chrysler open today, while Ford’s talks officially begin next week.

This story was originally published July 13, 2015 at 4:37 PM with the headline "UAW, General Motors confident they can reach contract deal."