P&A Providers & Administrators
MenuMENU
SearchSEARCH

For UAW, Jobs Trump Pay

July 25, 2011
5 min to read


FLAT ROCK - Detroit auto makers and the United Auto Workers union open talks on a new labor contract this week, and plenty is on the line for workers like Dustin Boyd.


A 16-year veteran of Ford Motor Co., Mr. Boyd works on the assembly line at the auto maker's plant here, which cranks out cars just eight hours a day. The rest of the time it's idle.

Ad Loading...


In the contract talks, Mr. Boyd would like to come away with higher wages but he thinks it is even more important for the UAW to convince Ford to make more cars in Flat Rock and add a second eight-hour shift of production, which would preserve his job and add hundreds more, reported The Wall Street Journal.


"We know that we need more product in the contract because that will mean more jobs and job protection for the rest of us," Mr. Boyd, a second-generation Ford employee, said last week.


This year's talks are the first since the U.S. government bailout of General Motors Co. and Chrysler Group LLC and may prove less adversarial than others in the mostly contentious labor history between the UAW and the auto makers because of recent restructurings, no-strike clauses at two makers and public antipathy toward the bailout.


The auto makers are still looking to reduce labor costs further. They remain at a significant competitive disadvantage to foreign-owned auto plants in the South even after restructurings put their costs on a par with some U.S. plants owned by Toyota Motor Corp. and Honda Motor Co.


Ford now says its costs for an hour of UAW labor total $58. GM's cost is about the same and Chrysler's is $49. That compares to about $27 an hour at Volkswagen AG's new plant in Chattanooga, Tenn., and Hyundai Motor Co.'s plant in Montgomery, Ala., according to labor experts.

Ad Loading...


Chrysler's vice president of employee relations, Al Iacobelli, calls the talks a "unique opportunity" to expand its work force "intelligently by keeping labor costs competitive." Marty Mulloy, Ford's vice president of labor affairs, is optimistic the negotiations won't be contentious. "We have a history of working collaboratively together to find solutions to critical issues."


The UAW has vowed not to give further concessions, but one key factor in this year's talks is that the three Detroit companies are expanding and adding union jobs as U.S. auto sales recover.


Some company executives hope they will be able to trade promises of jobs for further cost reductions, according to people familiar with the auto makers' thinking.


The negotiations for more than 112,000 hourly workers will be closely watched not only in Detroit but across the country because taxpayer dollars financed the industry's rescue. In June, the White House said taxpayers could lose roughly $14 billion on the bailout but argued that the industry's failure would have cost more.


In this set of talks, Ford, GM and Chrysler want to be free of fixed wage increases for workers that were part of past UAW contracts. Instead, they are willing to offer profit sharing and performance bonuses that allow workers to share in the companies' prosperity. Company negotiators are also expected to push cost savings for health-care benefits. Active UAW workers now pay only about 5 percent of the cost of their health care, compared with 25 percent to 30 percent for white-collar workers, auto executives said.

Ad Loading...


"It's going to be a very tough set of negotiations," said Joe Ashton, the UAW's chief negotiator for GM. "The vast majority of members want jobs and they want job security. They never want to go through what we went through in '09 when we faced bankruptcy and plant closings."


That's where adding jobs may sweeten the pot. At Flat Rock, where UAW Local 3000 represents about 1,700 workers, union members worry that the plant could close without more work. Ford's joint-venture partner here, Mazda Motor Corp., said this year it plans to move its entire production out of the plant within 18 months.


But if an agreement is reached, Ford may commit to add workers not only at Flat Rock but at other plants around the country because all but two operate at less than full capacity. Ford is the only Detroit auto maker without a no-strike clause and has had the highest annual profit and outstanding debt of the three.


The UAW is hoping GM will reopen its plants in Spring Hill, Tenn., and Janesville, Wis., in the next few years as U.S. industry sales rise from about 12 million vehicles this year to a projected 14 million in a few years. GM has already announced expansion plans at plants in Toledo, Ohio, and in Flint and Lansing in Michigan. But, says Cathy Clegg, GM vice president of labor relations, "We certainly aren't going to make a decision and make a commitment solely as a way of getting an agreement if the market doesn't drive it."


Chrysler has no plans to reopen plans but is willing to consider letting UAW represent certain jobs in its plants that are now filled by non-union labor that could add hundreds of union jobs to its payroll.

Ad Loading...


Ford is likely to face the toughest contract talks. The Dearborn, Mich., auto maker avoided a government bailout and bankruptcy restructuring in 2009, but now has the highest labor costs and its workers still have the ability to strike. In 2009, Ford workers rejected concessions sought by both the company and agreed to by the UAW's leadership including Mr. King.


The auto maker posted a $6.6 billion profit last year and hourly workers received a $5,000 bonus. But Mr. King criticized Chief Executive Alan Mulally for receiving a pay package valued at more than $26.5 million last year.


GM and Chrysler have the benefit of no-strike agreements until 2015 that were imposed in their U.S.-financed bankruptcies. If contract talks reach an impasse, either side can request binding arbitration.


More Industry

Photo of gray SUV plugged into public electric-vehicle charger in parking lot
Industryby Hannah MitchellJuly 21, 2026

World EV Adoption Set to Grow

A new report says the segment, despite recent setbacks in some regions, is poised for acceleration as many countries look to reduce pollution.

Read More →
Bar chart of truck and SUV segments' weekly value change
Industryby StaffJuly 21, 2026

Black Book: Weekly Market Update

Wholesale automotive auction business stayed steady last week as bidders encountered lower prices, analysts observed.

Read More →
laptop with blue car on screen on a shopping website, Clear Costs Convert
Industryby Lauren LawrenceJuly 21, 2026

Pricing Transparency Drives Purchase Consideration

An annual study by JD Power found that clear pricing matters to consumers on automaker websites, so much so that it increases their purchase consideration.

Read More →
Ad Loading...
Bar graphic of used-car segment weekly change
Industryby StaffJuly 14, 2026

Black Book: Weekly Market Update

Used-vehicle market depreciation was the prevailing story in the wholesale market last week.

Read More →
Light-blue Fiat car parked on a sunny Chicago street
Industryby Hannah MitchellJuly 14, 2026

Smaller Is Looking Better

A growing number of Americans in the market for a new vehicle are opting for more affordable options, not waiting for market stability to bite the bullet.

Read More →
man sitting at desk using calculator with charts in front of him, to-go coffee cup on desk, rising and falling data chart in front
Industryby Lauren LawrenceJuly 14, 2026

U.S. EV Market Slowly Stabilizes

U.S. electric-vehicle interest is slowly stabilizing since a major dip in sales after last year's end of the federal EV tax credit, and hybrids remain the leading electrified power train.

Read More →
Ad Loading...
blue background, map of the world with connecting lights and an electric vehicle emblem in the middle
Industryby Lauren LawrenceJuly 8, 2026

Global EV Market Entering New Phase

Automakers are making investments to lower battery costs and optimize production to meet changing consumer needs.

Read More →
Bar chart showing week-over-week wholesale automotive price change
Industryby StaffJuly 7, 2026

Black Book Weekly Market Update

The holiday weekend, not surprisingly, put a drag on wholesale automotive activity last week, analysts observed.

Read More →
Photo of Honda CR-V SUV on two-lane road next to roadside trees
Industryby Hannah MitchellJuly 1, 2026

Auto Affordability in Context

Cox Automotive points out the complex circumstances that have led to eye-popping vehicle prices.

Read More →
Ad Loading...
Line chart of used-vehicle days to turn over past week
Industryby StaffJune 30, 2026

Black Book: Weekly Market Update

Automotive auction inventory increased last week, giving choosy bidders even more leeway.

Read More →