By Nora Naughton and Mike Colias
General Motors Co. and the striking United Auto Workers union
are dueling over two main issues: how fast to move newer hires up
to the top wage and how soon temporary workers should qualify for
full employment.
As the union's walkout at GM closes out a third week, the UAW is
pushing to shorten the eight-year time period it takes for a new
worker at GM to reach full pay of about $30 an hour, according to
people close to the talks. The auto maker has resisted the demand
because it could add to its labor costs, they said.
The eight-year timetable has frustrated UAW workers who say it
creates a situation where many union-represented workers are
earning less for performing the same job as more-veteran colleagues
-- a pay disparity that is at odds with the union's core belief
that workers should earn equal pay for equal work. New hires start
out at about $17 an hour and get yearly raises until they reach
full pay.
The UAW is working to lock in a new four-year labor contact for
tens of thousands of hourly workers at GM before turning its full
attention to negotiations with Ford Motor Co. and Fiat Chrysler
Automobiles NV. Contract talks, which continued Friday, entered a
critical phase in the previous week as UAW and GM bargainers moved
onto bigger economic issues, such as wages and benefits.
Talks will continue into the weekend, according to a letter from
UAW Vice President Terry Dittes to GM workers. While many major
differences remain unresolved, Mr. Dittes said the sides are making
progress on health care and temporary workers.
The strike, now the longest nationwide walkout at GM since 1970,
has halted production at more than 30 company plants in the U.S.
and suspended work at about two dozen GM-owned parts warehouses and
distribution centers.
GM has also proposed giving temporary workers a formal path to
full-time employment, addressing one of the UAW's key demands
heading into contract talks. Absent a formalized process, workers
at GM can remain on temporary status indefinitely.
The Detroit auto maker has roughly 3,000 temporary workers, or
about 7% of its total workforce, a number that fluctuates based on
production schedules. These employees are also represented by the
UAW.
Company bargainers told the union earlier this week that GM was
willing to give any temporary worker with three consecutive years
of service full-time status, people familiar with the matter said.
But the UAW pushed back, saying the proposal still doesn't provide
enough job security and lacks language that would prevent GM from
laying workers off before they hit the three-year mark, the people
said.
The two sides have moved closer on the issue and are now
negotiating over how to calculate the time served, the people
said.
Health care, a major sticking point heading into talks, is
largely settled, according to people familiar with the
negotiations. In an early offer, GM proposed having UAW workers pay
up to 15% of health-care costs out of pocket but the union quickly
shot it down and the out-of-pocket obligation will remain unchanged
at around 3%, the people said.
GM also offered earlier this week to remove a $12,000 cap on
profit-sharing checks handed to workers each year but made it
contingent on the UAW giving up other bonus money. That proposal
was rejected, the people say. Under the current formula, workers
get paid $1 for every $1,000 the company makes in North America.
Profit-sharing checks in recent years have approached $12,000.
While GM and the UAW keep negotiating, contract talks with Ford
and Fiat Chrysler have progressed on some topics, according to
letters sent by UAW leaders to members this week. But on large
economic issues, such as wages and benefits, negotiators at those
two companies will wait until a deal is struck at GM and then use
it as a template, as is typical in pattern bargaining.
GM, Ford and Fiat Chrysler have relied on new hires earning less
than veteran workers as a way to keep their labor costs competitive
with foreign rivals who operate nonunion plants in the U.S.
South.
But the eight-year timetable, implemented in the union's 2015
contract, has been a source of contention and workers want to see
it shortened or eliminated completely.
"You've got people working on the line making $8 or $9 less [per
hour] than the person next to them doing the same job," said Andrew
Pinchen, an electrician at a GM transmission plant in suburban
Detroit. "People understand the concept of some grow-in period, but
eight years is a long, long time."
All three U.S. car makers are trying to keep their labor costs
in check in this round of contract talks, wary of a potential
downturn in the U.S. car market following years of strength. Those
costs have crept up in recent years as the union made progress in
winning pay and benefits lost in previous rounds of bargaining,
particularly around the recession.
GM and Ford's all-in labor costs, including wages and benefits,
have topped $60 an hour for the first time since before the
recession. Fiat Chrysler's hourly rate reached $55 this year. By
comparison, foreign car companies, which don't have unionized
factories in the U.S., spend an average of $50 an hour on labor,
according to the Center For Automotive Research in Ann Arbor,
Mich.
While labor accounts for only about 5% of the cost of building a
vehicle, it is one of the few cost components the companies can
control, labor experts say.
Deutsche Bank analyst Emmanuel Rosner in a note Friday raised
concern that GM's eventual UAW contract could result in higher
fixed costs than investors had expected. He said the impact is
difficult to quantify but has reduced his earnings-per-share
estimate for GM in 2020 to $7.05, from $7.40.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
October 04, 2019 17:56 ET (21:56 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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