GM General Motors Company

By Mike Colias and Nora Naughton 

General Motors Co. and the United Auto Workers are down to a crucial topic at the bargaining table: wages.

The UAW is pressing GM to lock in more guaranteed wage increases for members during the next four-year labor contact, while company bargainers want to give workers more pay in the form of lump-sum bonuses that don't raise their long-term labor costs, said people close to the talks.

Reaching a resolution on this topic is one of the few remaining obstacles, these people said, to getting a new tentative labor pact for the company's 46,000 full-time factory workers and ending a 23-day strike that has brought GM's U.S. factories to a standstill.

The conflict over how to increase factory-worker pay is especially intense in this round of talks, with both sides wary of a possible cooling in the U.S. car market and looking to secure terms on pay for the next four years. U.S. auto sales remain healthy after a record stretch, but have historically been prone to sharp downturns.

The Detroit auto maker, the U.S.'s largest by sales, has said publicly that it wants to better compensate its union-represented workers. But the negotiations are now centered on how much of that comes in the form of a permanent pay increase versus lump-sum bonuses that would be paid out only in the years promised, the people said.

Under the current UAW contact, full-time factory workers at GM start at roughly $17 an hour and top out at roughly $30 an hour after eight years.

Bargainers returned to negotiations this week, after contract talks hit a snag on Sunday when the UAW's top bargainer for GM, Terry Dittes, publicly lashed out at the company and claimed talks had "taken a turn for the worse."

GM returned Monday with another contract proposal and the sides have made progress on crucial issues, including how fast new hires can reach top pay, the people close to the talks said. Negotiators have largely settled several other contentious issues, including health care and a path to full-time status for temporary workers, the people said.

The strike, the longest nationwide walkout at GM since 1970, is taking a toll on both sides. The lost production from idling more than 30 U.S. plants has hit GM's bottom line by more than $1 billion, analysts estimate, and disrupted the launch of a lucrative line of redesigned pickup trucks.

Meanwhile, UAW workers aren't drawing company paychecks, and are getting by on $250 weekly checks from the union, a fraction of their normal pay.

The showdown over wages is typically a core tension during talks and one of the last items to be settled, analysts said.

"It's the battle royal," said Kristin Dziczek, an economist and labor expert at the Center for Automotive Research.

GM wants to build in more flexibility through paying one-time bonuses, so it can compensate workers when profits are healthy but not get stuck with higher labor costs during a sales downturn, Ms. Dziczek said.

The union wants the opposite, assurances its members will improve their wages and have income security through an uncertain period, she added.

"Base-wage increases increase the cost of vacation pay, sick pay, overtime," Ms. Dziczek said. "There are a lot of other things that go up automatically with that."

Each of the past two contracts has included a combination of wage increases and lump-sum payouts. For example, the agreement that expired last month included a 3% wage increase in the first and third years, and lump-sum payouts in the second and fourth years. That let GM avoid raising workers' base wages in those years.

The wages set in the GM contract will have implications for Ford Motor Co. and Fiat Chrysler Automobiles NV because, as is typical in pattern bargaining, the GM talks will set a template for contract talks with the other two U.S. car companies.

In addition to wages, negotiators continue to discuss pay for less-tenured workers, retirement benefits and the amount of a contract signing bonus that each worker would receive upon ratifying the new labor pact.

Under the expired contract, workers hired more recently must work eight years before reaching the top wage. The union wants to compress that timetable, while GM has resisted, the people familiar with the talks said. Bargainers have come closer to a compromise in recent days, the people said, without providing details.

(END) Dow Jones Newswires

October 08, 2019 16:14 ET (20:14 GMT)

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