UAW Ready to Trade Wages for Jobs?

By Charles Krome

Some time later this year, the folks at GM’s Orion Assembly plant, located in Orion Township, Mich., will start putting together the all-new Chevrolet Sonic and Buick Verano. It will mark a significant change in the General’s usual strategy of building its small cars in other countries with reputations for low labor costs, but that’s because it marks a significant change in the UAW’s usual strategy, too. As some readers may already know, as part of its efforts to support GM’s recovery from bankruptcy, the union agreed to institute a two-tier wage scale at the plant. While veteran workers will continue to earn their usual salaries, newcomers will be hired in at pay rates some 40 percent lower.

And now the Detroit media are reporting that the UAW will consider extending the two-tier system to other GM plants, again in return for the promise of more jobs. It’s just the latest news about what this fall’s union negotiations with the Detroit Three will likely bring, but it’s also one of the few areas in which the UAW is expected to cut the OEMs some slack.

With the return of Ford and GM to profitability, UAW members are eager to cash in on those companies’ success, and it’s easy to understand their point of view. Both those automakers took in billions of dollars of profit in 2010, but that performance wasn’t based on historically high vehicle sales. So where did it come from? Well, a lot of it was the result of cost cutting, and a lot of the cost cutting came in the form of union givebacks. To the union members, it probably looks like a nice chunk of the money they gave up went straight into Ford/GM profits.

The union also is talking tough about the transplants again. UAW President Bob King has made it an explicit goal to organize at least one of the foreign OEM’s U.S. plants this year, and the union’s recent national convention saw the creation of a Global Organizing Institute, which will seek to put pressure on those companies in their home countries as well.

Unfortunately for the union, both of these efforts will face more than the usual amount of difficulty. The UAW has traditionally used what’s called “pattern bargaining,” in which it first concentrates on negotiation with just one of the Detroit companies and then seeks to implement that same contract at the others. But in today’s industry, with GM and Ford clearly outperforming Chrysler, that’s not going to be so easy. A contract that’s “fair” for Chrysler would give the other two OEMs a huge advantage, while one that’s tailored to Ford or GM would certainly be too difficult for Chrysler to swallow.

On the transplant front, the recent disasters in Japan are going to make it very difficult for the UAW to take a hard line with Toyota, Honda or Nissan, which would mean putting the bull’s-eye on Hyundai-Kia. But given the still-fragile state of the economy in general, and the job outlook specifically in rural Georgia and Alabama, where the companies build cars, I’m betting most people there are plenty happy with the status quo. Which brings us back to the UAW’s two-tier wage structure.

If the union’s willingness to expand that system truly signals a change in strategy that puts more of a focus on jobs than on wages, it also may mark the rebirth of the UAW as a leading player on the U.S. labor scene. Of course, it also may help if the union decides to sell its multimillion-dollar, 1,000-acre golf resort in northern Michigan.

Author: Charles Krome

Charles Krome is a long-time automotive journalist who spent more than 10 years on the inside at General Motors and Ford, and also has corporate communications experience with Audi, Porsche and BASF Automotive Refinish. As a big motorsports fan growing up in the Detroit area, Krome was lucky enough to be able to attend numerous NASCAR, Indy car, F1 and SCCA events while still in his formative years. This, combined with a childhood that included significant (passenger) seat time in cars from Lotus and Jensen Healey, made him a car guy at an earlier age. Today, he lives in metro Detroit with his car wife, raising car kids.

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1 Comment

  1. So, the difference in wages is not based on experience (or merit), but it is based on the time of hire. For instance, if a new 50 years old experienced worker is hired (say, from Ford into GM), he or she will earn 40% less than an existing 50 years old GM worker with the same amount of experience. That is archaic.

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