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UAW Wants New Job Commitments in Deal With GM

September 21, 2007
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Regardless of what agreement the United Auto Workers and General Motors eventually reach, getting the deal ratified by UAW workers may depend on job commitments.

Detroit’s Big Three automakers, on the other hand, are expected to be highly reluctant to make those commitments.

Talks between the UAW and GM continued Friday, September 21.

Employees at GM assembly plants in Lordstown, Ohio; Spring Hill, Tennessee; and Kansas City, Kansas, are relying on UAW president Ron Gettelfinger to secure new vehicles to replace vehicles they are losing or have lost.

For GM to obtain what it wants—a money-saving health care trust and a two-tier wage system that pays new hires less—it must guarantee investment in U.S. factories, says Tiny Sherwood, UAW Local 652 president in Lansing, Michigan.

“That’s the deal-breaker as far as I’m concerned,” says Sherwood, whose local represents about 3,000 workers at GM’s Grand River plant in Lansing. The plant produces Cadillac sedans and the SRX crossover.

GM will make its investment decisions based on the kind of deal that UAW workers ultimately ratify, says Dave Cole, chairman of the Center for Automotive Research in Ann Arbor. Those investments could reach $5 billion in the coming years, he said.

Lordstown wants a small-car replacement for the Chevrolet Cobalt. But the replacement could go to Mexico if GM can’t get cost-saving work rules and cost reductions from the master agreement that help dramatically close a $20-an-hour labor cost gap with GM's Japanese competitors, he said.

Creation of a retiree health care trust fund, known as a voluntary employee benefits association, would get GM about halfway to that goal, Cole said.

GM, with 73,000 UAW employees and four times that many retirees, has asked the UAW to assume its $50 billion in retiree health care liabilities. GM likely would kick in $30 billion to $35 billion to finance the trust.

Any deal ratified at GM could set a pattern for similar pacts at Ford Motor Co. and Chrysler. The UAW is negotiating on behalf of about 180,000 active employees.

The threat of additional market-share losses has each of the Detroit automakers worried about guaranteeing jobs and investment in UAW-represented factories, says Craig Fitzgerald, an automotive consultant with Plante & Moran in Southfield, Michigan.

The Detroit firms are looking to outsource to suppliers more nonproduction jobs and powertrain work, not lock themselves in to promises of additional high-wage UAW jobs, Fitzgerald says.

“The car companies are looking for more flexibility to outsource chassis and powertrain work, not less,” Fitzgerald says. “Who has confidence that market-share losses will stabilize to the extent that the companies can guarantee jobs?”

Filed by David Barkholz of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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