DEARBORN, Mich. — Contract talks between the United Auto Workers and Detroit’s three automakers kicked off with the union president departing from the traditionally friendly tone by telling Ford executives that workers want a bigger share of the companies’ record profits.
While Ford executives talked often about working together at a ceremony Monday, UAW President Gary Jones emphasized that he wants to end concessions and the companies outsourcing jobs to countries with lower-cost labor.
”We will protect our work, our jobs and our way of life,” Jones said. “We expect an agreement that recognizes our contributions.”
Bargaining over new four-year contracts between the Detroit automakers and the union representing 142,000 workers nationwide started Monday with a ceremonial handshake at Ford’s Dearborn, Michigan, headquarters.
The two sides have been at relative peace during recent good times, but that could change as auto sales and profits begin to slow, health care costs rise and a labor cost gap widens with workers at foreign-owned assembly plants in the South.
Bill Dirksen, Ford’s chief negotiator, tried to return to a more cooperative tone Monday, noting that there will be differences between the company and union.
”It’s up to us to figure out those solutions, and I think we can do it.”
Talks with General Motors and Fiat Chrysler will begin on Tuesday. The union’s four-year contract with all three expires at 11:59 p.m. Sept. 14.
Here are some key things to know heading into the negotiations:
Could the union go on strike?
Yes. At a bargaining convention in March, Jones told delegates that the union is raising strike pay and said it would walk out if necessary. The UAW also has been opposed to GM’s plans to close the factories, including large assembly plants in the Detroit area and in Lordstown, Ohio, near Cleveland. On Monday Jones said members will do “whatever is necessary” to get a contract they deserve. A strike is unlikely before the contracts expire at 11:59 p.m. Sept. 14.
What happens if there is a strike?
It depends on how long it lasts and how widespread it is, but a targeted company would quickly run out of parts and couldn’t build vehicles. Consumers would see fewer cars and trucks on dealer lots, and they wouldn’t be able to special order vehicles. Companies and workers would lose money. The last time UAW workers walked out of auto plants was in 2007 in a short strike against GM.
What are the issues?
Companies are looking to trim hourly labor costs, which have grown when compared with Southern U.S. factories run by Toyota, Nissan, Hyundai-Kia, Volkswagen and others. Fiat Chrysler pays about $55 per hour in wages and benefits to UAW workers, while it’s $61 at Ford and $63 at GM. That compares with an average of $50 per hour at plants owned by foreign-based automakers, according to the Center for Automotive Research, an industry think tank.
Automakers want costs to be closer to their competitors so they don’t have to charge higher prices or reduce profits like they did before the Great Recession. “We have to stay competitive because consumers ultimately are going to be the ones who decide who wins and loses,” said Ford President Joe Hinrichs.
Higher labor costs were among the reasons GM and Fiat Chrysler needed government bailouts and bankruptcy protection in 2009. UAW-represented workers make about $30 per hour in wages alone. Also health care costs are growing, and UAW workers pay only about 5% of the cost. Salaried workers pay about 30%. Automakers would like UAW workers to help reduce costs.
Still, the Detroit Three keep making big money. Together they posted over $15 billion in net profits last year. Workers also would like to shift more of their pay from profit sharing, which can fall in a downturn, to hourly raises.
This year GM workers got $10,750 profit-sharing checks for 2018, while Ford workers got $7,600 and FCA union members got $6,000. Then there are the GM plant closures in Michigan, Ohio and Maryland. The union wants new products for the factories, which employed thousands of workers. Most will get jobs at other GM plants, but will have to move to do so.
“I’m still holding out hope that GM will put a product in there,” said Dave Green, president of a UAW local at the now-closed Lordstown plant, which made the Chevrolet Cruze compact car. Lordstown has become an issue in the 2020 election because President Donald Trump pledged to bring manufacturing jobs back to northern Ohio.
GM has a tentative deal to sell the plant, but workers are skeptical.
Both sides seem far apart. Is it possible to settle without a strike?
Yes. Companies could make guarantees of new vehicles and jobs in exchange for concessions. Automakers also are likely to seek more use of temporary workers to reduce costs to fund pay raises. Health insurance may be a thornier issue.
“Health care is kind of the third rail of bargaining,” said Kristin Dziczek, vice president of industry and labor at the Center for Automotive Research. “People like what they have and they like not having to pay very much for it,” she said.
Automakers and the union have jointly studied reducing costs with wellness programs or by bulk-buying common surgical procedures at top-notch medical centers, Dziczek said. Workers would have to travel, but they’d get world-class care, she said.