UAW workers are poised to get a wage increase and not face a concessionary contract in what is proving to be a historic negotiation between the union and General Motors, Stellantis and Ford Motor, according to sources familiar with the talks.
GM is expected to offer a wage increase for its 50,000 hourly workers in the new contract, according to two people involved in the bargaining who talked to the Detroit Free Press but asked to not be identified because the negotiations are ongoing. But the automaker is not as ready to return cost-of-living adjustment benefits, a raise to keep up with inflation, to UAW paychecks, the sources said.
All three automakers officially started bargaining with the UAW earlier this month. While the UAW has not declared a lead automaker in the contract talks, GM offering a wage increase could mean Ford and Stellantis will follow suit if the history of pattern bargaining takes place.
Stellantis North America COO Mark Stewart told employees recently in a letter that the company is not seeking a concessionary contract but he left the automaker’s options open, saying “we must focus on improving efficiency, productivity and unplanned absenteeism.” On Wednesday, Stellantis CEO Carlos Tavares said the goal of the UAW talks will be to protect the profit-sharing bonuses hourly workers get for years to come.
The exact details of a wage increase GM might offer or the specific asks Stellantis and the others may make have not been shared.
But the fact that the automakers are even talking about such topics as wage increases and concessions, historically reserved for behind closed doors, is a sign that these labor talks will be like no other, labor experts say.
“It’s unusual given (automakers) history of playing things very close to the vest,” said Marick Masters, a business professor and labor expert at Wayne State University. “They realize it’s a new ballgame because the UAW has insisted on transparency with its membership. The companies are trying to get ahead of the public relations game and say, ‘Don’t paint us in a corner that we’re going to play hard and be nasty. We are willing to be generous, but it has to be negotiated.’ “
Reuss and Farley take to the press
GM spokesperson Pat Morrissey would not comment directly on whether GM will offer wage increases or COLA, but he said, “We have a long history of negotiating fair contracts with the UAW that reward our employees and support the long-term success of our business. Our goal this time will be no different.”
Ford declined to comment for this article.
But GM and Ford leaders recently penned op-eds about the upcoming negotiations. In GM’s op-ed, which was published in the Detroit Free Press on July 12, President Mark Reuss hinted at a raise, writing, “We believe our manufacturing employees should be recognized and rewarded and should share in the company’s success.”
Reuss wrote that GM is “committed to offering competitive packages that can accommodate the evolving needs of our manufacturing teams and recognize their contributions to the company’s current and future success.”
In Ford’s op-ed, published in the Detroit Free Press on June 29, CEO Jim Farley defended the wage Ford currently pays its 57,000 hourly workers without committing to a raise or giving a cost of living adjustment.
“We’ve heard some claims that our wages have remained stagnant, but the truth is that over the past eight years, UAW-Ford employees have received wage increases plus annual inflation bonuses of $1,500 per year, which exceeded the cumulative compensation gains they would have experienced under a straight cost of living adjustment,” Farley wrote. “By the end of the current contract, 80% of all Ford’s UAW-represented employees will be making the top wage rate of $32 per hour.”
He urged collaboration rather than concessions but noted that as Ford transitions to offering more electric vehicles, “Success in this new world will require us to adapt. Some jobs will be disrupted, and some will be created. Navigating that disruption means collaborating on what it will take for Ford to compete and win — striking the right balance between investing in our collective future and sharing the value we create together.”
In the Stellantis North America letter, which was obtained by the Detroit Free Press, Stewart said he’s confident the the automaker and the UAW can reach a mutually acceptable agreement.
A ‘moment for change’ for the union
The idea that GM will offer a wage hike might seem obvious given that most recent contracts have included a wage increase. But it shouldn’t be taken for granted, experts said.
“There was a 10-year time period where there wasn’t a wage increase,” Masters said. He is referring to the early 2000s when the Great Recession hit, leading to bankruptcy filings by GM and then-DaimlerChrysler. Ford took out huge loans to survive that period.
“(Automakers) introduced profit-sharing and other bonuses, which didn’t go into the fixed base pay of the workers because they just weren’t able to negotiate that given the bankruptcy and the leverage situation that Ford took in 2007,” Masters said.
From the end of World War II through the mid-1970s, there was often more money on the table given the impressive productivity of the industry and the high profits Detroit automakers recorded, said Harley Shaiken, professor emeritus at the University of California, Berkeley. But the auto sector is volatile and has endured turbulent economic times, too, he said.
“During tough economic times, the union was, at times, willing to give temporary concessions to avoid plant closures and job loss,” Shaiken said. “What has angered many workers is what they thought would be temporary wound up becoming permanent features of the industry. The union has signaled this is a moment for change and that sets the stage for a tough set of talks.”
The odds favor a raise
The UAW did not respond with a comment for this article, instead referring to comments President Shawn Fain recently made. He noted during Facebook Live talks to members in recent months how in the past decade the Detroit carmakers have made billions in profits.
“Ford, GM, and Stellantis have made a quarter of a trillion dollars in the past decade,” Fain said during a Facebook Live presentation on June 16. “Those profits are made off the work and sacrifice that our members deliver every day. We took cuts in hard times to save these companies. We had our job security provisions and cost of living adjustments that were suspended. Wages were reduced and have remained stagnant. We lost pensions, we lost post-retirement health care. Plants are still closing, and jobs have disappeared. Now business is booming, so it’s time we set things right.”
On Tuesday, GM reported a 53% increase in net income to $2.5 billion during the second quarter compared with the year-ago quarter. The company said it had $5.5 billion in adjusted automotive free cash flow — basically the money it has to spend after paying its expenses and taxes — for the quarter. That’s up from $4.1 billion a year earlier.
On Wednesday, Stellantis said it set new records for its financial results in the first half of the year, including $12 billion (10.9 billion euros) in net profit.
Fain wants a fair share of the money for his members and he has outlined the UAW’s demands as ending wage tiers, ensuring job security amid the electric vehicle transition and reestablishing COLA. He has concerns about lower wages at battery plants, such as GM’s joint venture Ultium Cells LLC in Lordstown, Ohio, where the United Auto Workers union is bargaining a new contract. The union wants to bring battery workers under the master agreements with the three automakers.
But the Detroit Three are already at a cost disadvantage, Masters said. The Detroit Three pay, on average, about $64 an hour with wages plus benefits, he said. But competitors of foreign vehicles at U.S. factories, where the union does not represent those workers, pay an average hourly compensation of $55 per hour. Rival electric vehicle maker Tesla, also a nonunion shop, pays $45 to $50 an hour, Masters said.
That’s why it is important to listen to what is being said and what is not being said, Masters said.
“The union is saying we want a wage increase and a COLA,” Masters said. “The automakers are not saying, ‘We’ll give you a wage increase and a COLA or embellish profit-sharing or eliminate the tiers or facilitate (the union’s) organizing of the electric vehicle plants or battery plants automakers are building. It’s highly likely they’ll get a wage increase of some amount to make up for inflation, but that could be a far cry from paying a wage increase and a COLA” and everything else the UAW wants.
Likewise, Masters said, the idea that the carmakers won’t ask for some concessions from the union is unlikely given how costly it is going to be for the companies to retool plants or build new plants for the transition to EVs.
“The asks on both sides will be pretty big,” Masters said.
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Free Press staff writers Eric D. Lawrence and Phoebe Wall Howard contributed to this report.
Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber.