Top 7 issues in UAW negotiations

Melissa Burden
The Detroit News

Bargaining talks between automakers and the United Auto Workers officially begin in the coming days as they seek to negotiate a four-year contract for more than 135,000 hourly workers at General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles US.

GM CEO Mary Barra, UAW President Dennis Williams and other company and union leaders will meet at 11 a.m. Monday at the UAW-GM Center for Human Resources in Detroit to officially kick off negotiations. Fiat Chrysler Automobiles and the UAW meet Tuesday, and Ford and the UAW will kick off bargaining July 23.

The union’s current contract expires Sept. 14. Top issues for the union and automakers are:

Pay increases for veteran tier-one employees: Veteran hourly workers have not had a wage increase in as long as a decade and securing a base wage increase is among key goals for the union. Automakers, if they agree to it, may try to keep the raise low enough that hourly wages remain less than $30 an hour.

Bridging the pay gap between tier-one and tier-two employees: The UAW wants to bridge the gap between tier-one workers, who earn more than $28 an hour, and more recently hired tier-two workers, who can earn up to $19.28 for doing the same work. FCA employs the most entry-level workers — estimated at more than 40 percent — while GM has less than 20 percent and Ford is at about 28 percent.

Capping percentages of two-tier workers: Companies would like to keep and expand use of tier-two workers, agreed to in the 2007 contract, because it helps lower labor costs. They’ve hired thousands of new workers because of it. But many in the union want to end the two-tier system. It’s possible caps would be set for percentages of entry-level workers at FCA and GM (unlike Ford, they don’t have caps on the percentage of tier-two workers now). Or the companies and union could agree to do away with the two-tier over several years.

Securing vehicle commitments for U.S. plants: Last week, the UAW said the Ford Focus will shift small car production from the Michigan Assembly factory in Wayne after 2018 to a plant outside the United States. Lower wages, an improved workforce and free trade agreements entice automakers to move or add work in Mexico. The union wants to secure new jobs in the U.S. and as many vehicle commitments to U.S. plants as possible.

Profit sharing: The union wants to continue the benefit, which has poured thousands of dollars into workers’ pockets as companies have turned profits. The automakers generally are on board with continuing the practice because they only pay it in good times.

Controlling health care costs: Automakers have seen huge spikes in annual health care costs for hourly workers who enjoy some of the best benefits in the country. They are hoping workers will pick up more of the cost. Williams said he is considering a health care pool to help control costs.

Reducing overall labor costs: Automakers, particularly Ford and GM, want to shave as much off their hourly labor costs (which are higher than FCA and Japanese automakers) as possible. The Center for Automotive Research says average hourly labor costs — including benefits — are $58 an hour at GM, $57 at Ford and $48 at FCA. Honda Motor Co. in the U.S. has a cost of $49 an hour, followed by Toyota Motor Corp. at $48.