UAW-GM tentative agreement lays tough pattern for Ford, FCA
The United Automobile Workers' proposed tentative agreement with General Motors Co. is expected to set the "pattern" for the automaker's crosstown rivals to follow, and the framework laid Thursday — if ratified — would be expensive for the other two Detroit automakers.
Both Ford Motor Co. and Fiat Chrysler Automobiles NV have signaled they want to cut costs during contract negotiations. The larger economic pieces of the UAW's proposed contract obligate GM to pay a record $11,000 ratification bonus; grant 3% raises over two years and 4% lump-sum bonuses in the other two; make no changes to the existing health care plan, plans all three automakers have said would be too pricey to maintain in coming years.
The tentative agreement proposed Thursday to UAW local leaders grants GM the ability to close three of its plants in the United States. But the union-created document lays out little that would lower labor costs ahead of what automakers around the globe anticipate will be a disruptive and expensive decade of change.
"I'm sure neither Ford nor Chrysler is going to be thrilled with the economics of this deal," said Arthur Schwartz, president of Labor and Economics Associates in Ann Arbor and the former general director of labor relations at GM. "It's probably richer than 2011, and probably somewhat richer than 2015."
Once a tentative agreement is ratified, the automakers that spent the past 32 days on the outside of negotiations looking in will move to main table discussions with the UAW leaders. That move would come weeks after UAW officials at Ford and Fiat Chrysler notified membership that they'd completed a majority of their subcommittee negotiations.
"We now have 18 out of 20 subcommittees that have reached tentative agreements or have negotiated to the point that only patterned or large economic items remain open for discussion," UAW Vice President Rory Gamble, head of the union's Ford department, wrote in an early October note to members.
A day later, Vice President Cindy Estrada, head of the union's FCA department, wrote that "some of the committees are close to completing to the point where the only issues left are economic or patterned that will be resolved once the UAW-GM negotiations are settled."
If that's the case, the negotiations to reach tentative agreements at the other automakers would likely be quicker than those that took more than three months at GM, experts said. It's unclear how much can be tweaked from the GM contract if UAW-GM members ratify the agreement.
Ford and Fiat Chrysler spokeswomen declined to comment directly on GM's tentative agreement, or how it could effect respective negotiations with the UAW. It was also unclear Thursday which automaker would be next to negotiate.
"Our focus is reaching a fair agreement with the UAW that allows the company to be more competitive so we can continue to preserve and protect good-paying manufacturing jobs and maintain our track record of investing in our U.S. plants," said Ford spokeswoman Kelli Felker in a statement.
"Bargaining between FCA and the UAW continues with the goal of reaching an agreement that will allow us to continue investing in our future while creating opportunities for our employees, their families and the communities where we live and work," said Fiat Chrysler spokeswoman Jodi Tinson in a statement. "We thank all of our employees for their continued hard work and dedication."
In years past, the Detroit Three agreed to the same wage increases for UAW members. The automakers also had the same health care packages, profit sharing agreements and pay for temporary workers. But some aspects of the proposed GM contract could disproportionately affect Ford and Fiat Chrysler.
The record-setting $11,000 signing bonus GM is offering UAW members upon ratification of the contract would hurt Ford, which has more hourly UAW workers in the U.S. than GM. It's unclear the other Detroit automakers would pay a similar ratification bonus. They didn't in 2015: GM paid workers hired before 2007 $8,000 after ratification; Ford paid $8,500; and FCA paid $4,000 to legacy employees.
Ford stands to take a greater hit from a lack of change to health care. GM had initially proposed to raise health care costs for UAW members — which are some of the lowest in the country — but ultimately there's no change.
Meantime, Fiat Chrysler has more employees hired after 2007 than the other two automakers. Changes to pay for in-progression workers hired after 2007, and the temporary workers that were hot-button issues during the GM contract talks, could cost Fiat Chrysler over the next contract term if the automaker has to hash out a similar deal.
Experts cautioned there is wiggle room in pattern bargaining. In years past, automakers had the same agreement for some pieces of the contract, and negotiated different ratification bonuses, retirement incentives, retiree benefit changes and other bonuses.
"They do come generally close," said Kristin Dziczek, vice president of industry, labor and economics at Ann Arbor's Center for Automotive Research. "They don't have to follow it exactly."
Said Schwartz: "Chrysler may push back on in-progression. And all three companies have different kinds of performance-based bonuses. They could be a little bit different."