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UAW to push for richer deal at GM

Melissa Burden, and Michael Wayland

The United Auto Workers will push for a richer deal with General Motors Co. than it did at Fiat Chrysler Automobiles NV, where members overwhelmingly supported a sweetened, four-year contract in a second round of voting this week.

The union on Thursday announced GM as its second negotiating target. The notice came hours after the UAW confirmed that 77 percent of workers with Fiat Chrysler voted in favor of a revised contract that provides raises for all workers, including an eight-year progression intended to end the contentious two-tier wage structure that pays newer workers much less than veteran employees.

Increases in base wages, profit sharing, ratification bonuses and other lump sum payments are all on the table for the 52,700 UAW members covered at GM, industry insiders say.

On Thursday, members of UAW President Dennis Williams’ staff went to the bargaining table with GM’s bargaining team at the UAW-GM Center for Human Resources. Talks were planned into the evening, Friday and over the weekend.

Over the past five weeks while Fiat Chrysler was the union’s focus, UAW bargainers continued to meet with representatives of GM and Ford Motor Co. to discuss non-economic issues. That means this new round of bargaining could move fairly quickly.

Williams says parts of the Fiat Chrysler contract could be used for pattern agreements at GM and Ford. “There is pattern issues in here,” he told reporters when a second tentative agreement was reached. Yet “there are things that are also unique to FCA.”

Many of those unique issues were the reason Fiat Chrysler workers voted 2-1 against a first tentative agreement that did not bridge a gap between entry-level and veteran workers, and provided little detail on product and job plans.

Some analysts believe Fiat Chrysler was selected as the union’s first target because it is the weakest of the Detroit automakers and needed a less expensive deal than its rivals.

GM is far more profitable than Fiat Chrysler and has about half the number of entry-level, or second-tier workers. That makes it important for the Detroit automaker to appease veteran workers, many of whom haven’t had a raise in a decade. GM on Wednesday announced record profits in North America. That means it will be difficult for the company to cry hardship.

‘Challenging discussions’

Union leaders at both GM and Ford previously tried to distance themselves from the first tentative deal at Fiat Chrysler, pledging they would bargain for pacts that would specifically reward their members. Williams indicated then that he would seek more lucrative contracts with GM and Ford, given their higher profitability.

“I think it’s going to be some challenging discussions they’re going to have, to craft something to meet the desires of both sides,” said Stephen Brown, senior director of corporate finance at FitchRatings.

Brown said GM and Ford want to keep labor costs at levels no higher than where they are today, but the union has been vocal that it expects the companies to deliver richer contracts. Based on the deal the UAW reached with Fiat Chrysler, analysts expect this contract will add to GM’s labor costs at a time when the automaker wants to reduce labor costs to become more competitive with the Japanese automakers.

Some industry insiders say the union could push for higher wages for GM veteran workers than what Fiat Chrysler’s members will receive, and perhaps even a shorter ramp-up time — less than the eight years at Fiat Chrysler — to close the gap between entry level and veteran workers.

The company could look to offset costs by lowering profit-sharing or seeking health care changes.

Kristin Dziczek, director of the industry and labor group at the Center for Automotive Research in Ann Arbor, said the union has to be careful how much it pushes for fixed-cost raises.

“They have a target of what they want to pay,” she said. “If you want it more in wages, you’re going to take fewer jobs.”

Job growth an issue

Fiat Chrysler’s deal only details about 100 new jobs that would be created over the four years of the contract. It offsets costs with more frequent use of temporary workers and pays many new workers less than current employees. The deal does include an eight-year progression to top wages for entry-level workers; 6 percent wage increases and 8 percent lump-sum payments for veteran production workers over four years; and ratification bonuses of $4,000 for veteran workers and $3,000 for entry-level workers.

Dziczek does not expect job growth in GM’s deal to come close to the number of jobs added by the automaker in the last four years. GM added 6,250 new jobs over the life of the 2011 UAW-GM contract.

GM announced this year $5.4 billion in planned investments at U.S. plants over the next three years, creating 650 new jobs. It announced last week it plans to hire hundreds of workers for its Spring Hill Assembly Plant in Tennessee.

And on Thursday morning, the automaker said it planned to add more than 1,200 jobs at the Detroit-Hamtramck Assembly Plant with the addition of a long-awaited second shift early next year.

‘A cyclical industry’

Art Schwartz, president of Ann Arbor-based consultancy firm Labor and Economics Associates, said negotiations are about keeping the company competitive for the long-term, while attempting to reward workers.

“Since the company’s doing well now, the tendency is to say we need everything now,” said Schwartz, a longtime negotiator with GM. “It’s a cyclical industry. It goes up and down. People shouldn’t get too excited in the ups and too depressed in the downs.”

Schwartz said the contentious talks at Fiat Chrysler could have an impact on what happens at GM.

“I hope that the thought isn’t that we need to turn down the first agreement to get more; that’s not a good way to bargain,” he said. “They need to bargain the first agreement to get a deal that can be ratified.”

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Detroit News reporter Michael Martinez contributed.