FCA, GM warn their futures are at stake ahead of UAW talks
There was no hug this year, as leaders of Fiat Chrysler Automobiles and the United Auto Workers leaders kept their distance Tuesday beyond a handshake to start contract talks.
Mark Stewart, chief operating officer for FCA in North America, followed General Motors Co. CEO Mary Barra on Tuesday in laying out the realities of the auto industry's future as the union calls for a greater piece of the record profits that the Detroit Three have made since workers ratified the current contract in 2015. The executives emphasized the pressures the carmakers are under as they lay the foundation for developing autonomous and electric vehicles.
"I want to make this crystal, crystal clear," Stewart said Tuesday at the Italian-American automaker's North American headquarters in Auburn Hills. "Our operational flexibility, the flexibility of our competitive cost structure we created together are needed to continue to fund these investments with electrification and the future of all of our company."
The FCA and GM handshakes followed Monday's contract negotiation kickoff for the Detroit Three Monday at Ford Motor Co.
When the current contracts expire after 11:59 p.m. Sept. 14, automakers will want agreements to contain spending over the next few years in anticipation of a decline in the industry. The UAW, meanwhile, will be looking to secure its members' jobs and to see the automakers' recent profits reflected in workers' paychecks after laborers took benefits cuts and taxpayers bailed Chrysler and GM from Chapter 11 bankruptcy in 2009.
"We invested in you, now it’s your turn to invest in us," UAW President Gary Jones said Tuesday in Detroit to a standing ovation from dozens of union members. "In other words, the United States of America taxpayers invested in you, now it’s your turn to invest in them."
Rallying cries of "UAW! UAW!" echoed in the Renaissance Center ahead of the official start of contract talks with GM. But Barra took to the stage to warn that "our collective future is at stake."
"While this industry has always been competitive, we must admit, it’s only getting more so," Barra said before offering the ceremonial opening handshake. "More than ever, we must be agile, decisive and disciplined. We must be proactive on all fronts because we are not here merely to survive. We are here to lead it and to win. To build a stronger future, we need to win, we must deliver vehicles customers want today to earn a chance to compete tomorrow, invest in the talent and technologies of tomorrow to win as our industry changes, and create financial flexibility to protect ourselves from the threats today and capitalize on tomorrow’s opportunities."
Four years after the last round of bargaining, expensive investments into electric and autonomous vehicles, and uncertainty around environmental and trade regulations make for a complex negotiating background.
The automakers recently have announced major investments into future technology. FCA is building a new assembly plant in Detroit for plug-in hybrid Jeeps. GM in March said it would spend $300 million for a new electric vehicle in its Orion facility.
"What's at stake and the opportunity for whoever gets it right is absolutely huge," Barra said. "It represents growth, and that means jobs."
Autoworkers say they are concerned with job stability and what future technology means for their jobs. Experts say the UAW will be disinclined to buckle on issues like health-care costs, wage increases, temporary employees and future product allocation. And that could lead to strikes — a possibility for which the union has prepared by increasing strike pay.
Taking center stage in Detroit on Tuesday was GM's move to correct its own capacity issues by pulling products from four U.S. plants, including Detroit-Hamtramck Assembly and Warren Transmission. Experts say those plans announced in November make GM a strike target and make for a particularly prickly negotiating period as the union tries to prevent the automaker from permanently closing any plant. In May, the automaker announced plans to sell its Lordstown Assembly plant in Ohio to electric-vehicle start-up Workhorse.
The UAW also is suing GM for its plans to "unallocate" Lordstown, Warren Transmission and Baltimore Operations before the current contract expires. The Detroit-Hamtramck plant is not included in the lawsuit because its production was extended through January 2020, after the current contract expires. Union leaders, who balked at the announcement by GM and Workhorse, are expected to demand a new vehicle for Lordstown during contract negotiations this fall.
"General Motors has the fastest-shrinking footprint in America," Jones said. "We will leave no stone unturned. You put us on the block, our location on the block, we will fight to keep these plants open and allocate products here on American soil."
Meanwhile, an ongoing federal investigation into whether the FCA-UAW negotiations in 2015 were corrupted during a years-long conspiracy looms over the bargaining table. The scandal has led to eight convictions, including former FCA Vice President Alphons Iacobelli. The investigation may lead the union to put up a tough front, especially since FCA and the union reached a deal first in the last round of negotiations in 2015 even after union workers rejected a first agreement. An impromptu hug between the late former FCA CEO Sergio Marchionne and former UAW President Dennis Williams during the handshake ceremony in 2015 drew criticism from the rank and file at the time.
"I think it's been overplayed, quite frankly, and I think our membership knows that those contracts passed last time," UAW spokesman Brian Rothenberg said Monday. "I think the president of the UAW represents members that are going to vote on a contract, and I think that tone is set by the membership."
The UAW's Jones on Tuesday echoed statements from Monday that the UAW would work to fight against companies paying lower wages in the United States, Mexico, China and elsewhere, protect temporary employees and shorten the eight-year timeline negotiated in 2015 to bring workers hired on or after Oct. 29, 2007, to the top of the pay scale. He added that representatives would look to ensure its 156,000 members have the training, tools and safe environment to keep up with the industry's advancements.
The UAW is expected to angle for wage increases in place of profit-sharing or lump sums dependent on profits that automakers prefer because those costs do not compound on themselves. Carmakers also are expected to focus on reducing health care costs, adding more temporary workers to the lines and prepping plants for EVs and self-driving cars.
Average hourly labor costs for foreign carmakers building vehicles in the U.S. are estimated to be $50 per hour compared to GM's $63, FCA's $55 and Ford's $61, according to the Center for Automotive Research.
"As we look to the future, we must remember as well how far we’ve come since the bankruptcy in 2009," FCA's Stewart said. "We cannot, we will not repeat those actions that put us in those dangerous financial positions. We cannot return to our old ways of doing business or we’re risking the same results. We need to learn from the past."