Editorial: UAW members must face contract reality

The Detroit News

The UAW rank and file is obviously not pleased with the tentative labor contract President Dennis Williams and FCA US CEO Sergio Marchionne agreed to two weeks ago, even though it provides significant economic rewards for workers.

Williams, just a year and a half into his role, has done a poor job of selling the deal, allowing those who oppose it to out-message him on Facebook and other social media. There is perhaps an element of distrust between leadership and the members, and there is certainly displeasure that the pact doesn’t fully address every concern workers have.

The fate of the contract won’t be known until all votes are in, but already several major locals have rejected it, indicating it faces an uphill battle. That’s unfortunate, particularly as it seemed to be a promising deal, narrowing the gap of the two pay tiers and providing a solution for mounting industry health care costs.

It’s possible Marchionne and Williams could rework the pact significantly enough to address member concerns, which include the preservation of the two-tier wage structure. A strike is also possible, though unlikely. Or Williams could turn instead to General Motors or Ford Motor Co. to set the pattern for this year’s deal.

But members should be careful in demanding too much. Though automakers are doing better financially, they are still operating in a globally competitive market. Part of the reason for improved financial performance is the more rational labor contracts that came out of the 2008 industry collapse. The automakers also must deal with huge regulatory costs to meet upcoming emission and mileage mandates.

Where the rank and file are demanding this contract fix everything at once, Williams seems to understand that moderate wage increases combined with profit-sharing is the best way to reward workers without placing the company at risk.

Marchionne shares the union’s dislike of the two-tier pay system, so it is likely to go away at FCA over time.

This is not an austerity contract. It includes wage increases for both tiers, a $3,000 ratification bonus, profit sharing and more than $5 billion in plant investments to keep UAW members working.

In assessing the impact of a four-year agreement, the automakers must calculate the uncertainties of gasoline prices, the cost of future regulations and the chance of an economic downturn. They can’t assume current conditions will last.

Williams did a good job of negotiating a contract that is generous to his members while recognizing the company is not that far out of bankruptcy and will not be able to give the union everything it wants at once.

Now he needs to do a better job of selling it.