UAW Said to Seek Early Labor Agreements With GM, Ford, Chrysler

The United Auto Workers will seek early contract settlements in talks with the U.S. automakers this year, breaking a pattern of brinksmanship that stretches at least four decades, two people familiar with the plan said.

UAW Vice President Joe Ashton, who leads bargaining with General Motors Co. (GM), has said the union wants a deal before the current four-year agreements with GM, Ford Motor Co. (F) and Chrysler Group LLC expire on Sept. 14, said the people, who asked not to be identified revealing internal discussions. The union may seek a deal with GM first, one of the people said.

UAW President Bob King favors an early agreement at GM to avoid an attempt by Ford to gain concessions that workers at GM and Chrysler granted before the companies went bankrupt in 2009, the person said. Ford, which avoided bankruptcy and earned $6.56 billion last year, is the only U.S. automaker whose workers refused to accept limits on strikes over wages and benefits.

“Bob will go to GM first because he couldn’t take a rich Ford agreement to GM and Chrysler,” Sean McAlinden, chief economist with the Center for Automotive Research in Ann Arbor, Michigan, said in an interview yesterday. “It would be almost impossible to sell a Ford agreement to GM and Chrysler.”

Michele Martin, a UAW spokeswoman, didn’t respond to a request for comment.

The UAW traditionally targets a lead automaker to set a pattern for wages and benefits that the union then seeks to impose on the other two companies, McAlinden said. Typically, bargaining goes up to or beyond the contract deadline before a deal is reached, he said. In 2007, GM and Chrysler had short strikes before an agreement was reached. Ford hasn’t had a national strike since 1977.

Bargaining History

A review of UAW settlements with the U.S. automakers back to the early 1970s showed the union hasn’t reached an agreement early in that time frame, said William LeFevre, an archivist on labor history at the Walter P. Reuther Library at Wayne State University in Detroit.

“If Chrysler or GM were the target, then the pattern agreement would be cheaper for Ford,” said McAlinden, a former autoworker. “GM wants to do it and they are claiming they are the middle-of-the-road company.”

Jodi Tinson, a Chrysler spokeswoman, and Kim Carpenter, a spokeswoman for Detroit-based GM, declined to comment yesterday.

“The decision about which company will lead the negotiations with the UAW is up to the UAW leadership,” Marcey Evans, a Ford spokeswoman, said in an interview. “We look forward to our discussions later this year to ensure Ford becomes competitive with the best in the world.”

Surrendering Raises

King, 64, elected president of the union in June, has said workers must be rewarded for the $7,000 to $30,000 in concessions they each gave since 2005 to help the automakers survive. The workers surrendered raises, bonuses and cost-of- living adjustments and agreed to a two-tier wage system, in which new hires earn about $14 an hour, half of the amount paid to senior production workers.

The concessions helped the U.S. automakers lower labor costs to about $58 an hour for wages and benefits from about $75 an hour and get close to the $52 an hour Toyota Motor Corp. (7203) gives its U.S. workers, McAlinden said. Labor rates at U.S. automakers remain above the $44 to $48 hourly rate Hyundai Motor Co. (005380) pays its U.S. workers in wages and benefits, McAlinden said.

“We did what we had to do to save the companies,” King told delegates to the union’s bargaining convention in Detroit last month. “It will take time to win back what we’ve given up.”

Ford’s 40,600 hourly workers in November 2009 rejected additional concessions, including a six-year ban on some strikes and a wage freeze for new hires until 2015. Unionized workers at GM and Chrysler accepted those terms before the automakers filed for bankruptcy protection in 2009.

No-Strike Clause

“Ford wants parity on the no-strike clause and on freezing wages for entry-level workers,” McAlinden said. “But by going to GM first, the UAW could say, ‘Ford, just take this pattern, and we don’t want to discuss those other details.’”

All three companies are trying to avoid an expensive contract that would boost labor costs, McAlinden said.

The union will seek new work and jobs at factories in Tennessee, Louisiana and Wisconsin, the person said. The UAW is willing to expand the use of the $14 hourly wage if the automakers commit to more jobs in the U.S., Ashton has said.

“We will look at anything that will retain jobs,” Ashton said March 29 at a GM factory in Orion Township, Michigan, in response to a question about whether the union would consider additional use of the two-tier wage system. “The most important thing going into this set of negotiations is jobs.”

Automakers’ Earnings

GM, which sold stock to the public in November, earned $6.17 billion last year. Auburn Hills, Michigan-based Chrysler posted a net loss of $652 million last year and forecast net income of as much as $500 million this year.

Ford last month rewarded Chief Executive Officer Alan Mulally with $56.6 million in stock for leading the Dearborn, Michigan-based automaker’s turnaround. In addition, Mulally’s 2010 compensation rose 48 percent to $26.5 million. King has called Mulally’s stock award “morally wrong” and “outrageous.”

Mulally’s pay may be an issue at the bargaining table, McAlinden said.

“Everybody in every Ford plant that I know, knows every last dime he got,” McAlinden said. “It didn’t help.”

To contact the reporters on this story: Keith Naughton in Detroit at knaughton3@bloomberg.net; John Lippert in Chicago at jlippert@bloomberg.net.

To contact the editor responsible for this story: Kevin Orland at korland@bloomberg.net.

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