UAW Says Labor Costs to Stay Similar at GM, Ford, Chrysler

The United Auto Workers intends to keep labor costs comparable in its contract negotiations with General Motors Co. (GM), Ford Motor Co. (F) and Chrysler Group LLC, President Bob King said today.

“We’re not going to advantage or disadvantage one company versus another,” King told reporters at Chrysler’s Auburn Hills, Michigan, headquarters for the start of labor talks with the automaker majority-owned by Fiat SpA. (F) “We want them to be competing on the basis of product and design and quality.”

Hourly workers at Chrysler and GM, as part of U.S-backed bankruptcies in 2009, agreed not to strike over wages and benefits during this year’s contract talks. Ford, based in Dearborn, Michigan, didn’t seek a U.S. bailout and UAW members at the company rejected a strike ban and arbitration.

The UAW has helped Chrysler revamp its operations, Al Iacobelli, the automaker’s vice president of employee relations, told reporters.

“The objective is to keep it right and not fall back into our old ways of making ourselves uncompetitive,” he said.

The current UAW contracts at the automakers expire Sept. 14. King 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.

Ford, Chrysler and Detroit-based GM combined to earn more than $6 billion in the first quarter. Last year, GM earned $6.17 billion. Ford had net income of $6.56 billion in 2010, the most in 11 years.

Chrysler Profit

Chrysler posted a first-quarter profit of $116 million, its first since emerging from bankruptcy. The company has forecast a full-year profit of as much as $500 million for 2011. The automaker reported a net loss of $652 million last year.

Ford said on a website that it spends $58 an hour to provide wages and benefits to UAW members, $8 more than the average labor costs at the mostly nonunion U.S. factories of foreign automakers such as Hyundai Motor Co. (005380) Chrysler has said its hourly labor costs are about $50. Kristin Dziczek, an analyst at the Center for Automotive Research in Ann Arbor, Michigan, estimates GM’s hourly labor costs at $56.

Ford is in the worst position among the companies because it’s the only one facing the possibility of a strike in the talks, analysts such as Dziczek have said. Unresolved issues at GM and Chrysler are subject to binding arbitration.

Profit Sharing

Chrysler doesn’t want to see an increase in its hourly labor costs and is interested in creating a better profit- sharing equation for hourly workers, according to a person familiar with the company’s thinking.

Chrysler’s current profit-sharing system is complex and not aligned with the company’s goals, according to this person, who was not authorized to speak about the issue publicly. Some new metrics may include attendance, quality, productivity and a more transparent measure of profit, the person said.

The automaker sees active health-care costs as a way to find savings, possibly to pay for increases in variable pay, the person said.

King said health care is an area to find savings “that won’t take a penny” from members.

“That’s the kind of approach we’ll have on all of the issues,” he said.

To contact the reporter on this story: Tim Higgins in Southfield, Michigan at thiggins21@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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