UAW Wants Higher Wages for New Workers at GM, Ford, Chrysler

United Auto Workers President Bob King said yesterday he has asked for higher wages for new workers at General Motors Co., Ford Motor Co. (F) and Chrysler Group LLC, which he said won’t add to the companies’ fixed costs.

“We’re very concerned about the entry-level workers having a middle-class standard of living, which I would argue they don’t at the current rate,” King said following a speech in Detroit. “So I would say that’s the highest priority.”

King said the union has proposed in contract negotiations with the companies that new workers receive a wage increase. They now are paid $14 an hour, half what senior production employees make. The union’s contracts covering 113,000 workers at GM (GM), Ford and Chrysler expire Sept. 14.

“I’m concerned about raising fixed costs in a way that makes the companies non-competitive,” King said. “But there is room because of the current framework to make gains in certain areas and keep the companies competitive.”

In a speech to the Detroit Economic Club, King said the union wouldn’t add to the fixed costs of the automakers.

“We are going to make sure the companies are competitive coming out of these agreements,” King said. “We are not going to disadvantage the companies we work for. Heck, we all want a wage increase, but is that the best way?”

The UAW is “asking for more for senior workers in a different form, through profit sharing and other ways of increasing compensation without increasing fixed costs,” Harley Shaiken, a professor of labor relations at the University of California at Berkeley, said yesterday in a phone interview.

King has said the union won’t make concessions while keeping labor costs competitive. King has said workers must be rewarded for the $7,000 to $30,000 in concessions they each gave since 2005 to help the U.S. automakers survive.

UAW Concessions

Previous concessions included surrendering raises, bonuses and cost-of-living adjustments as well as agreeing to the two-tier wage system.

Ford union locals will conduct strike-authorization votes for the automaker’s 41,000 hourly workers through Sept. 2, the UAW has said.

Ford is the only automaker the union can strike because it agreed to a ban on walkouts related to negotiations with GM and Chrysler as part of their U.S.-led bailouts and bankruptcies in 2009. Ford didn’t take a bailout or reorganize in Chapter 11.

‘Upbeat’ Outlook

King said he is optimistic about the progress of talks, while he also said he didn’t know if a deal could be reached before the Sept. 14 deadline.

“I am upbeat because there is a real commitment to keep the companies successful, from the companies and from us,” King said. “And a real commitment to give our members a fair share of the success of the companies.”

In the second quarter, GM and Ford combined to earn $5.4 billion, with Chrysler reporting profit of $181 million, excluding losses from paying off government loans. It has forecast net income of $200 million to $500 million this year. Chrysler is majority owned by Fiat SpA. (F)

Last year, GM earned $6.17 billion and Ford had net income of $6.56 billion, the most in 11 years.

John Fleming, Ford’s executive vice president for global manufacturing and labor affairs, attended King’s speech and also said negotiators are making progress.

“The atmosphere is very good,” Fleming told reporters after King’s address.

“This is the best route for the union: gains for the members, but ensuring that there are jobs for the future,” Shaiken said. “What the union was willing to accept in a moment of deep crisis is not the pattern it wants to use going forward.”

To contact the reporter on this story: Keith Naughton in Detroit at knaughton3@bloomberg.net

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

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