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UAW Said to Select GM to Set Pattern for Auto Agreement

The United Auto Workers, bargaining a new contract for U.S. automakers, is turning to General Motors Co. to set the pattern for wages and benefits for the U.S. industry, said three people familiar with the discussions.

UAW bargainers are seeking a large signing bonus and new work in U.S. factories in exchange for not increasing fixed labor costs at GM, Ford Motor Co. (F) and Chrysler Group LLC, said one of the people, who asked not to be identified as revealing internal discussions. Negotiations at GM are farthest along and will continue through the weekend, the people said.

The union’s contracts covering 113,000 workers at GM, Ford and Chrysler expire Sept. 14. UAW President Bob King still hopes to have deals at all three companies around the deadline, so talks will continue at Ford and Chrysler next week, the person said. Detroit-based GM is offering buyouts in hopes that senior workers retire, making room for new hires who are paid half as much, said two people familiar with the proposal.

“GM makes the most sense as the lead company because it remains the largest, it has shown renewed health and a willingness to work with the UAW,” said Harley Shaiken, a labor professor at the University of California at Berkeley. “GM is the company that is demonstrating that they want to get a deal.”

Michele Martin, a spokewoman for the UAW, denied that the union had selected GM. “That’s not accurate,” she said last night, declining to comment further.

Signing Bonuses

The size of the signing bonuses the union is seeking isn’t known, the people said. Such bonuses totaled $3,000 for workers at GM, Ford and Chrysler in the last contract talks in 2007.

The Detroit-based UAW traditionally picks one automaker to create a deal it uses as a template with the other two. Such pattern bargaining has kept wages and benefits close to parity among the three carmakers, Shaiken said.

Though Ford is the most profitable, the union isn’t seeking to set the pattern with the Dearborn, Michigan-based automaker. Ford lacks a no-strike pledge workers agreed to at GM (GM) and Chrysler as part of their U.S.-backed bankruptcies in 2009. A deal the union might get at Ford could be rejected at GM and Chrysler, leaving the UAW with no recourse to insure that pattern would be preserved, the person said.

No economic proposals have been discussed so far in the Ford contract talks, which have been suspended for the U.S. Labor Day holiday weekend, said two people familiar with the situation. GM and Chrysler will continue negotiating through the weekend, said two people familiar with those discussions.

“Ford going first might be counterproductive because they could wind up with a situation where there’s turbulence in the industry,” Shaiken said. “And that’s not what they want.”

‘Equality of Sacrifice’

If Ford goes last, the union might work out a deal to get its 41,000 hourly workers an extra payout to resolve a so-called “equality of sacrifice” dispute over salaried workers receiving raises and bonuses last year, said Art Schwartz, president of Labor & Economics Associates, a consulting firm in Ann Arbor, Michigan. Ford is the only one of the three to avoid a government bailout and bankruptcy.

“A deal at GM and Chrysler first and Ford last would benefit the UAW,” said Schwartz, a former GM labor negotiator. “It would enable the union to give people at Ford a little more money.”

Marcey Evans, a spokeswoman for Ford, declined to comment, as did Gualberto Ranieri, a Chrysler spokesman. Kim Carpenter, a GM spokeswoman, said negotiations are continuing, without elaborating.

UAW Leader’s Comments

The UAW’s King said Aug. 29 he is seeking raises for entry-level workers, who now are paid about $14 an hour, half what senior production employees make.

For senior workers, King has said he’s open to compensation that won’t raise the companies’ fixed costs. That compensation may include a mix of profit sharing and performance bonuses based on achieving productivity and quality goals, King has said.

“We are going to make sure the companies are competitive coming out of these agreements,” King said in an Aug. 29 speech to the Detroit Economic Club. “We are not going to disadvantage the companies we work with. Heck, we all want a wage increase, but is that the best way?”

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.

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

Buyout Proposals

GM’s proposed buyouts are aimed at paring the ranks of senior employees and skilled-trades workers, who receive the highest pay, said the people familiar with the offer. New workers, even with a higher hourly rate than $14, would lower overall labor costs for the automakers, the people said.

“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 the Detroit speech. “So I would say that’s the highest priority.”

With a path to lower labor costs, the companies are willing to put more work in U.S. plants, rather than in low-wage countries such as Mexico, the people said.

Fiat SpA (F), which controls Auburn Hills, Michigan-based Chrysler, is considering building Jeep and Alfa Romeo models in North America, rather than at its Mirafiori plant in Turin, Italy, as it had previously planned. The automaker is considering the change because of the high value of the euro, said a person familiar with the situation.

A deal involving mostly lump sum payments to workers in exchange for more investment in U.S. factories is a departure from past agreements that added to labor costs with raises and other benefits, Shaiken said.

“The workers have been through hell and back and they want to see successful companies,” Shaiken said. “This is a very different direction. Does it have risks? Yes, but what is far riskier is the status quo.”

To contact the reporters on this story: Keith Naughton in Southfield, Michigan at knaughton3@bloomberg.net; David Welch in Southfield, Michigan at dwelch12@bloomberg.net; 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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