UAW to Begin Negotiations With U.S. Automakers Next Month

Updated on

The United Auto Workers, seeking to close the pay gap between veteran and newer workers, will begin formal negotiations with the biggest U.S. automakers next month, union Vice President Jimmy Settles told reporters.

The union will start talks with Ford Motor Co. on July 23 at Detroit’s Cass Tech High School, Settles said Monday. Negotiations with General Motors Co. and Fiat Chrysler Automobiles NV will open July 13 and 14, he said, adding he didn’t know which would go first.

“We’ve got to negotiate smart,” said Settles, who leads Ford workers for the Detroit-based UAW. “We don’t want to negotiate the company out of business.”

Ford wants to reduce labor costs for its more than 50,000 U.S. hourly employees. The automaker, whose current four-year UAW contract expires Sept. 15, contends that those expenses are uncompetitive. The company’s average U.S. labor cost, including benefits, is $57 an hour, about $9 more than at Toyota Motor Corp. and Fiat Chrysler’s U.S. unit, according to the Center for Automotive Research in Ann Arbor, Michigan.

Ford Motor Executive Chairman Bill Ford, who along with Settles was at the dedication of a Detroit baseball field named for his late father, William Clay Ford, said the company is confident that it can reach an agreement that results in competitive labor costs.

“The relationship is there, information is being exchanged every day, so there will be no surprises,” Ford said. “It’s always a compromise.”

Two-Tier Wages

Veteran workers at Ford make $28.50 an hour, a level that hasn’t changed in a decade, and entry-level employees are eager to achieve wage parity with their senior colleagues. Under a two-tier system the union accepted in 2007 and is now eager to end with automakers healthy again, new hires’ hourly rate is $15.78 to $19.28.

Ford has said lower, entry-level wages have been critical to its ability to hire more than 15,000 U.S. workers since 2011. That exceeded a pledge the Dearborn, Michigan-based company made to the UAW to add 12,000 by 2015.

“We’re going to try to close that gap,” said Settles, who added he is “bidding” within the union to have Ford chosen as the lead company to set the wages and benefits that the other two automakers will be asked to follow in so-called pattern bargaining.

“I like leading, I don’t like following,” Settles said. “Our talks informally have been going very, very well.”

Union negotiators will begin preliminary meetings with their company counterparts at Ford’s world headquarters the week of July 13, Settles said.

“Then immediately after the handshake” on July 23, “it goes nonstop,” Settles said.

This is the first time the three American automakers have entered talks with such vastly different labor costs, said Bill Dirksen, Ford’s vice president of labor relations, who will lead negotiations.

“We have some differences which are the result of what the industry has gone through the last several years,” said Dirksen, referring to the 2009 bankruptcies of GM and Chrysler, which Ford managed to avoid. “It’s creating some relatively unique circumstances with regard to labor costs.”

Dirksen said Ford would like to be chosen by the union as the company to set the pattern for wages and benefits.

“That’s up to the UAW, picking the target” company, Dirksen said. “Most companies, most years, prefer to lead and we don’t see it any differently.”

Ford has said it had 90,000 employees in North America at the end of last year, an increase from 84,000 a year earlier and 75,000 at the end of 2011, when it reached the last four-year agreement with the UAW.

Ford’s net income fell 56 percent last year to $3.19 billion as it converted two factories to produce a new aluminum-bodied version of the F-150 truck. Ford’s F-Series line of pickups, the top-selling vehicle in the U.S. for the past 33 years, accounts for 90 percent of the company’s global automotive profit, according to Morgan Stanley.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE