It Looks Like A Big Payday For Auto Workers

GM and DaimlerChrysler already are making fat opening offers

Ford Motor Co., recently hailed by North American auto workers as the most labor friendly of the Big Three, looks to be in the doghouse as the unions negotiate industrywide contracts. On Sept. 8, the Canadian Auto Workers selected Ford to negotiate its next pattern-setting contract. If there's no agreement by Sept. 21, Ford will face a strike at its nine Canadian plants.

South of the border, meanwhile, the United Auto Workers--miffed at Ford's intention to spin off Visteon Automotive Systems, its parts-making unit--has decided to shut the company out in the last days before the U.S. pact expires Sept. 14. That means Ford won't be the negotiating target and, therefore, won't have a say in setting terms for the new contract. The upshot: Ford is in a squeeze play.

LIFETIME JOB? On the other hand, the auto workers seem to have gotten downright cozy with the other two- thirds of the Big Three--as they contemplate inking the richest contract in years. At a Labor Day parade in Detroit, UAW President Stephen P. Yokich said he was encouraged by the initial offers General Motors Corp. and DaimlerChrysler had put on the table. "I've been here a long time. It's the best first offers we've ever gotten from Chrysler and GM," he said.

Sources familiar with GM's three-year offer say the No.1 auto maker proposed a 2% wage increase and $500 lump-sum the first year, followed by a 3% raise the second year, and a $1,500 lump payment the third year. GM also proposed job-security enhancements that some labor experts say amount to a lifetime job guarantee for workers with at least 10 years' seniority.

DaimlerChrysler has proposed comparable terms, according to others familiar with the German-U.S. auto maker's initial offer. While the offers seem paltry compared to recent contract settlements at other major industrial firms such as Boeing Co., they are a "a good starting point" for negotiations, comments one senior UAW official. Analysts expect the union to win annual increases of 3% for at least three years.

With Detroit auto makers enjoying record sales and profits and sitting on nearly $50 billion in cash between them, analysts believe it'll be impossible to resist the unions' higher wage demands this year. Indeed, at a Sept. 8 news conference, Canadian Auto Workers President Basil "Buzz" Hargrove made it clear that his 50,000 members at the Big Three expect a "substantial" wage increase, especially in light of the huge payouts made to senior executives in recent years. "The issue isn't their ability to pay. It's our ability to force the companies to share the wealth," says Hargrove.

SUSPICION. While GM's offer of a lifetime job guarantee sounds enticing, there is a price. The auto maker wants to trade job security for flexibility in introducing new production methods that would shift parts-making jobs to lower-paying suppliers. The unions are unlikely to go for that unless they can get assurances that the Big Three will help their efforts to organize nonunion supplier plants. And union leaders are suspicious about promises of job guarantees. "In a market economy, there is no such thing as lifetime employment," says the CAW's Hargrove, who says he has not received such an offer. "What we're trying to guarantee is work and wages."

With the industry on a roll, neither side expects a strike. Yet some real sticking points remain. Each company has its own touchy issues on the table. At DaimlerChrysler, for instance, the UAW wants assurances that management won't interfere with its efforts to organize two non-union plants in Alabama and North Carolina.

At General Motors, the two sides must work out the complicated effects of GM's spinoff of its Delphi parts-making unit. And at Ford, once-cozy relations significantly deteriorated over the summer, when Ford started talking about the Visteon spinoff. So while boosting workers' paychecks significantly is unlikely to be a problem, the UAW and CAW might still have some difficulty in getting company support to help build their memberships.

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