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Deadline looms: Will auto union pragmatism help strike a deal?

With the auto union's contract set to expire at midnight, some members see cooperation with the automakers as essential to the union's survival given the industry's recent challenges.

By Staff writer / September 14, 2011

Ingrid Hill, a United Auto Workers union member, works on the assembly of a Chevrolet Volt at the General Motors Detroit-Hamtramck assembly plant in Michigan.

Rebecc a Cook/Reuters

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With the United Auto Workers' labor contract set to expire at midnight, the union and the three US automakers continue month-long negotiations that will determine how much workers will share in the comeback of the industry.

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So far, pragmatism seems to be the operative stance, rather than contentious lines in the sand. That stems, analysts say, from a recognition that the US automotive industry has taken its lumps these past two years. General Motors and Chrysler are barely recovered from bankruptcy, and all three automakers, including Ford, have had to prove they can succeed with vehicles that are smaller and more fuel-efficient – and make those sales at a time when cash-strapped consumers are hesitant to buy.

"The reason you're seeing so much cooperation is they understand what is at stake," says Kristin Dziczek, director of the labor and industry group with the Center for Automotive Research, an industry think tank in Ann Arbor, Mich. "This is a moment that all of the parties don't wish to squander."

The United Auto Workers (UAW), which represents about 355,000 members, entered negotiations last month on a tightrope. Some workers want to restore many of the benefit and salary cuts surrendered during the crisis, but others see cooperation with the automakers as essential to the union's survival given this rocky period for the industry. Car and truck sales are expected to reach 13 million units this year, but that's a far cry from the industry's 17 million peak in 2005.

Union leaders and automakers both realize how friction not only makes the domestic industry vulnerable to foreign competitors, but it also risks weakening their public identity, analysts say. That doesn't mean talks have been easy, though.

During the last negotiations in 2007, and the emergency talks in 2009 when GM and Chrysler were thrown into bankruptcy, the UAW agreed to slash wages and benefit packages by almost a third.

Hourly wages for veteran workers are now averaging $50, compared with $76 earlier last decade. Entry-level hires are averaging about $14 to $16 an hour under a controversial two-tier wage structure the union agreed to in 2007 designed to improve the competitive position of the domestic automakers vis a vis foreign companies, which traditionally pay their workers less.

All three US automakers are wrangling to keep wages at current levels and instead reward workers through longer-term benefits such as profit-sharing packages and bonuses linked to quality, productivity, and attendance. Some workers say that they should share in the spoils of Detroit's comeback and that the entry-level wages are eliminating the middle-class security the automotive industry long guaranteed to workers.

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