UAW and GM strike a deal. Is that good news for Ford and Chrysler, too?
If the past is any indicator, the labor deal struck between the UAW and GM could be a template for Detroit's other automakers. The deal includes investment in six plants and 6,400 new jobs.
The highlight of the GM agreement is the company’s pledge to invest in six plants in Tennessee, Michigan, and Indiana, which the union says will collectively create 6,400 US jobs, many of which were previously lost to satellite plants in Mexico.
The company will restart a shuttered Saturn plant in Spring Hill, Tenn., where it will build one midsize car and launch a second new model midsize car by late 2013. The plant closed in 2009 following the GM bankruptcy and subsequent restructuring that retired the Saturn brand.
Tennessee Sen. Bob Corker (R) called the news of the plant’s reopening “outstanding," and dubbed Tennessee an "automobile mecca.”
The union was not able to eliminate the controversial two-tier worker structure that splits the pay scale between entry-level and tenured workers, nor did it secure cost-of-living increases or base pay raises. However, it did raise the maximum hourly entry-level workers can earn, to $19.28 by 2015.
GM also agreed to a $5,000 signing bonus plus enhancements in profit sharing, which will now guarantee workers a minimum of $3,500 each year.
Local union leaders across the US voted unanimously to recommend the deal. Rank and file membership votes next week.
However, he would not say whether Ford or Chrysler was next in line at the negotiating table.
During the traditional contract negotiation cycle in Detroit, the first deal struck tends to be considered an informal blueprint for negotiations with the remaining two domestic automakers, in this case, Ford and Chrysler. While Ford is in an open-ended contract period with the union, the Chrysler negotiations end at 11:59 p.m. Wednesday.
Chrysler CEO Sergio Marchionne has already said the union should not assume the GM deal will fit what his company needs moving forward.
Ford has the ability to strike if an agreement is not reached, unlike GM and Chrysler, which gave up that right during bankruptcy restructuring.
Ford’s historically good relationship with the UAW makes it unlikely a strike is in the works, says Paul Eisenstein, publisher of TheDetroitBureau.com, an online media site that covers the automotive industry. But he adds that the company will likely argue it has suffered “slightly higher labor costs” which hurt it in comparison with its domestic competitors who received government concessions.
The real drama is expected with Chrysler. Last week, UAW talks with the company broke down after Mr. Marchionne, also the CEO of Italian automaker Fiat, sent an e-mail to Mr. King, complaining of unfair treatment after King failed to show up at a meeting. Marchionne returned to Europe Friday.
Marchionne is back in Detroit this week. Even if both parties do not reach an agreement by late Wednesday night, it will not necessarily mean arbitration is the next step, says Kristin Dziczek, director for the labor and industry group for the Center for Automotive Research, an industry think tank in Ann Arbor, Mich.
“The union can’t strike, the company won’t lock them out, what does the deadline mean? Not a whole lot,” Ms. Dziczek says. “The deadline is useful to focus attention on, but it’s not a real absolute.”
Fiat owns the majority stake in Chrysler, but Marchionne wants the Italian automaker to buy the remaining stake, approximately 40 percent of the company, which is controlled by a UAW health-care trust fund.
Mr. Eisenstein says negotiations may be contentious due to “the more acrimonious tone” Marchionne has struck during the negotiation period compared with his competition, but that ultimately, “there will not be much difference” between the contract struck with Chrysler and the one just signed with GM.