BUSINESS

Ahead of contract talks with automakers, United Auto Workers chief rejects idea of lower wages

03/25/2015 10:14 EDT | Updated 05/25/2015 05:59 EDT
DETROIT - The leader of the United Auto Workers union has rejected a new level of lower wages for members who make auto parts ahead of contract talks with automakers that start in the summer.

There have been reports that General Motors Co. and Ford Motor Co. may propose a new pay level that is lower than the two existing groups.

Speaking Wednesday at the union's national bargaining convention in Detroit, which sets the agenda for the union's bargaining efforts with the auto companies and other industries, President Dennis Williams said the UAW already has too many tiers of lower wages.

Williams is under pressure from union members to end a second level of wages that starts around $15 per hour, about half the $28 per hour made by longtime workers.

"I'm thinking they got too many damn tiers now," said Williams, who received a standing ovation.

His rejection of a lower pay level comes as the current contract between Fiat Chrysler, GM, Ford and the UAW, which represents about 137,000 workers at the three companies, expires in September.

This year's contract talks are the first to come after the auto industry fully recovered from the Great Recession, and could be contentious as the union seeks a slice of the industry's billions of dollars in profits. Auto sales are expected to hit nearly 17 million in the U.S. this year, close to historic highs. They fell as low as 10.4 million in 2009.

In his speech, Williams said workers shared in getting the auto companies through bad times and "we must equally share in the good times."

Many at the convention spoke in favour of pay raises for veteran workers and of ending the second tier. Longtime UAW workers have not had an hourly pay raise since 2007, although they have received hefty annual profit sharing checks. But there's no guarantee of getting checks every year.

Pay raises are expected this year, and Williams said it would be hard to bridge the gap between the two tiers if both get raises.

But the union "has a history of finding ways to what people perceive to be the impossible," Williams said.

At a post-convention press conference, Williams said the union was not willing to add work to automaker factories at less than second-tier pay.

A third tier of wages already is in place at several GM factories in the Detroit area for a small number of workers, however. The work may otherwise have gone to Mexico or another country with lower labour costs.

Auto companies, mindful of the recession, are reluctant to increase U.S. labour costs and once again be at a cost disadvantage to foreign companies. They want to reduce labour expenses, contending that their costs already have grown above competitors.

An analysis done by the Center for Automotive Research, a think-tank based in Ann Arbor, Michigan, shows that to be true, at least for GM and Ford.

GM's total hourly labour costs, including wages and benefits, total $58 per hour, followed closely by Ford at $57. Costs for Honda and Toyota are below $50 per hour, the analysis found. Chrysler, with costs totalling $48 per hour, is below Honda and equal to Toyota, but higher than Nissan, Hyundai, BMW and Volkswagen.

Mercedes-Benz had the highest labour costs in the U.S. at $65 per hour, while Volkswagen was the lowest at $38.

Williams also said he wants to keep Detroit companies competitive with foreign automakers.