Posted on 11/23/2015 5:20:38 AM PST by markomalley
New union contracts negotiated at American auto manufacturers will lead to a spike in labor costs after years of belt tightening.
The United Auto Workers approved significant contract adjustments at Ford and General Motors on Friday after months of tense negotiations. Those decisions—one by membership vote, the other by union leadership—come soon after Fiat Chrysler approved a new deal with dramatic pay boosts. Each of the contracts could reverse “much of the savings achieved by the companies over the last eight years,” according to a study first published in the Wall Street Journal.
The new GM deal would raise labor costs from $55 to $60 an hour, a 9 percent hike, according to a study of the deals from Kristin Dziczek of the Center for Automotive Research and Art Schwartz, a former GM labor executive and president of Labor and Economic Associates. The union contract at Ford also reached the $60 hourly rate over the next four years, a 5 percent increase from its current rate of $57. Those hike pales in comparison with Chrysler, where average hourly wages will spike nearly 20 percent from $47 to $56.
The Detroit automakers were forced to impose labor cuts in the wake of the 2008 recession that led to a multi-billion dollar taxpayer bailout of GM, which entered bankruptcy, and Chrysler, which was sold to Fiat. Ford turned down bailout assistance.
The new contracts would reverse many of the pay freezes adopted to control costs, as well as offset the tiered payment systems that allowed the automakers to hire new employees at lower pay and benefits than previous generations of union members.
Edward Niedermeyer, an auto epert who has closely followed UAW negotiations, told the Washington Free Beacon that the talks have ended up splintering workers, while driving up labor expenses at a fragile time. American-owned companies can afford short-term hikes because of high demand and large profitability of SUVs and trucks—classes of vehicles that are vulnerable to global fuel prices, which have been steadily falling.
“Workers better make smart investments with their new wage and bonus increases, because they come at the cost of their long-term position. They’ve weakened their long-term job security and they’ve failed to bandage the festering wound that is two-tier wages,” Niedermeyer said.
The union ran into snags getting the deal approved by its membership at GM and Ford plants. At GM overall membership approved the new contract 55-45, but skilled workers voted down the deal by a significant margin.
“Following receipt of these ratification results, meetings were held with the UAW skilled trades membership at each GM worksite in order to determine the issues for their rejection of the tentative agreement. Based on this feedback from the skilled trades membership, I have determined that further discussion with the company was needed,” Dennis Williams, the union’s president, said in a Nov. 13 press release.
After meeting with the company and skilled workers, the UAW executive council announced that it would ratify the new contract on Friday. Hours later, UAW membership at Ford narrowly voted to approve its deal.
“The voice of the majority has secured a strong future that will provide job security and economic stability for themselves and their families,” Williams said in a release.
Niedermeyer said that economic stability is largely dependent on gas prices and lending rates remaining low—something that may not be true in the future. Spiking labor costs only a few years into economic recovery could bring about the same conditions that led to the collapse of American auto manufacturing in the first place.
“This is a cyclical business, and the UAW has prioritized maximizing its position now at the risk of losing out big in the next downturn,” Niedermeyer said.
Great, car prices are gonna keep going up.
Companies are not allowed to make profits
It sure makes it tough for lower income folks to afford a car esp since Chairman O’s cash-for-clunckers took many servicable (and affordable) cars off the market. Never mind that tho liberals are the friend of the poor... :/
Obama and his pet unions have killed the American made cars, I will never purchase another one.
guess i better buy that new truck now.....sheesh
This increase will help pull the DNC out of bankruptcy. More money, higher dues. Higher dues, more union contributions to the ‘RATS.
Sounds like the auto workers are setting the stage for more
imports from plants outside of the US.
I buy Toyotas—Eff ‘em.
Personally I have no problem with Union negotiated contracts in the private sector (in general).
If American car mfg costs get out of hand so too will the selling price of their product. The customer will then decide if they want to buy the American product or perhaps an import if those mfg have maintained a tighter control on costs. Alternatively they may opt to buy nothing new at that time and instead decide to buy late model used.
In the end the free market will determine what the selling price of any given commodity is as long as there remains competition.
Buy American? I’ll never buy one that isn’t American made.
Japan bombed Pearl Harbor and killed thousands of our soldiers. I don’t buy their crappy cars.....
In my entire life, I have never owned an American car.
>>Companies are not allowed to make profits
Men and women who get up and go to work every day make those profits for the company. They are private corporations. The company makes profits and the employees who actually build cars should receive some of the rewards too.
>>In my entire life, I have never owned an American car.
These days, you need to clarify that. I own a Mustang that was made in Canada and a Toyota made in Kentucky. Which one is an American car?
After I junked my POS Chrysler in 1988...
It had under 100,000 miles on it, everything fluid that could leak ...did
I started buying Toyota, Nissan products...
They in no form or fashion make crappy cars...
Both Toyota's I owned had almost 300,000 miles on them with just general maintenance and a few timing belts, when I sold them...
So in summary you would prefer to buy from union criminals like the UAW who just in the last ten years actually make a decent product because of a war that happened 70 years ago...?
Yeah.... I’ve never owned anything except General Motors. Well, I take that back. My first car was a Plymouth Belveder that I bought from the neighbor. Other than that 40 years of General Motors. I’ve owned Pontiacs, Chevys, Cadillacs, a corvette, Camaros, Firebirds, GMC, Silverado, Buicks.... I’ve never really had a lemon. But yeah.... I don’t want no JAP car.
$60 per hour times 40 hours per week times 52 weeks is nearly $125K per year. Am I in the wrong line of work????
Don’t forget overtime.
My Camry was made in Kentucky and had a higher U.S. content than my Chrysler . I understand your thoughts. I will always buy US made and non Union if possible. The unions give aid to my enemies.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.