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.
Truer words were never written.
Labor is only 8% of a new cars sticker price. So a $30,000 car carries a labor charge built in at $2,400. A 10% labor increase equates to a $240 dollar increase per vehicle, sucks; but not earth shattering.
How did the President of GM respond when you contacted his office about your problems?
For every sad sack story there are plenty of success stories to cancel them out.
For instance: My Big 10 has over 500,000 miles on it and is still earning its way as a work truck. Starts, runs as it should, everything works. Have had it 26 years.
My C2500 diesel only has a quarter of a million miles, still gets 21 mpg pulling a 10,000 pound trailer down the highway.
And my Jimmy is over 180,000 miles. Just put another 120 miles on that one today in beep-and-creep traffic. Owned it for more than 20 years.
With the internet, anyone can discover each vehicle’s pattern failures and how to get them fixed.
We wrote a letter to the dealership and cc’d GM headquarters. I don't remember exactly who we cc’d but it was at GM headquarters and it was high enough. We know the game. Probably not the president, though.
The responses.
1. The dealer offered us a used Transam that the salespeople used as shuttle. A beater. Apparently, there is a car on the lot that all of the salespeople drive. Sort of a perk. Unfortunately, it usually has a lot of miles on it and has been abused. And it was another Trans Am! Our Trans Am was new! Theirs wasn't!
2. GM headquarters blew us off. Not a word. THEY BLEW US OFF!
Also, we have a lemon law here in my state and our car could have been declared a lemon. It certainly qualified. However, it would have required us to hire a lawyer at additional expense to us.
And even if it is declared an lemon, it is pretty much toothless. It would required further litigation and a lawsuit to get some kind of reimbursement.
At this point, we'd had had enough and it was clear that it would have cost us a fortune to try to get some kind of recourse. We decided to cut our losses.
Your Jimmy.
Wow. I must have had bad luck. My (my dad's) Jimmy started having problems at at 80K miles. First the push button 4wd fried and then it started to miss horribly. The dealership replaced the fuel injector and the cables and the tech at the dealership was going to have us grind the valves on the back cylinder. We had $2000 into a car that was worth $3500 and decided to punt. We sold it for $500.
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