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.”
The Japanese may keep them at bay. What will happen is that ‘savings’ will have to be found elsewhere, as in even crappier parts and materials.
“I buy Toyotas—Eff ‘em.”
I haven’t bought a UAW car in decades...and never will.
Japanese car prices aren't padded by sky-high UAW wages (part of which goes to fund the Democratic Party). Buy an American-assembled Toyota or Honda, and reap the dividends in the form of fewer repair bills.
And people wonder why consumers buy foreign cars....
What you posted is absolutely true, but the company and u nions need to renegotiate if the company is going bankrupt. Under no circumstances should the taxpayers have to bail them out.
Plus cadillac healthcare and cushy pensions.
Including Toyota.
Ford made $6.2 billion in pre-tax profits in 2014. GM made $6.6 billion and Fiat Chrysler made $4.4 billion. I think the companies are doing pretty good for themselves.
Come next month my Corolla will be 12 years old and it still runs great and so far no mechanical parts have had to be replaced.
Car's like that were designed to go 200K miles.
American unions never learn. They will expect another government bailout in the future.
That's an hourly rate factoring in benefits and pension. It isn't what they get paid.
The crappy reliability of domestic makes can be traced to a combo of the UAW's greed and competition from foreign makes. To keep the price competitive with imports, domestic marques have to water down component specs until they hit the dollar amounts necessary to sell their cars at some benchmark price. That is why many original Japanese car components (typically high-dollar parts) outlast those of domestic makes *and* one set of replacement parts.
Price increases on government products I would never even consider buying anyway are not that troubling. :)
No wonder 2/3 of the cars I am seeing on the road were made by either Nissan or Hyundai.
The workers wages are around 25 per hour.
60 bucks an hour to make sure a robotic arm isn’t putting the cup holder in the wrong place?? Sounds ridiculous to me. Also, it’s hard for me to think of them as private companies when tax payers are forced to subsidize them everyone the economy tanks...
I’ve never bought a new car, American or foreign, and will never do so. I’m not interested in funding some union that will turn right around and donate to Democrats...
everytime**
And they are exempt from Obamacare.
not bad pay for putting a screw in.
Buy American? I’ll never buy one that isn’t American made.
Roger that...
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