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Home / Business / With GM contract kits, UAW takes the fight to Ford and Fiat Chrysler

With GM contract kits, UAW takes the fight to Ford and Fiat Chrysler



United Auto Workers members on strike picket outside General Motors & # 39; Detroit-Hamtramck assembly plant September 25, 2019 in Detroit.

Michael Wayland / CNBC

DETROIT – Approval of a new four-year contract between United Auto Workers and General Motors Friday ended a 40-day strike against the carmaker, but the union's struggles are far from over.

UAW will use the GM agreement as a "pattern" for negotiations with Ford Motor and then Fiat Chrysler, but there are no guarantees that the gains and losses from the talks with GM will be passed on to its rival rivals.

GM struck a cash-rich deal that pays a mix of one-time bonuses to union members that the company pushed to shut down four US plants and maintain operational flexibility without significantly increasing recurring fixed costs. Ford and Fiat Chrysler, which is not expected to try to shut down any assembly plant, may push to reduce costs elsewhere to better align the economy of the agreements.

"It's expensive," said Kristin Dziczek, director of industry, labor and economics at the Center for Automotive Research, saying about the GM deal. "But they are also companies that have done pretty well … if anyone thought they should have lower labor costs, they were mistaken."

Many things will be reset to negotiations with Ford and Fiat Chrysler, including the opportunity to strike and talk about company-specific issues around jobs, employee benefits and bonuses. Many important issues such as health care costs and traditional pay are the same across companies.

Under GM's agreement, healthcare costs remain unchanged at about 3% for workers, employees receive one-time bonuses or raise each year of the deal and record $ 1

1,000 bonuses – which is not expected to be repeated on Ford or Fiat Chrysler. It also shortened the way for current employees to earn top pay and created a system for temporary employees to become full-time workers after two years.

"There are a lot of lump sums involved," said Art Schwartz, president of Labor and Economics Associates and a longtime GM on labor relations. "There's a lot of money, but not something that really needs to be built into the cost structure."

Spokesmen with Fiat Chrysler and Ford, who on Friday chose to negotiate with the next, declined to comment directly on how the GM deal will affect their companies and their talks.

Fiat Chrysler

While Big Three Detroit automakers have recorded substantial profits in recent years, they are each in different positions in terms of employment, profit margins and US footprints that will contribute to the negotiations.

For example, Fiat Chrysler is building a new assembly plant in Detroit and adding thousands of jobs instead of trying to shut down businesses like GM. But the Italian-American company's unionized workforce of 47,200 has the highest proportion of newer, or "in progress," employees and temporary workers. According to analysts, the company could push back GM's commitment to ensure that all "in progress" workers earn top wages over the next four years instead of eight.

"I think Fiat Chrysler is going to be tough," said Art Wheaton, a labor expert at the Worker Institute at Cornell University. "Fiat Chrysler has a lot more temporary workers than Ford."

Fiat Chrysler has also traditionally been capable to negotiate different profit sharing structures and other production-related bonuses. Such changes may be more difficult to achieve during this year's negotiations, according to Colin Lightbody, work consultant and long-time dealer for Fiat Chrysler.

"In this environment, I think there will be more difficult for Ford and (Fiat Chrysler) to break the pattern, "Lightbody said.

Adding the fight, especially to Fiat Chrysler, is an ongoing federal corruption probe into the UAW. Ten people have pleaded guilty as part of the investigation, including seven trade union officials and three Fiat Chrysler executives, the probe has revealed union officials who accept bribes and setbacks.

It's unclear whether Ford and Fiat Chrysler will push to dissolve their jointly operated fitness centers that have been at the center of the probe as GM did.

Ford [19659012] Based on the talks, Ford's negotiations expected to be smoother than competing competitors, but the company is expected to try to address issues around healthcare costs and underutilized capacity of its US powertrains.

Health insurance costs for Ford's 55,000 hour workers in the United States are expected to be $ 1 billion for the first time next year, while GM and Fiat Chrysler are expected to be closely behind. GM paid about $ 900 million for its hourly workers in 2018.

Despite GM unable to negotiate increases for out-of-pocket costs, Ford and Fiat Chrysler could push for other cost containment and quality improvement measures around how workers use the health care system.

A simple example would be to ensure that employees have and use a primary care physician, rather than going to the emergency room or emergency room.

With little or no co-payment or deductible, car workers pay only about 3% of the cost. This compares with automakers' pay workers, who pay about 20% to 30%, and the average American worker at 28%, according to the Henry J. Kaiser Family Foundation.

Temporary workers, while having a discussion, are expected to be less of a problem at Ford than GM or Fiat Chrysler. Despite having the highest employment in the UAW, it has the lowest proportion of temporary staff of 6%, thousands of whom they have already employed as permanent employees for the past four years.

How Ford plans to address the under-utilization of the driveline and whether it will mean shutting down plants or adding new work to the factories is uncertain.


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