Latest News - July 2011

July 20, 2011
No new concessions, UAW President Bob King warns
Source: Detroit Free Press
By: Brent Snavely

UAW President Bob King is preparing to enter negotiations with GM, Ford and Chrysler next week with a clear bargaining position: No new concessions.

King said he understands domestic automakers' need to maintain competitive labor costs.

Still, UAW members have made sacrifices in recent years, King said, and the union plans to resist any effort to raise members' health care contributions or cut wages and benefits.

"I've said a number of times, there is no justification for any further concessions in this round of bargaining," King said.

King, 64, will lead the UAW's first contract talks with the Detroit Three since Chrysler and GM emerged from their gut-wrenching, government-backed restructurings in the spring and early summer of 2009.

The negotiation of a four-year contract to replace the one that expires Sept. 14 is being watched closely from Wall Street to the White House.

The talks will test King's ability to meet members' expectations of winning back concessions made since 2007.

Under the 2009 deal brokered with the Obama administration's automotive task force, the union agreed to keep GM's and Chrysler's labor costs competitive with U.S. plants operated by Asian automakers. The UAW also agreed not to strike Chrysler or GM through 2015.

In return for keeping labor costs competitive, King said it is reasonable for the union to ask for a higher wage for entry-level workers as they replace older workers who retire.

He also wants permanent seats on the companies' boards of directors, no increased contributions to health care insurance and tweaks to a profit-sharing formula so workers share more in each company's financial success.

For the first three months of the year, GM earned $3.2 billion, Ford earned $2.6 billion and Chrysler earned $116 million.

"What the companies are asking our members to do this time -- and that is not to raise fixed costs -- is a huge ask," King said.

In 2010, the average hourly labor cost per worker in the U.S. was $58 for Ford, about $56 for GM and $49 for Chrysler. That puts domestic automakers near or below labor costs for Toyota ($55) and Honda's ($50) U.S. plants, but higher than Hyundai's $44-per-hour labor cost, according to the Center for Automotive Research.

"It doesn't do our members any good if we raise fixed costs, and that means our vehicles cost more and we lose market share and then job security is in jeopardy again," King said.

Still, King said the UAW wants higher wages for entry-level workers.

In 2007, the UAW agreed to allow each Detroit automaker to hire new workers at a starting wage of $14 to $16 per hour, about half of the $28 traditional wage rate. That works out to about $30,000 per year.

"It is a very legitimate goal that everybody working in the auto industry should be at a middle-class standard of living," King said. "Entry-level, for a family of four, is barely there."

King also downplayed concerns that UAW leadership is not in tune with members who are expecting to win back concessions such as annual cost-of-living increases.

"Of course people would like to see raises and increases in wages," King said. "But more than that, they want long-term security."