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Latest News - September 2011

September 12, 2011
UAW Is Said to Seek Record Signing Bonus of as Much as $10,000
Source: Bloomberg BusinessWeek
By: Keith Naughton

The United Auto Workers, bargaining a new contract with U.S. automakers, is seeking a signing bonus of as much as $10,000, more than three times higher than the payment workers received for endorsing the current accord, according to four people familiar with the proposal.

UAW bargainers are seeking the increased signing bonus and new work in U.S. factories in exchange for not increasing fixed labor costs at General Motors Co., Ford Motor Co. and Chrysler Group LLC. Union negotiators have proposed a signing bonus of $8,000 to $10,000 for each member, said the people, who asked not to be identified revealing internal discussions.

The union’s contracts covering 113,000 workers at GM, Ford and Chrysler expire Sept. 14. UAW President Bob King has said he’s open to compensation that may include lump sum payments, rather than raises, that are tied to profit sharing and achieving productivity and quality goals. A sizable signing bonus would help sell the deal to union members looking to be repaid for concessions that helped U.S. automakers survive.

“A signing bonus in this range would get some attention and is meant to serve as a down-payment on something negotiators want workers to view positively,” said Harley Shaiken, a labor professor at the University of California at Berkeley. “It’s serves as a statement that says, ‘The gains this contract offers are real.’ There’s nothing as real as a check up front.”

There may be resistance to a large payout, said one person familiar with the discussions. A $10,000 signing bonus for each UAW member would cost about $470 million at GM, $410 million at Ford and $250 million at Chrysler. Such a large cash outlay may be untenable, said the person, who asked not to be identified.

$3,000 in 2007

Workers at GM, Ford and Chrysler received signing bonuses of $3,000 after they ratified the current contract in 2007. Prior to that, signing bonuses had been around $1,000, Shaiken said.

“The signing bonus is relatively new,” Shaiken said. “It’s meant to be a statement of good faith and to offer an incentive” to ratify a contract.

The size of the signing bonus will first be crafted at GM, which continues to take the lead in negotiations with the UAW, said two people familiar with the pace of discussions. Talks at GM and Chrysler, majority owned by Fiat SpA, will continue this weekend while meetings at Ford are scheduled only for today, said three people familiar with the plans.

Michele Martin, a spokeswoman for the UAW, denied that the union is seeking such large bonuses.

“It’s inaccurate and it creates false expectations,” she said.

Marcey Evans, a Ford spokeswoman, declined to comment. GM and Chrysler, in e-mails, also declined to comment.

UAW Leader’s Speech

The UAW’s King said in an Aug. 29 speech to the Detroit Economic Club that he would not raise fixed labor costs at the U.S. automakers. GM and Chrysler required government-sponsored bankruptcies in 2009 to survive and their workers have agreed not to strike in these contract talks. Workers at Ford, which avoided bankruptcy, rejected a no-strike pledge.

“We are going to make sure the companies are competitive coming out of these agreements,” King said in the speech. “We are not going to disadvantage the companies we work with. Heck, we all want a wage increase, but is that the best way?”

King has said the union won’t make concessions while keeping labor costs competitive. King has said workers must be rewarded for the $7,000 to $30,000 in concessions they each gave since 2005 to help the U.S. automakers.

Raises Surrendered

Previous concessions included surrendering raises, bonuses and cost-of-living adjustments as well as agreeing to a two-tier wage system, where new hires are paid about half of more senior employees. Now that GM and Ford are profitable, workers have said they want to recover what they gave up.

Workers at Ford have filed an “equality of sacrifice” grievance against the automaker for restoring raises and bonuses to salaried workers last year. An arbitration hearing on that dispute is schedule for Sept. 15, the day after the company’s contract with the UAW expires.

“A large signing bonus is not just a nice chunk of money,” Shaiken said. “It’s a statement that says, ‘Look, we understand what you want and you will share in the gains of these companies going forward.’



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