12 July 2011


Despite massive restructuring at the Detroit three since 2007, top union and company negotiators who kick off national labor talks later this month will be in for a difficult stretch as they race toward a Sept. 14 deadline on the current contract.
As many as six assembly plants face uncertain futures — three each at Ford and GM — and the automakers will still make an effort to cut labor costs that have already been dramatically slashed in recent years.
UAW and Detroit Three leaders may also find themselves at odds with rank-and-file autoworkers who feel they've already taken more than their fair share of cuts. Many are talking tough about winning back concessions.
One Ford employee said it has been over six or seven years since they have had a raise and complained the automaker just keeps taking away from them.
Throughout it all, the seasoned negotiators must be mindful of appearances after the highly politicized government-backed bankruptcies of General Motors and Chrysler. Neither side wants to look like it's slipping back into old ways.
The UAW's top agenda will be jobs. For them it is all about putting America back to work.
For GM and Ford, the talks will be about getting labor costs in line with foreign rivals.
Ford's hourly labor costs are at $58, compared with about $50 for Asian automakers in the U.S.
The carrot: Jobs
Automakers often use job commitments as leverage during contract talks, and that will happened again this year.
One difference this time around, however, is that in the past two years automakers have already announced 13,000 U.S. jobs are coming, even before the start of formal negotiations.
In June, Chrysler said it would add 268 jobs at its Trenton North engine plant.
In May, GM said it would create or retain about 4,000 jobs in eight states over the next 18 months.
GM commented that these were investments that were done to continue to move their business forward, and should not be read as negotiating tactics.
Despite those announcements, many of the 1,700 Ford workers in Flat Rock are worried about Mazda's decision to end production of the Mazda 6.
One assembly worker comment that this is a little scary, and they would like to get their concessions back, but definitely job security is more important.
And in St. Paul, Minn., where Ford plans to discontinue the Ranger pickup in December, the mood for about 750 workers is also grim.
Estimates are that three plants each at Ford and GM are in danger of eventual closure or of not being reopened.
For Ford, those plants are in Minnesota, Flat Rock and Avon Lake, Ohio. Ford makes the ever-popular Econoline van at Ohio Assembly but could make the next-generation model at another plant.
Meanwhile, the UAW has been publicly pressuring GM to keep its pickup truck plant in Shreveport, La., open and re-open plants in Spring Hill, Tenn., and Janesville, Wis., that have been on standby since the bankruptcy in 2009.
GM could move production of the GMC Canyon and Chevrolet Colorado from Shreveport to a plant in Wentzville, Mo. That would help fill the capacity of the Wentzville plant, which is operating on one shift.
Even if the plants closed, many UAW workers would be able to keep their jobs by accepting the already-announced new positions in other locations, although they'd likely have to move to another state to take them.
'Vying for new work'
To be sure, the danger of plant closures and job disruption is lower than in 2007, when automakers were losing billions and their labor costs were far higher than Asian rivals.
But the dramatic restructuring over the last several years has left many plants with underutilized space.
In Brook Park, Ohio, UAW Local 1250 is hoping Ford's engine plant is picked for a four-cylinder version of the EcoBoost engine. That could bring 300 more jobs to the plant.They are a strong advocate that it should be built in Cleveland, but every other plant is vying for new work.
As the UAW fights for jobs, and the automakers work to lower labor costs, the two sides could find common ground.
That's because the automakers can lower their labor costs by hiring new workers an entry-level wage rate of $14 and $16 per hour, thereby lowering their average labor cost per worker.
Under the current contract GM and Chrysler can hire an unlimited number of entry-level workers until 2015 while Ford's contract is capped at 20 percent.
Already, Chrysler has lowered its total labor costs more than Ford and GM because it has filled many of the more than 2,800 jobs it has announced since June 2009 with entry-level workers.
That has helped Chrysler cut its total labor costs per worker from nearly $76 per hour in 2006 to $49 per hour in 2010.
Ford could reduce its total hourly labor costs by as much as $3 per hour to $55 per hour if it hires the maximum amount of entry-level workers allowed under its current contract. But it cannot do that unless older workers retire, and many are reluctant to do so given Ford's success, which comes with annual bonuses.
The UAW plans to push for an increase in the entry-level wage, which is about half of the regular $28 per hour. They feel entry-level may not be a good middle-class standard of living today, so they want to figure out a way to get more income to those workers.

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