Pay debate slows auto talks as deadline approaches

AP News
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Posted: Sep 09, 2011 2:12 PM
Pay debate slows auto talks as deadline approaches

Contract talks between the United Auto Workers union and General Motors and Chrysler slowed Friday as the union seeks more money and the companies insist on cost cuts to offset pay increases, three people briefed on the negotiations said.

Although the talks are progressing, the slowdown over pay comes just five days before the union's national agreements with General Motors Co., Chrysler Group LLC and Ford Motor Co. expire, at 11:59 p.m. Wednesday.

"There is still lots to do," said one of the people, who added that negotiators are expected to work at least one of the days this weekend.

The contract talks will determine wages and benefits for 111,000 union workers at the companies, and they also set the bar for wages at auto parts companies, U.S. factories run by foreign automakers and other manufacturing companies, which employ hundreds of thousands more.

At Ford, little progress has been made as both sides keep sending new proposals to each other, another person said. All four asked not to be identified because the talks are private.

Talks traditionally slow when they get to money, raising the possibility that the current four-year pacts will be extended past Wednesday's deadline. In 2007, when the last contract was signed, bargaining with the companies ran into October and even November with Ford.

One key issue is pay raises for entry-level factory workers who now make $14 to $16 per hour, about half the rate of longtime union workers. The union agreed to the lower wages in 2007 to help the companies through tough financial times while at the same time preserving the roughly $29 per hour made by longtime UAW workers.

The union has proposed pay increases, but the companies, wary of increasing payrolls, have said costs must be cut in other areas to fund the raises, the three people said. They're looking at wellness programs to cut health care costs, and other measures.

"We're very concerned about the entry-level member having a middle-class standard of living, which I would argue they don't," UAW President Bob King said last month.

Both sides also are talking about profit-sharing instead of pay raises for longtime workers and healthy signing bonuses to convince workers to ratify the contracts. Even if union leaders agree to a contract, members still must vote on it.

Many members, especially at Ford, want the union to get back cost-of-living pay raises and other concessions they gave up in 2007 and 2009 when the companies faced financial trouble. The companies, though, want to keep labor costs low so they can continue to make money even when auto sales are slow.

As of Friday, negotiations at GM were ahead of Chrysler and Ford, but GM and Chrysler bargainers were communicating about pay and other items that might be common to both companies.

Ford may be waiting to settle until after GM and Chrysler because it is making more money than the other two and may have to pay more to get workers to approve a deal.

"The rank-and-file at Ford, their expectations are higher," said Art Schwartz, a former GM negotiator who now runs a labor consulting business in Ann Arbor, Mich.

Ford also is the only company the union can strike over wages. GM and Chrysler have no-strike clauses that were part of their government bailouts in 2009. Ford union members voted overwhelmingly last week to let union leaders call a strike.

Lewis Booth, Ford's chief financial officer, hinted to industry analysts Friday in London that talks with Ford could go beyond Wednesday's deadline.

"Our contract formally expires on Sept. 14, but if those discussions are still going on, we'll expect to continue working, continuing the discussions," he said.