You are here

GM contract terms may be a tougher fit for its rivals

New York

THE tentative contract that General Motors has worked out with the United Automobile Workers union is going to raise the carmaker's cost of labour and require a significant cash outlay.

But GM won something that it had rarely attained in the past outside of bankruptcy: the ability to close three plants economically.

Now the union is likely to try to win similar monetary gains from Ford Motor and Fiat Chrysler. And those companies may find them more costly, said Kristin Dziczek, vice-president for industry, labour and economics at the Center for Automotive Research in Ann Arbor, Michigan.

sentifi.com

Market voices on:

"Ford and FCA don't have three plants they want to close," she said. "So what will they win?"

GM workers will vote on the contract this week, with a result expected on Friday. Under the proposed contract, the company's 49,000 UAW workers would get higher wages and bonuses. In addition, GM pledged to invest US$7.7 billion in US factories, and to make additional investments of US$1.3 billion through joint ventures.

One project that GM is planning is a battery plant near the site of the factory it idled this year in Lordstown, Ohio. The company also promised that its Detroit-Hamtramck plant would get an investment of US$3 billion. In exchange, the union is accepting the shutdown of transmission plants in Baltimore and Warren, Michigan, and a small-car plant in Lordstown.

Workers not yet at the top wage of US$32 an hour will get raises to move them to that level within four years. Temporary workers also get a path to full employment. If the agreement is ratified, each worker will get a bonus of US$11,000.

But Ms Dziczek said it was unclear what Ford and Fiat Chrysler could get from the UAW in exchange for higher wages and bonuses and accelerated pay raises like those GM agreed to.

Fiat Chrysler has a higher percentage of "in progression" workers, who earn as much as US$12 below the top union wage. Just under half of Fiat Chrysler's 44,000 UAW-represented employees are in that category.

Ford has 55,000 UAW workers. About 34 per cent are in progression and 6 per cent are temporary, roughly comparable to the distribution at GM. NYTIMES