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UAW, Chrysler reach deal
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September 16, 1999: 1:24 p.m. ET
Even with raises, labor costs seen dropping through productivity
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NEW YORK (CNNfn) - The United Auto Workers and DaimlerChrysler reached a tentative contract Thursday covering 75,000 workers at the nation's No. 3 automaker that could set the pace for agreements at General Motors Corp. and Ford Motor Co.
Terms of the agreement were not disclosed, with officials at DaimlerChrysler and the union declining to provide details until UAW members vote on the pact. The union represents at least 250,000 other workers at GM, the world's largest automaker, and Ford.
While details were not released, Harley Shaiken, a professor at University of California-Berkeley who specializes in labor relations, said the union agreed to a four-year pact, rather than the traditional three-year agreement, and that it includes a $1,400 signing bonus as well as 3 percent annual wage increases for at least the first three years of the contract.
Shaiken also said the pact includes provisions for senior employees to get employment guarantees, but without seeing the contract language, he and other industry observers would not say if the new protections were a significant improvement from the previous contract's language.
"My strong sense is this builds on existing provisions, that it doesn't represent some major breakthrough," he said.
The agreement was reached early Thursday, almost 48 hours after the last round of talks began in Auburn Hills, Mich., the U.S. headquarters of DaimlerChrysler. The two sides broke for about four hours Wednesday morning, but otherwise kept talking straight through the contract's expiration just before midnight Tuesday. The union extended its contracts with Detroit's Big Three automakers Tuesday evening.
Both sides have released little information about the talks, but Stephen Yokich, the UAW president, previously characterized the initial offers from DaimlerChrysler (DCX) and GM (GM) as the best he'd ever seen.
But even with the reported 3 percent wage increases, the Big Three should continue to see their labor costs per car dropping due to continued improvements in productivity, said David Cole, director automotive studies at the University of Michigan.
"People are going to look at this and say this is pretty rich wage increases for people who already make a lot of money," said Cole. "But the opportunities to improve productivity are still pretty high. A few years ago, 30 to 35 hours a vehicle was what was accepted as best practice. Now it's close to 20. The goal is now around 10."
Wages, job security, health care costs, overtime demands and assigning work to outside, usually nonunion suppliers were said to be among the top issues in this year's talks, as they were during the last round in 1996.
Auto sales have been exceptionally strong, and union leaders have said workers were entitled to a share of record industry profits. DaimlerChrsyler, GM and Ford (F) had combined earnings of more than $5.5 billion in the second quarter of 1999.
According to DaimlerChrysler, its average assembly worker is 43 years old, has 16 years of experience and earns about $70,000 a year, thanks to overtime and profit-sharing. The same worker gets 37 paid vacation days a year.
There were few official signs of the specifics that the UAW and DaimlerChrysler negotiated. The union has discussed efforts to organize some of DaimlerChrysler's nonunion plants in the United States: a Mercedes-Benz sport-utility factory in Alabama with 1,600 workers and Freightliner commercial truck plants in North Carolina.
Shaiken said he understood the company did not agree to a UAW proposal to recognize union representation at those plants if the union had membership cards signed by more than half the workers, rather than waiting for a full vote. But the company didn't rule out such a procedure either, Shaiken said.
"From what I've heard, the union didn't get all it wanted, but it got enough that it's likely to invigorate the (organizing) drive," he said. "It'll give the drive a legitimacy and an ability to engage workers that was more difficult before. It was an important gain at the union."
UAW leaders have complained about company moves against organizers. DaimlerChrysler has vowed to remain neutral in the UAW's efforts.
Organizing new plants is crucial to the union's membership ranks, said Cole, since the Big Three are clearly going to continue to cut jobs through retirement and because of productivity gains. Of particular importance is getting access to supplier plants, where UAW representation has dropped from about 50 percent of workers to close to 20 percent, he said.
The UAW will be looking to its improved relationship with the Big Three for help pressuring suppliers for access to workers at those plants, where wages are usually lower than at UAW-covered plants, Cole said.
"It's a very competitive labor environment today," Cole said. "That's not going to change."
The UAW usually chooses one automaker to make a deal with first, then uses that deal as a template for other contracts.
The UAW is expected to turn its attention now to GM, where lower level talks continued Thursday. The existing contract covers almost 200,000 workers, including those at Delphi Automotive, GM's former parts division, which will negotiate its first independent contract.
Wages are an issue at GM, which has sought to mend fences with the UAW after last summer's 54-day strike at two Flint, Mich., parts factories. The strike virtually shut down the automaker's North American production.
According to union newsletters, the UAW has asked GM for higher wages, and has sought better overtime compensation. In recent years, automakers have held down employment by increasing overtime.
The spin-off of GM's Delphi parts subsidiary also is figuring in the GM talks. About 42,000 UAW members now work at Delphi, and the union wants to preserve their parity with their former co-workers at GM. The UAW was upset that GM divested Delphi without first working out a deal with the union. GM will be involved in some of the Delphi negotiations because of language about the effects of the spin-off that must still be settled.
Delphi spokesman Peter Rowe declined to discuss the status of the talks.
The thorniest issue appears to be at Ford, where the UAW represents about 103,000 employees. Ford reportedly would like to spin off its Visteon parts unit that employs about 23,500 UAW workers. The UAW is opposed to the move, fearing job cuts and lower wages at a separate company.
The union granted an indefinite extension of the contract to the automakers Tuesday -- but not before flexing its muscles at DaimlerChrysler. National negotiators, including Yokich, were meeting at DaimlerChrysler headquarters when workers at five plants in Missouri and Indiana staged a brief walkout Tuesday night.
The plants, which employ about 15,000 workers, make the company's highly profitable Dodge Ram trucks and all its minivans. Picket signs were up for about an hour before the contract extension was announced. Production at all five plants resumed as normal on Wednesday.
-- from staff and wire reports
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