US auto industry braces for labor talks

Published 28.06.2015 22:36
Updated 28.06.2015 22:45
US auto industry braces for labor talks

The uneasy labor peace that helped the U.S. auto industry survive a financial collapse will soon be tested, as the Detroit Three prepare for contract talks with the United Auto Workers. "It's going to be a very tough negotiation," Joel Persinger, the chairman of UAW Local 5950 at General Motor's plant in Orion, Michigan, told AFP. "It's mostly all about wages." The union - which had seen its ranks decimated in wave after wave of mass layoffs as the Detroit Three lost market share to foreign competitors - agreed to major concessions in 2007 and 2009 to help GM and Chrysler emerge from bankruptcy protection. The UAW's hands were tied when it went back to the table in 2011 because the terms of a federal bailout barred it from striking. It has regained the right to strike now that the U.S. Treasury has sold its stake in GM and Fiat Chrysler Automobiles has repaid its federal loans.

With sales booming, workers who haven't seen a raise in eight years are looking to share in the profits from the industry's recovery. But with labor costs at U.S. plants run by the Detroit Three still higher than those of their foreign competitors, automakers are looking to hold the line. "These are the first negotiations out of the shadow of bankruptcy and the first negotiations since the 1990s that follow a streak of five very profitable years," said Kristin Dziczek, lead labor analyst for the Center for Automotive Research in Michigan.

The union opens negotiations with all three companies simultaneously in mid-July but will pick a so-called "target" company just ahead of a Sept. 15 contract expiration deadline. The other two companies will be expected to follow the pattern agreement with modest changes. The union wants a raise for the 140,000 union members covered by the contract and is looking at different models for "bridging the gap" in pay between legacy workers making $30 per hour and new hires who make roughly $16.50 under the current contract.

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