DETROIT – It was all smiles and optimism Monday as the United Auto Workers union opened contract talks in an official handshake ceremony with General Motors.
But the glad-handing may not last long with both sides a long way apart on a number of financial issues.
GM and Ford want to cut labour costs that are $8 to $9 per hour higher than U.S. plants owned by Honda and Toyota, while Fiat Chrysler wants to keep its costs stable. The union also wants pay raises for longtime workers, an end to lower pay for entry-level workers and new product guarantees what would create jobs at U.S. factories.
Despite the differences, union officials and GM executives said they were confident at a Monday ceremony that they could negotiate a deal that will make both sides happy.
“A successful GM is good for shareholders, but it’s also good for employees,” CEO Mary Barra said.
Yet workers also want pay increases and to “bridge the gap” between longtime workers who make $29 per hour and entry-level workers who top out at $19.28, UAW President Dennis Williams said.
“Some of them are not part of the middle class like they should be,” he said of the lower-paid workers.
The union agreed to the lower-tier wages to help the companies as they were headed into financial problems in 2007. Hourly pay rates have been essentially frozen since 2005.
Although members want to do better, they also want job security, Williams said. Companies have talked about moving production to Mexico, especially in lower-margin small cars. Last week Ford said it would stop making the compact Focus and C-Max hybrid at a factory in the Detroit suburb of Wayne, Michigan.
Presumably the production would be moved to Mexico with the plant getting a different product. Also, earlier this year, GM announced it would start building the Chevrolet Cruze compact in Mexico in addition to a factory in Lordstown, Ohio, east of Cleveland.
The union’s contracts with GM, Ford and Fiat Chrysler expire Sept. 14. Talks with Fiat Chrysler open on Tuesday, while Ford’s talks officially begin next week.