General Motors Workers Appear Ready to Ratify UAW Labor Agreement
A tentative four-year labor contract between General Motors Co. (GM) - Get Report and the United Auto Workers union appeared headed toward ratification on Thursday, following approval by GM workers at a big factory in Ft. Wayne, Ind., by a 58% margin.
The union has been pushing for ratification following the tentative contract's defeat at several GM plants in early voting. GM's hourly work force of 52,700 has until Saturday to cast their ballots. If the contract passes, the union will begin bargaining with Ford Motor (F) - Get Report , the last of the Big Three Detroit-based automakers this year. Fiat Chrysler (FCAU) - Get Report workers approved the contract in October.
The union's leadership and the automakers are hoping to avoid a work stoppage, which would be costly to the companies in financial terms and likely hamper efforts by the UAW to organize non-union car plants in the southern U.S.
The UAW's top priority, along with a wage increase, is to narrow the wage gap between higher-paid older workers and those hired after 2007 at a lower pay scale to help the financially strapped industry.
"I am extremely grateful the UAW has made serious progress with restoring its motto of 'equal work for equal pay,' " John Jablonski, an entry-level worker, told the Detroit News. "I cannot stress enough that the UAW took the lower-wage tier only to save the jobs of many auto workers, and to keep the American auto industry alive. And now the UAW is fighting for us to get the wages and benefits we deserve."
Kristin Dziczek of the Center for Automotive Research in Ann Arbor, Mich., noted that hourly production workers have tended to favor the contract. Skilled-trade workers generally were opposed because they aren't eligible for a $60,000 retirement incentive available to older production workers.
The contract approved by Fiat Chrysler workers established a pattern of pay increases for hourly workers, starting at $17 an hour and progressing to nearly $30 an hour over eight years. Older workers got a $4,000 bonus. The GM proposed contract is similar, except that it includes an $8,000 bonus.
The UAW is eager to avoid another work stoppage at a time when U.S. automotive demand is extremely strong. The last strike, in 2007 against GM, lasted two days. The last prolonged strike happened in the late 1990s. From 2011 through the expiration of the current contract the UAW was barred from striking under terms of reorganization following the bankruptcies of GM and Chrysler.
Sources at the automakers said this year's labor contract is looking most costly than expected and may mean future investments in plants and new models could tilt toward non-U.S. locations.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.