A number of financial issues may disrupt the happy union of United Auto workers (UAW) and General Motors (GM), that involved contract talks in an official handshake ceremony, held on Monday.
GM and Ford want to cut labor 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. Regardless of these differences in opinions, UAW and GM officials seem to have faith in the Monday ceremony that enables them to cut a deal that will prove to satisfy both the sides. CEO Mary Barra feels that GM’s success is beneficial for the shareholders along with the employees.
UAW President Dennis Williams discusses that the workers are hope to eliminate the income gap via an increase in pay between longtime workers, and entry-level workers; where the former gets $29 per hour and the latter gets $19.28 per hour. He fears that some of these workers are not even part of the middle class as expected theoretically. To support the companies when they incurred the financial difficulties in 2007, the union has agreed to the lower-tier wages. Hourly pay rates have been essentially frozen since 2005.
The President added that members want to get better but, they still require the job security. The companies have also considered shifting the production to Mexico; where global automakers’ investment and employment growth are proportionally exceeding that in the United States and Canada, and into lower-margin small cars. Production will be most likely shifted to Mexico with the plant getting a different product. Along with a factory in Lordstown, Ohio, east of Cleveland, GM decided, it would start building the Chevrolet Cruze compact in Mexico. Also, Ford will be stopping the production of the compact Focus and C-Max hybrid at a factory in the Detroit suburb of Wayne, Michigan. On September 14th, the union contracts will be ending with GM, Ford, and Fiat Chrysler. Talks with Fiat Chrysler open on Tuesday, while Ford’s talks officially begin next week.
