February 23, 2024

G.M. Looks to Shepherd U.A.W. Pact

Both G.M. and Chrysler have been holding around-the-clock talks with the union for several days, hoping to reach a new deal before their current four-year contracts expire at the end of the night on Wednesday.

The third Detroit automaker, the Ford Motor Company, agreed with the U.A.W. on Tuesday to extend its contract until settlements were reached at the other two companies.

With its stock price lagging 33 percent below its initial public offering price of a year ago, G.M. needs a deal that bolsters confidence in its comeback from its government bailout and bankruptcy.

And with the strongest balance sheet of the Big Three, G.M. is in position to sweeten worker bonuses and raise the pay of second-tier workers in exchange for flexibility in its plants and profit-sharing tied to quality and productivity.

“With a vastly improved balance sheet, G.M. has a distinct advantage in negotiation its U.A.W. contract,” said Mike Jackson, a senior analyst at the research firm IHS Automotive. “It is working hard to set terms that are more favorable to its own cause.”

Historically, the union reaches an agreement with one automaker first and expects the other two to follow the framework for wages, benefits and work rules.

Recently, G.M. has stepped up its efforts to devise a competitive cost structure that both the companies and the union can live with for the next four years.

Underscoring G.M.’s aggressive approach has been the presence of its chief executive, Daniel F. Akerson, at the bargaining table. In years past, it was rare for any Detroit chief executive to be directly involved in the talks until the end of the process.

The U.A.W. agreed not to strike G.M. or Chrysler as conditions of the Obama administration’s bailouts of the companies. But G.M. is still 26 percent owned by the American taxpayers, and its executives are eager to avoid a prolonged arbitration process if a deal cannot be reached.

“A failure to reach a settlement would be looked at as almost a repudiation of the government funding,” said Gary N. Chaison, professor of labor relations at Clark University in Worcester, Mass.

Among the top issues to be reconciled is how much workers should gain now that the companies have greatly improved their finances. G.M. earned $5.7 billion in the first half of 2011, and Ford’s profit for the same period was nearly $5 billion. G.M. also has a cash stockpile of more than $30 billion, which it has been using to pay down debt and create what it calls a “fortress balance sheet.”

A deal that investors see as favorable for G.M. could help reverse the slide in the company’s stock price. Shares of G.M. closed at $22 on Tuesday, one-third lower than the price for its initial public offering last November.

Instead of increasing wages — which have been frozen since 2003 — analysts expect the carmakers to offer workers large bonuses that they would receive as lump sums after the contract is ratified. That avoids permanently increasing the companies’ annual labor costs, and the signing bonuses most likely would amount to considerably less than four consecutive years of small raises.

The bonuses will probably be $5,000 to $7,500 at G.M. and Chrysler, and slightly more at Ford, predicted Arthur Schwartz, a former G.M. negotiator who is now president of the consulting firm Labor and Economic Associates in Ann Arbor, Mich.

Ford would pay more because it is healthier and thousands of its workers have filed a grievance against the company over executive bonuses. A hearing on that matter is scheduled for Thursday.

“Their pay rates are already competitive, so why they’re entitled to a pay increase by definition is certainly debatable,” Mr. Schwartz said. “A nice-size signing bonus would go a long way.”

A U.A.W. spokeswoman, Michele Martin, said reports that the union had asked for bonuses of as much as $10,000 were “inaccurate” and creating “false expectations” among workers.

The bonuses are meant to increase the chances of ratification by rank-and-file members, but a large amount would undoubtedly draw criticism from opponents of G.M.’s government bailout and could even cause workers to think they are being taken.

“Most workers could see a large signing bonus almost as a sign of a bribe,” Mr. Chaison said. “If it’s too large then they’ll get suspicious about what they’re being asked to accept.”

The companies are expected to slightly increase pay for workers on the entry-level pay scale, which currently starts at $14 an hour, or half as much as most autoworkers earn.

Workers said that they expected the new second-tier pay scale to top out at about $18 an hour. U.A.W. and company officials, however, have not confirmed an amount they are discussing.

The union also is seeking to protect as many jobs as possible, and specifically wants to persuade G.M. to reopen closed plants in Tennessee and Wisconsin. But G.M. officials have said they will need to restart those plants only if market demand is sufficient, asserting that they do not need additional capacity yet.

Article source: http://feeds.nytimes.com/click.phdo?i=487aad97d67b59ec96714cf94a1529fb

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