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Center for Automotive Research Predicts Sharp Gain in Auto Jobs

November 30, 2011 by Leave a Comment

DETROIT — Employment in the auto industry will return to prerecession levels by 2015, with carmakers and their suppliers adding about 167,000 jobs by then, according to estimates by an auto industry research firm.

The job growth would represent a 28 percent increase over current levels but would still replace only about a third of the jobs lost in the last decade. And much of the increase is made possible by labor agreements ratified this fall that allow the Detroit automakers to hire more workers on the lower of their two pay scales.

The industry group, the Center for Automotive Research in Ann Arbor, Mich., said it expected the Detroit automakers to hire 14,750 hourly employees in the next four years. They would receive entry-level wages of $16 to $19 an hour. Workers hired before 2007 earn about $29 an hour.

The group projected that about 15 percent of the new jobs would be at Detroit automakers, and nearly 80 percent would be at suppliers. Foreign automakers would account for the rest.

Sean McAlinden, the group’s chief economist, said that about one in six hourly workers at the three Detroit companies would be earning entry-level wages in 2015. They will account for 23 percent of hourly workers at Chrysler, 17 percent at General Motors and 12 percent at Ford, he said.

Currently, about 5 percent of hourly workers at the three automakers are paid entry-level wages.

Mr. McAlinden said that he expected the companies eventually to stop using a two-tier wage system but that it would most likely survive past their next contract negotiations with the United Automobile Workers union, in 2015. Chrysler’s chief executive, Sergio Marchionne, unsuccessfully pushed to eliminate the system during this year’s negotiations, though he said he did not propose cutting wages for any existing workers.

The two-tier system was created in 2007 to help the automakers cut labor costs as they were hemorrhaging money, but only recently were they able to begin hiring new workers in large enough numbers for the savings to have a noticeable effect on the bottom line.

“This was the only real option for lowering labor costs and increasing employment,” said Kristin Dziczek, director for the labor and industry group at the Center for Automotive Research.

The automakers have said the new contracts would result in a minimal increase to their labor costs, which was their overarching goal during the negotiations, while the union tried to recover some of the concessions it had given up in recent years.

Mr. McAlinden estimated that the new contracts would add $114, or 8 percent, to the companies’ average per-vehicle labor costs by 2015. The increases range from $85 a vehicle at G.M. to $166 at Chrysler, though Chrysler’s per-vehicle labor costs would remain the lowest of the three, at $1,293.

About 590,000 people now work in the auto industry, 13 percent more than in July 2009, when G.M. emerged from bankruptcy, Ms. Dziczek said. That figure is expected to grow to 756,800 in 2015.

Much of the job growth will happen in Michigan, where the three Detroit automakers cut more than half of their jobs since 2001, she said.

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Ford Workers Ratify Contract

October 19, 2011 by Leave a Comment

The United Automobile Workers union said Wednesday that the contract had passed, with 63 percent voting “yes” and 37 percent voting “no.” Early on, the deal appeared in danger of being rejected, after several large plants turned it down. But workers who had weighed in since Friday were overwhelmingly in support.

The contract calls for 5,750 new jobs that Ford had not previously announced, and for most workers to receive signing bonuses of $6,000 and profit-sharing checks averaging $3,700 this fall. They also will get bonuses totaling up to $7,000 in later years, but workers earning entry-level wages are the only ones to receive a pay increase.

“This agreement is proof that, by working together with our U.A.W. partners and local communities, we can significantly create new jobs, invest in our plants and people, and make a very positive impact on the U.S. economy,” Mark Fields, Ford’s president of the Americas, said in a statement. “Our agreement is fair to our employees and it improves our competitiveness in the U.S.”

Ford has scheduled a conference call with analysts and reporters Thursday to explain the financial implications of the deal. The credit-rating firms Standard Poor’s and Moody’s said recently that they might upgrade Ford if the contract were ratified.

Workers at the last Detroit carmaker to reach a new labor deal, Chrysler, began voting this week. Voting there is scheduled to end Oct. 26.

Labor experts said they expected workers at Chrysler to express less opposition than those at Ford did, given Chrysler’s shakier financial position.

Gary Chaison, a professor of labor relations at Clark University in Worcester, Mass., attributed the big swing toward approval at Ford to union leaders realizing that the deal was in peril and stepping up their efforts to show workers how they would benefit. Sentiment also shifted after the leaders began to prepare for a strike, warning that Ford might not return to the bargaining table.

“They got out there and really started to sell the agreement, not as a great agreement but an adequate agreement,” Mr. Chaison said. “The members walked right to the very edge of a cliff and they looked over and decided to take a step back.”

The contract adds only about 70 cents an hour to Ford’s labor costs, which were roughly $59 an hour under the old contract, estimated Brian Johnson, an analyst with Barclays Capital. That is a 1 percent increase, the same amount that General Motors said its new contract, ratified by workers last month, would add.

“The contract, while richer than other firms, does not impose significant new costs on Ford (while a strike would have temporarily cut production and profits),” Mr. Johnson wrote in a report to clients this week. He said a strike could have cost Ford $273 million a day in lost revenue and $71 million a day in profits.

Workers at plants in Chicago and Wayne, Mich., voted against the deal in the first few days, but their “no” votes were more than overcome by strong support from large union locals in Dearborn, Mich., Louisville, Ky. and Kansas City, Mo.

“Our leadership went in the plant and made sure we answered as many questions as we could so they were making an informed decision,” said Jeff Wright, the president of U.A.W. Local 249 in Kansas City. More than 90 percent of voters there supported the deal Sunday after Jimmy Settles, the U.A.W. vice president in charge of negotiations with Ford, flew in to meet with its workers.

Mr. Wright said his members would have liked a better deal, but understood that this was not the time for the union to press harder.

“I don’t know anybody that wouldn’t want a raise,” he said. “It’s going to be good to have this behind us so we can go back to building cars and trucks.”

In the contract, Ford committed itself to invest more than $1 billion in the Kansas City plant, which has 3,700 workers, to make upgrades and build a metal-stamping plant on site. The plant will begin building a new full-size commercial van, called the Transit, in 2013.

It also will get an additional shift of workers to build the F-series pickup truck in 2012, adding perhaps 1,500 workers, Mr. Wright guessed, and the next-generation of the F-series will be built there.

“As the nation’s economy remains stalled and uncertain and its employment rate stagnates, we were able to win an agreement with Ford that will bring auto manufacturing jobs back to the United States from China, Mexico and Japan,” the U.A.W.’s president, Bob King, said in a statement.

Ford and the union have yet to resolve a grievance filed by thousands of workers who assert Ford violated its “equality of sacrifice” promise by restoring bonuses for salaried employees but not for its hourly work force. The grievance is in arbitration, with a hearing scheduled for November, and any payout resulting from that would be on top of the contractual bonuses.

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Autoworkers’ Early Vote on Ford Contract Is Negative

October 14, 2011 by Leave a Comment

With voting completed Thursday at plants that account for roughly 20 percent of Ford’s 41,000 members of the United Automobile Workers union, the four-year tentative contract had been rejected by about 55 percent, the union said on a Facebook page dedicated to its negotiations with the company.

In the last couple of days, 63 percent of workers at two big assembly plants in Michigan and Illinois voted against the deal even though it promised larger bonuses and more new jobs than contracts negotiated with General Motors and Chrysler.

Workers have indicated that they are most upset that the contract keeps wages frozen for those on the traditional pay scale, particularly in light of bonuses given to top Ford executives as the company, the country’s second-largest automaker, has rebounded from the recession. Many are also upset that people hired in the last few years will continue to be paid much lower wages, though the second-tier pay scale was increased by several dollars an hour in the new contract.

“I’m fairly confident that Ford can afford to pay us more,” said Gary Walkowicz, an opponent of the deal who works at a Ford plant near the company’s headquarters in Dearborn, Mich. “We’ll be talking about more than 10 years without a raise by the end of this contract.”

The surprising early showing against the contract prompted the U.A.W. to alert union locals to begin preparations for a strike as soon as next week if the tentative agreement failed to pass. Voting will continue through Tuesday.

“This will be our next course of action if the tentative national agreement is rejected,” Keith W. Brown, president of U.A.W. Local 245 in Dearborn wrote in a blog posted Thursday.

Mr. Brown, who represents workers in Ford’s research and engineering departments, added that he was “still hopeful that we will not need to strike.”

Some workers opposing the deal say union leaders are merely raising the possibility of a strike to scare more of its members into ratifying the deal.

And some labor experts said the big payouts to Ford’s senior management — its executive chairman, William Clay Ford Jr., and chief executive, Alan R. Mulally, each received $26 million in compensation last year — might be stirring up a protest vote at the first plants to cast ballots. Postings on the union’s Facebook pages have criticized the paychecks of “greedy” executives and empathized with the protests on Wall Street about compensation in the financial services industry.

“There’s no question the executive salaries played into this,” said Harley Shaiken, a labor professor at the University of California, Berkeley. “It sets the wrong tone and invites comparison to the issues on Wall Street.”

The U.A.W.’s president, Bob King, and his aides were pushing hard for workers in other large plants to support the contract and counteract the negative vote received thus far.

In previous contracts, union members have occasionally rejected agreements early in the process, only to have the last voting factories support the deal overwhelmingly. A big swing factor could be the voting that concludes this weekend at Local 600 in Michigan, which represents about 6,000 workers at Ford’s Rouge assembly complex.

“The early votes tend to reflect anger over what’s not in the contract,” said Mr. Shaiken. “The later votes tend to reflect a more realistic view that this is the agreement they are going to get.”

Ford is the only American auto company that the U.A.W. can strike during this round of contract talks, but both the company and the union have indicated little interest in a showdown. Beyond a strike, if the ratification should fall short, the two sides could hold further talks, or Ford could impose a lockout on the union workers.

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Looking Ahead: Economic Reports This Week

September 26, 2011 by Leave a Comment

CORPORATE EARNINGS Companies reporting results include Walgreen (Tuesday); Darden Restaurants (Wednesday).

IN THE U.S. The United Automobile Workers will start negotiations with Ford Motor on a new contract; President Obama will participate in a town hall meeting on the economy in Mountain View, Calif. (Monday).

Solyndra will seek permission in bankruptcy court in Wilmington, Del., to auction its assets and hire lawyers to represent it in inquiries into its government-backed loan guarantee (Tuesday).

Ben S. Bernanke, the chairman of the Federal Reserve, will give a speech in Cleveland (Wednesday).

IN EUROPE Prime Minister George Papandreou of Greece will meet with Chancellor Angela Merkel of Germany in Berlin (Tuesday).

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U.A.W. Urges Raise for Entry-Level Jobs

August 30, 2011 by Leave a Comment

DETROIT — Contract talks between the United Automobile Workers and the Detroit carmakers are entering a more intense phase, with the union pressing for wage increases for entry-level workers as a critical part of a new national labor agreement.

The U.A.W.’s president, Bob King, said on Monday that the union had made a formal proposal for an increase in the $14-an-hour wage for entry-level workers, also known as second-tier employees. Full U.A.W. wages are about $28 an hour. “We are very concerned about the entry-level member having a higher standard of living,” Mr. King told reporters after a speech to the Detroit Economic Club.

The entry-level jobs were created in 2007, when the companies negotiated their current contracts, which expire on Sept. 14. Only about 3 percent — or fewer than 4,000 workers — of the 112,000 union workers employed by the Big Three automakers are paid the lower wage.

But Mr. King said he was mindful of the need to improve the second-tier wages as part of a broader effort to win gains from the Detroit companies, which are now healthy financially.

He stopped short of saying that the union had asked General Motors, Ford and Chrysler for any base-pay hikes or cost-of-living adjustments for its full-paid workers.

“What we have to do is figure out how we raise income in whatever way is possible, whether it’s cost of living or base wage or profit sharing,” Mr. King said.

Executives at the auto companies have indicated a willingness to improve profit-sharing formulas to avoid across-the-board pay increases that add long-term structural costs.

It would be difficult, however, for the companies to resist a specific wage increase for entry-level employees, analysts predicted.

“The lower tier is only slightly above eligibility for food stamps if you have a family,” said Harley Shaiken, a labor professor at the University of California, Berkeley. “It’s the working poor rather than the middle class.”

Over all, Mr. King described the tenor of negotiations as “upbeat,” and reiterated previous pledges that the union did not want to cripple Detroit’s comeback with an onerous contract.

“We are committed to the long-term success of Ford, General Motors and Chrysler,” he said. “The facts are that our companies face a lot competition.”

The negotiations traditionally accelerate after Labor Day, and the union often chooses one of the companies to bargain with exclusively until a deal is reached.

This year’s talks are colored by no-strike clauses agreed to by the union as part of the government’s bailout of G.M. and Chrysler. Ford, which turned around financially without the benefit of federal aid, does not have such a clause, and its workers are voting this week on whether to authorize a strike if an acceptable contract cannot be reached. One of the first votes was taken at a Ford plant near Kansas City, Mo., where workers voted 3,049 to 18 in favor of the authorization.

“I think it sends a pretty strong message,” said Jeff Wright, president of U.A.W. Local 249.

But Mr. Wright added that he thought a strike was unlikely. The last national walkout at Ford was in 1976, and Mr. King said he was hopeful that Ford workers would support a contract that offered parity with G.M. and Chrysler.

“I’m confident that if we get a good contract, we’ll get it ratified,” he said.

Analysts expect the companies to entice workers to approve a deal.

“There’s going to be a signing bonus and it could be significant,” said Arthur R. Schwartz, a former G.M. negotiator and the president of Labor and Economic Associates, a consulting firm. “If that money is hanging out there it will be very hard for members to vote no.”

If a deal cannot be reached at G.M. or Chrysler, their contracts would be settled by an arbitration process. Because of the uncertainty in an arbitration proceeding, Ford may choose to wait until G.M., for example, sets a pattern on economic issues like profit sharing before agreeing to the same terms.

And although both management and labor have said talks were moving smoothly so far, analysts discounted the notion that the talks would wrap up before the Sept. 14 expiration date.

The union needs to extend the discussions to the last minute to prove it has achieved the best deal possible, Mr. Shaiken said. “An early deal,” he said, “implies that if you’d been at the table a few more days, then you could have gotten more.”

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