Why the UAW-Big Three Talks Are So Tense

 Bill Pugliano/Getty Images

Bill Pugliano/Getty Images

Outside of manufacturing states, the labor struggle can seem like capital letter American History now. The days of sit-ins, Woody Guthrie, and brutal strikebreakers may have receded into the past, but the labor struggle in America is alive and well, and it’s front-center in current contract negotiations between the United Auto Workers, and the Big Three. Nearly a month into the talks, tensions are still high, and unless agreements can be reached soon, the booming American auto industry could be in trouble.

At stake are the jobs of 137,000 American auto workers, and by extension, the entire U.S. auto industry. For decades, the UAW has been one of the strongest unions in the country, but the increasing globalization of the industry has put the union under an increasing amount of pressure – much to the benefit of the automakers. In recent years, an influx of Asian and European automakers have established factories in the U.S., with the majority of them setting up shop in anti-union southern states, leading to a rise in non-union American autoworkers. What’s more, the ascendency of Mexico as a production hub has led to a number of plants opening up across the border, and providing automakers with one hell of a big trump card to play.

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Bill Pugliano/Getty Images

At the crux of the negotiations are two key points: the tiered wage system and healthcare. Long considered to be the jewel in the UAW’s crown, its health insurance plan is coming under fire from automakers as health care costs continue to climb upward. According to Automotive News, Ford will end up paying $800 million for union health care this year, and FCA will spend $615 million (GM declined to disclose its health care costs). But with auto sales climbing with each passing month, it will difficult for any automaker to plead poverty here, so while the UAW is open to a co-op-style system, it isn’t likely to move much on its benefits. The biggest hurdle here is the two-tier wage system, implemented in 2007, just before the industry’s near-collapse, cemented in 2011 just as it was emerging from the wreckage, and according to the UAW, completely exploitative in this boom era.

Source: Ford

Source: Ford

Fiat Chrysler Automobiles was the first automaker to sit and renegotiate its contract with the UAW, and so far, the talks haven’t exactly been warm. From the Big Three’s point of view, it’s paying too much for labor. Including health care costs, it’s estimated that automakers spend between $45-$59 an hour on union workers, depending on hourly wage. In contrast, their workers in Mexico make an average $5.25 an hour. Those costs add up – according to the Center for Automotive Research, it’s estimated that building the Chevrolet Sonic stateside costs GM $674 more than Ford’s comparable Mexican-built Fiesta.

But the Big Three can’t just abandon its American plants, it isn’t getting any cheaper to provide for families, and there’s a reason why auto industry work is called “skilled labor.” Under the current two-tier system, Tier 2 employees earn between $15 an $19 an hour, compared to veteran Tier 1 workers, who earn around $28 an hour. During renegotiations in ’11 when automakers were still shaky, the UAW conceded a more concrete implementation of the tiered system – it was better than the specter of plant closings. But now the system is firmly entrenched, and as the concessions made it harder to Tier 2 workers to graduate to Tier 1 pay, automakers have gone on a hiring spree, setting up a scenario where the more expensive workers retire out, leaving the Big Three with a majority of lower-paid workers while profits soar.

PAUL J. RICHARDS/AFP/Getty Images

PAUL J. RICHARDS/AFP/Getty Images

As a result, the rallying cry for this round of negotiations has been “No More Tiers,” as the UAW fights for a closing of the wage gap for its workers, arguing that it is anathema to the union’s basic tenets of equality and solidarity. A possible compromise lies in the Canadian model, where autoworkers are put on a 10-year escalator pay plan, with wages growing along with seniority.

But a month in, there’s still a long way to go. Talks with FCA have reached an impasse after a UAW vote overwhelmingly defeated the automaker’s tentative agreement. Up next is Ford, which narrowly averted a strike at its invaluable F-150 plant in Kansas City this week, then on to GM. With past negotiations mired in uncertainty for the entire industry, the UAW had to make some painful concessions to ensure that everyone kept their jobs. Today, the auto industry is in better shape than ever, and it’s probably time to get generous with the men and women who build its cars.

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