Everyone is all smiles at the opening of GM-UAW contract talks, but the two sides are getting down to it now that the deal with FCA is complete.
With the contract with FCA finally ratified, the United Auto Workers turns its attention next to the General Motors.
Only hours after the announcement of the results of the second ratification vote at FCA, the UAW named GM as its next target.
“The UAW announced today that it will pursue a contract for UAW-GM members in the next round of Big Three bargaining as negotiations continue at Ford,” the union said.
Earlier this month, Mary Barra, GM’s chief executive officer, stressed that the company expected a settlement, but declined to discuss the GM goals or objectives.
Just prior to the UAW proclaiming GM was next, the automaker announced plans to add 1,200 jobs at the Detroit-Hamtramck assembly plant. Since the first of the year has announced major investments totaling more than $5 billion at several of the company’s plants.
The investment commitments squeezed out of Detroit’s automakers have become one of the UAW’s major objectives during its contract talks. The union now relies on the investment commitments as a protection of job security, union officials said.
The FCA contract will serve as the pattern for key economic provisions.
The contract specifies all current FCA workers on the now on the second tier will be paid traditional wages within eight years. The “in-progression employees” with four years of service will be paid traditional wages by the end of this contract – that’s more than $10 per hour in wage increases. In-progression members with two years of service will receive more than $8 per hour in base wage increases by the end of the contract.
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In addition, workers hired prior to 2007 will collect two 3% wage increases and two 4% lump-sum bonuses, which means traditional workers will be taking home an additional $20,000 during the next four years. UAW-FCA members will continue to pay no premiums for their health care.
In addition, the health-care coverage remains unchanged, while the profit-sharing pool will be funded based on the new formula of $800 for every 1% in North American profit margin. This profit-sharing pool will be paid out based on each UAW-FCA member’s uncapped compensated hours. In other words, the more hours you work, the bigger your share of the pool.
Workers on the second tier will get more retirement security in this agreement. Thanks to an increase in the 401k contribution rate to 6.4% and large wage increases, FCA will be putting significantly more money into in-progression members’ 401k retirement savings funds.
As soon as the contract is signed, traditional members will get a $4,000 up-front lump sum bonus and in-progression members will get a $3,000 payment.
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GM workers are likely to get a larger signing bonus than their counterparts at FCA and the union is like to press the company for a larger share of the company’s profits.
The automaker reported record quarterly earnings for the third quarter, as strong demand for trucks in North America and improved profit margins in China overcame declining revenues. GM posted profit of $1.50 a share in the quarter, well ahead of the $1.18 per share consensus among Wall Street analysts polled by Thomson Reuters.
For GM, a big key to its good quarter was in North America, where cheap gasoline has fueled surging demand for large pickup trucks and sport utility vehicles, segments where GM is dominant. Roughly 72% of its quarterly revenue in North America, where profit margins hit a record 11.8%, which would appear to support the union’s demands for a larger share of the company’s profits.
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GM Chief Financial Officer Chuck Stevens said the company expects to hit its goal this year of generating 10% profit margins in North America for the full year, a year ahead of its previous forecast.