In talks that began ceremonially with the Detroit Three on Monday, United Auto Workers officials are eager to try to help their members recover financially from the sacrifices they began making seven years ago as the Great Recession brought about a massive restructuring of the domestic auto industry.
And on the surface, the UAW has reason to hope.
But not so fast.
Company and union negotiators will be heading toward a September 14 deadline against a backdrop that also includes many reasons for caution by new UAW President Dennis Williams and his lieutenants.
For one thing, the auto business is more competitive than ever, and none of the Detroit Three can afford to handcuff itself cost-wise in a U.S. market that once again has become their most dependable source of profits, thanks to a recovering economy, quiescent gasoline prices, the popularity of pricey pickup trucks and sport-utility vehicles -- and in view of the continued bloodbath in Europe and a slowing China market.
Also, UAW executives need to keep looking over their shoulders at the labor market in Mexico, where global automakers' investment and employment growth are proportionally outstripping that in the United States and Canada. In fact, Ford last week dropped an interestingly timed bombshell when it said production of its Focus subcompact and its poor-selling C-Max hybrid and plug-in models will move to Mexico after 2018 from the Wayne, Mich., assembly plant where it was established with much fanfare just a few years ago.
There are other uncertainties for the UAW to consider, including the fact that Marchionne -- also with interesting timing -- has been poor-mouthing Fiat Chrysler's own long-term financial position as he seeks to pressure GM into discussing a merger. His company may well be the most vulnerable to UAW strong-arming as the "strike" deadline nears, but the blue-collar workforce -- which has, after all, been through the ringer a few times over the last few decades -- might not have the stomach to go toe-to-toe with a Fiat Chrysler that is hanging implicit threats of dissolution over their heads.
And while Marchionne did say a few months ago that he'd like to see the two-tier distinction in UAW wages disappear, he most certainly didn't mean what union members were hoping he meant: closing the gap by significantly bumping up the hourly wages of the lowest-paid, which now max out at about $19 an hour compared with $28 an hour for longer-tenured workers. What Marchionne and leaders at GM and Ford clearly would prefer doing is closing that gap in large part by making as much of the compensation as possible for top-tiered workers contingent on profits or tied with incentives to quality and productivity, thereby putting a lid on what they're obligated to pay "tier one" workers -- while allowing "tier two" workers' wages to catch up only slowly.
A final wild card in the union's considerations has to be the fact that Michigan, home of its largest membership base, became a right-to-work state in 2013. That puts even more pressure on UAW negotiators to show that union members are getting some value for the dues they charge and for the UAW's enthusiastic backing of every progressive political candidate and cause that comes along.
If UAW members in Michigan, and other right-to-work states such as Indiana, don't like the agreements their leaders come up with, they can opt out of paying union dues next year. And that's something union leaders have never had to worry about before.
