Ford, GM and FCA start bargaining with the United Automobile Workers image

Three big U.S. automakers will start bargaining today with the United Auto Workers union for new contracts that would establish how much the post-recession profits the industry shares with workers has increased and also to find what the union costs are for more jobs in the U.S.

After a number of bargaining debates in 2007 and 2011, UAW leaders stated that they will insist on raises for the 139,000 workers at plants run by Ford Motor Corporation, General Motors Corporation and Fiat Chrysler Automobiles. The union representatives and the CEOs of the three Detroit automakers will meet this Monday to publicly agree on those.

Dennis Williams, the union’s president, explained that he wanted to narrow the gap between veteran workers who are earning around $28 per hour and workers who started working in 2011, who win $16-$19 for an hour.

Sean McAlinden, chief economist at the Center for Automotive Research, said that labor represents a declining share of a car’s cost, adding that the three carmakers’ costs for UAW members decreased from 11.5% in 2007 to 5.7% in 2014. However, executives at the Detroit Three said that they could add more UAW jobs depending on compensating increases in wages or benefits that will lead to productivity gain. A central issue will be the health care costs, with automakers having to pay a “Cadillac tax” of 40% on rich UAW medical plans starting in 2018.

Ford is expecting to boost its productivity by 6 to 7% in all of its factories, with John Fleming, head of the brand’s manufacturing stating that every dollar not taken out is a dollar that a competitor would spend on making their vehicles more competitive. Ford shook the union last week when it announced it had planned to move production of its small Focus and C-Max hybrid models out of a plant in suburban Detroit by 2018.