The much awaited discussion between the Detroit Three auto brands and the United Auto Workers has started on Monday, with officials from UAW looking to offer financial aid to the union’s members after the financial crisis that started in 2007 led to a big change in the domestic auto industry.
General Motors, Fiat Chrysler Automobiles and Ford have managed to recover from the Great Recession with a lot of help from the Government. The U.S. car sales are doing well at the moment, reaching a total annual of 17 million units sold, a number which five years ago was considered no longer attainable.
The negotiations between the union and the companies are headed to a deadline on September the 14th facing a current background that includes a number of reasons for caution for UAW’s new president, Dennis Williams. The auto business has become very competitive in the past months, which does not allow the Detroit Three to make any massive cost changes in the U.S. market, which is now again their most reliable source of profits due to not only the recovering economy, but also to low gasoline prices, the growth in popularity for the pricey pick-up trucks and sport-utility vehicles and also because the auto market in Europe and most definitely in China is not doing so well at the moment.
The UAW execs have to pay attention to the labor market in Mexico, where these automakers are investing both in plants and employments in the face of U.S. and Canada. Ford announced last week that it will move the production of the C-Max hybrid and its plug-in models from Michigan to Mexico starting 2018. Moreover, FCA’s CEO Marchionne is stating at the same time with these talks with UAW that FCA’s financial position is not solid in the long run, trying to pressure GM into an eventual merger. And while the union is looking to close the gap between veteran workers who are making $28 per hour as opposed to the newer-comers who earn at the most $19 for an hour, Marchionne and the leaders from GM and Ford would much rather close this gap by basing the compensation for top-tiered workers on profits with incentives to quality and productivity, only allowing the second rank workers to catch up slowly.
By Gabriela Florea