According to a recent report from the Wall Street Journal, healthcare packages and profit-sharing deals might be modified during the negotiations for the new four-year labor deals between the United Auto Workers (UAW) and the Detroit Three carmakers.
Citing sources that were close to the talks but declined to reveal their identity as the information is not public yet, the healthcare expenses might become a key issue during the negotiations that ceremonially started on Monday, because the three automakers are being impacted by a so-called “Cadillac tax” of 40 percent on the UAW medical plans after 2018. The Journal even said the third biggest US automaker, Fiat Chrysler Automobiles NV would seek to rethink bottom up the compensation systems. “Those are just two of many issues that we will be discussing with the UAW during this round of negotiations,” commented a FCA US representative. FCA US uses a very high tally of lower-paid, entry-level workers in contrast to larger peers General Motors and Ford, revealed a 2014 labor costs study conducted by the Center for Automotive Research.
For example, the average US worker at FCA US was costing the company $48 per hour compared with $57 for Ford and $58 for GM last year. The ongoing labor agreements between the UAW and the Detroit Three are being phased out on September 14 and the main issue of debate might be the gap between entry-level and veteran workers. The latter earn as much as $28 per hour while workers hired after 2011 entered a “second tier” hourly wage of $16 to $19.