The new deal inked by the UAW union and Fiat Chrysler, the third largest US automaker, is set to finally close the gap between new and veteran workers in the span of eight years.
But according to labor experts and other researchers it doesn’t setup the base to close a more than decade-long slump in manufacturing salaries across the US. Numerous factors influence the US manufacturing wages, including the all powerful currency quotation and the increased competition from Mexico that has attracted numerous companies because of lower salaries among other benefits. “The strength of the dollar and competition from Mexico will continue the slowdown in manufacturing wages,” comments Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor. The FCA rank and file members of the UAW now get ready for another round of ratification on the renegotiated four-year agreement that would see all workers to almost $30 an hour over eight years.
But experts see management and workers pressured more and more by the automakers now lean enough to easily shift production between the US and Mexico or even throughout their worldwide manufacturing facilities in their never-ending quest to lift profitability. According to labor experts, the UAW since 2008 has faced a strategic option – increase salaries or lift job numbers. GM and Ford most likely will deliver an agreement matching the one at FCA, but given that almost half of US vehicles are made in non-union plants the effect throughout the broader economy will now be minimal.