No one is breathing easy yet.
Because more UAW strikes remain in the realm of possibility in coming weeks.
As General Motors waits to see whether 46,000 factory workers will vote in these next few days to approve a tentative contract agreement with the UAW and end a strike entering its sixth week, labor experts and a source with knowledge of the negotiations say Ford Motor Co. and Fiat Chrysler Automobiles remain vulnerable to strikes.
“We don’t know whether they’ll have a strike or not. That’s still possible,” said Kristin Dziczek, vice president of the Center for Automotive Research in Ann Arbor.
“Once the pattern is established at GM, when the contract is ratified, Ford and FCA pick it up and start crafting their own language. There could still be a strike at either one of those companies," she said. "Just because there was a GM strike does not mean the other two are off the hook.”
Others watching closely agreed.
“There are going to be real negotiations and critical issues at Ford and FCA,” said Harley Shaiken, a labor economist at the University of California at Berkeley. “It’s not done. This isn’t an afterthought.”
A person with knowledge of the negotiations said, “It’s premature for anyone to speculate on Ford or Fiat Chrysler because GM hasn’t been ratified yet. We don’t know how this will end up. It is impossible to predict until a General Motors contract is actually final. A strike is always a tool in the toolbox.”
'I have no spare money': UAW-GM labor fight spotlights the struggles of temp workers
Brian Rothenberg, spokesman for the UAW, declined to predict what could be in store for Ford and FCA. Assuming ratification, the union takes the GM contract as a template to the other Detroit carmakers to hammer out a final deal. The UAW has reported significant progress on subcommittee issues with both Ford and FCA, but final economic provisions and production promises remain.
No question, the current situation is volatile and uncertain.
GM has seen this strike hit 55 sites in 10 states in its first UAW strike since 2007. It has cost the Detroit automaker an estimated $450 million a week.
UAW leadership is proud of tentative deal that provides 3% pay increases for two years and a 4% lump sump payments the other two years, eliminating long-term temporary worker status and holding hourly workers' share of health care costs to 3%, among other provisions.
Fact is, the proposed deal sets a “high bar” for the Detroit Three to meet, said Marick Masters, a business professor at Wayne State University.
"It is an expensive agreement for the companies," he said. "At the same time, it becomes clear that the UAW is not going to expect anything less than that from Ford or Chrysler. If either of the two companies would try and negotiate anything substantively different, it would invite as strike.”
Ford has the most U.S. hourly workers among the three. And Fiat Chrysler has the most temporary workers. So the GM tentative agreement on those issues affects the two competitors disproportionately.
Observers wonder if the two remaining companies waiting to negotiate contracts will try to make adjustments to the GM deal to ease the financial pain a bit. For example, GM agreed to a record $11,000 ratification bonus.
While GM plans to move forward with closing three U.S. factories, FCA is building a new plant and expanding another in Detroit, and Ford builds all of its pickups in the United States. These differences could lead UAW negotiators to accept nuances in the contract language and try to find cost savings for GM’s domestic competitors.
Not so fast, said a person with knowledge of the negotiations. Key points to the tentative deal with GM are core elements of the “pattern” that will remain. Any notion that either Ford or Fiat Chrysler will adjust much more than the ratification bonus is wishful thinking. GM's bonus needs to be fat enough to get those strikers off the strike line, labor experts said.
Meanwhile, Ford and FCA are more likely to give into UAW demands where they might not in times past, having seen that the UAW is serious about striking and union members have demonstrated solidarity on the strike line. The costs GM is absorbing during the strike is not something either competitor wants to imagine, experts said.
While a set pattern simplifies the process going forward at the other two automakers, "it doesn’t necessarily make it smooth," Shaiken said.
'Premature to speculate'
FCA spokeswoman Jodi Tinson declined to comment.
Ford spokeswoman Kelli Felker said: "It’s premature to speculate on how the UAW-GM tentative agreement would affect us. Our focus remains on reaching affair agreement with the UAW that allows the company to be more competitive so we can continue to preserve and protect good-paying manufacturing jobs and maintain our track record of investing in our U.S. plants."
Temptation for Ford
William Gould IV, emeritus professor of law at Stanford University and former chairman of the National Labor Relations Board, said, “I think the temptation for Ford will be to say they should have sacrifices on compensation and/or fringe benefits that the UAW did not afford GM because the circumstances are different. Ford will put a lot of pressure on the UAW given the dynamics. As benefits go up, there’s a greater incentive to shave costs. That’s why the problem of job security could be a pressing one during these next few years as automobile sales decline.”
Deal points negotiated with GM set a “strong pattern” for Ford and FCA, said Kate Andrias, a professor of labor and employment law at the University of Michigan.
“There needs to be health care reform and a more labor friendly trade policy. But given the circumstances, this tentative (GM) agreement is a significant victory for workers," she said.
No question, the U.S. manufacturing footprint of Ford and Fiat Chrysler creates negotiating power, Shaiken said. "Ford is putting new products into the U.S. And with 10,000 more hourly workers than GM, these are real issues."
He added, “At the end of the day, the UAW retains considerable clout on the picket line.”
The UAW won on economics and GM won on plant closures, said Gary Klotz, a longtime employment lawyer in Detroit. “I see it as a bloody compromise.”
He said, “The eye-popping ratification bonus of $11,000? They want to get that agreement passed and throw money in the direction of strikers. That’s a big chunk of what they lost during the strike.”
In times past, an $8,000 ratification bonus was seen as generous, Klotz said. There is no way the other two automakers will want to match $11,000 for tens of thousands of workers. He wonders if Ford will try to go for a smaller wage increase, a less generous conversion for temporary workers to get to permanent status or a less generous wage rate for “in-progression” workers to reach the top of the pay scale.
“They could try and slow that down,” Klotz said. “Whether they’re able to, I don’t know.”
A great deal for the UAW in the short term could work against workers' goal of enhanced job security if the automaker perceives production in the United States as cost prohibitive, he said.
Fiat Chrysler is viewed as more competitive against nonunion foreign-based automakers in terms of overall labor cost structure.
Labor observers said key to making a contract deal work for the other two companies will require looking at the small print and how to slow down the growth of labor costs, which could mean incentives for older more costly workers to retire so that they’re replaced by cheaper labor, and other strategies.
“It’s highly likely there’s a downturn in the next four years," CAR's Dziczek said. That was part of what’s behind workers trying to get back things they felt they gave up in the bankruptcy. UAW workers are thinking, ‘If we don’t get them back now, before the next downturn, they’re not coming back.’ The companies are still very profitable and sales are at a very high level that would’ve been fantastic in 2008 or 2009.”
But looking ahead, most analysts agreed that this may be the final four-year contract negotiated with some idea about the near future. Too much remains uncertain over the next decade. With hourly labor accounting for about 5% of cost of producing vehicles in the United States, that can add up to a lot when talking billions of dollars that may be needed for research or capital improvements.
“In four years, it’s possible you could have these companies merge with other companies and not even exist as independent companies,” Masters said. “The industry is ripe for restructuring. You could find they are just so desperately in need of capital they find new partners, and joint ventures aren’t a good enough way to get there.”
While much is uncertain in coming weeks, one thing is clear: The UAW has real power and is willing and able to use its power.
“At one level, it’s interesting the union used a substantial amount of bargaining power to serve the interests of the workers other than those at the top tier of the pay scale. People often criticize unions as greedy bastards. There has always been, historically, some truth to that. In this round, the UAW took great lengths to improve the plight of various types of lower tiers: temporary workers, new hires and probationary workers,” said Harry Katz, the Jack Sheinkman Professor of Collective Bargaining at the School of Industrial and Labor Relations at Cornell University.
He added, “That’s significant. It may not sound like the biggest thing in the world, but it is. It exhibits there still is solidarity within the union and the workforce.”
No way will Ford or FCA do anything to tempt a strike, Katz said “Other unions call strikes and workers cross the picket line. Even with the UAW corruption scandal, which is disappointing for this union because it had a history of clean leadership at the national level, even with that black mark, the workers stood by the union.“
This article originally appeared on Detroit Free Press: GM-UAW aftermath: Ford, Fiat Chrysler still face strike risk