BREAKING NEWS: Big 3 & UAW Stun Automotive World

If the Big Three followed through with half of these proposals, they would be an AFV/hybrid force to be reckoned with.

BREAKING NEWS
Date: Sunday, April 01 @ 06:33:20 PDT

NEW CONTRACT BETWEEN BIG 3 AND UAW STUNS AUTOMOTIVE WORLD
Innovative agreement cinched by Wal-Mart inclusion
By BT Justice

The winds of change blew like a hurricane though Detroit this morning.

Just after midnight, a surprise announcement was made that a new three-year labor agreement had been hammered out between the United Auto Workers Union and the Big Three automakers.

The new contract with General Motors, Ford Motor Company and Chrysler Group contains unprecedented elements, including an alliance with Wal-Mart that gives UAW members a 50 percent discount on all purchases at the giant retailer.

The current contract expires September 14, so announcement of a new labor agreement five and a half months early was a surprise.

Before going into effect, the contract must be approved by the union’s members, but Ron Gettelfinger, UAW President, predicted, “Ratification is a slam dunk.â€

The announcement was made at Solidarity House, the international headquarters of the UAW, in Detroit, with senior management of the three companies sharing the stage with the leadership of the UAW.

“From the beginning we focused on cooperation with the union,†said a joint statement issued by the CEOs of the Big Three. “Both we and the UAW leadership took a long-term view of actions that could save union jobs and save our companies.â€

The statement was signed by G. Richard Wagoner, GM’s Chairman and Chief Executive Officer; Alan R. Mulally, Ford’s President and Chief Executive Officer; and Thomas W. LaSorda, Chrysler Group’s Chief Executive Officer.

In reaching agreement on a new contract, the automakers and the UAW made unprecedented concessions to each other.

Wages of UAW members will be cut more than 40%, to approximately $27 per hour including benefits, which is the average paid to hourly employees at U.S. plants of Asian and European automakers.

To compensate for the pay reduction, UAW members will receive a half-off discount for all purchases at Wal-Mart, though purchases must be made through self-check cashier stations.

“I’m not happy about the pay cut,†said Jon-Jon Baumer, a 16-year employee at Ford’s Ohio Assembly Plant, in Avon Lake, Ohio and a member of UAW Local 2000. “But I’ll be able to buy a gallon of top-quality pickles for $1.49. You can’t beat that.â€

A major concern of the UAW has been declining membership, which has fallen from 1.5 million members in 1979 to 540,000 members today.

GM, Ford and DaimlerChrysler, the parent of Chrysler Group, have agreed to assist the union in increasing membership by calling for federal legislation requiring all jobs at all automotive plants in the U.S. be unionized, and the contract will not be ratified until the legislation becomes law.

In addition, the three companies have agreed to UAW representation at all of their plants worldwide that are currently not represented by a union.

“This means we no longer oppose jobs going to Mexico, China and other countries because work will be done by UAW members,†said Gettelfinger, who predicts UAW membership will more triple this year because of the new contract.

Another concession made by the automakers is to transfer overseas any UAW member whose job in the U.S. is eliminated, along with up to five family members.

“Many of our rank-and-file are excited about the prospect of moving out of rust-belt cities to areas with better weather and better food,†said Gettelfinger. “Who wouldn’t jump at the chance to live in China or India?â€

Other notable factors of the contract:
• A requirements that all salaried employees work five days per quarter in a manufacturing plant and earn UAW wages, rather than salary, during that time
• All salaried employees will become honorary UAW members and pay UAW dues
• Bonuses will be paid to salaried employees only in years in which their company’s market share increases.

“It’ll be fun to watch the white-collar guys find out what real work is like,†said Bonnie Le Casque, a member of UAW Local 909, who works at GM’s powertrain plant in Warren, Mich.

“To be honest, I think I’ll enjoy going over to the Gear Jammer and having a beer with them at the end of a shift,†added Le Casque. “But I’m not looking forward to the re-work we’ll end up doing because of them.â€

The deal also allows Wal-Mart to purchase cars and trucks at a significant discount. The terms have not been announced, but some analysts predict Wal-Mart will begin selling vehicles as well as parts at its 1,075 Wal-Mart Discount Stores, 2,256 Wal-Mart Supercenters and 579 Sam's Clubs in the U.S.

“The new contract is win-win-win-win-win,†said Jason Vines, Chrysler’s vice president of communications.

“That’s five wins if you weren’t counting. The Big Three reduce costs, consumers buy our products for less, the union increases membership, Wal-Mart increases sales and profits by retailing vehicles, and UAW members receive unprecedented purchasing power at Wal-Mart,†said Vines. “As everyone knows, if Wal-Mart doesn’t have it, you don’t need it.â€

Not only is the new labor agreement unique, but the process that led to it was equally extraordinary.

Formal contract negotiations were not anticipated to begin until June, but each of the automakers has been holding preliminary discussions with the UAW for about a month.

On the evening of March 15, a Wal-Mart manager in Auburn Hills, Mich. noted a large purchase of pizza, potato chips and soda made by a DaimlerChrysler employee, who explained the food was for the contract negotiation team at Chrysler’s nearby headquarters.

“The next day, a plane load of managers from Bentonville showed up with food, coolers and a couple propane grills,†according to Vines.

“Discussions took a sharp turn for the better, and we had so much food we decided to invite over the negotiating teams from GM and Ford,†said Vines. “The rest, as they say, is history.â€

Because the announcement of the new contract took place in the early hours Sunday, many news organizations did not have representatives in attendance.

Further details of the new agreement will be released tomorrow.