Like prize fighters vying for a title bout, each of Detroit’s Big Three car makers hopes to be the first to step into the ring later this summer and hammer out a new labour contract with the United Auto Workers union, Reuters said.
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General Motors, Ford and the Chrysler unit of DaimlerChrysler have quietly been holding preliminary contract talks with the UAW since last month, the report said.
In keeping with tradition, however, the negotiations are likely to heat up sometime around next week’s Labour Day holiday when the UAW will pick a so-called “target” company to bargain with more intensively, Reuters said.
After a tough head-to-head, which could last well past the current contract’s Sept. 14 expiration, the UAW will use whatever labour agreement it reaches with the first company as the “pattern” to be endorsed by the others, the news agency added, noting there may be no big winners and losers in this year’s contract talks.
In fact, Reuters noted, the very ground Detroit car makers and the UAW stand on seems to be crumbling beneath them as they reel from relentless gains by foreign car makers and the non-union sector of the US vehicle industry.
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By GlobalDataThe report said each of the Big Three have different priorities to address with the union and going first can have big advantages since the target company can get the best deal for itself while inflicting as much pain as possible on its cross-town competitors.
“If we’re the lead company, it can help us insofar as that we can, in some ways, tailor an agreement to our particular situation. And all three companies have different situations,” Chrysler spokesman Dan Bodene told Reuters.
Reuters said he did not elaborate but the news agency noted that Chrysler, for instance, has about one retiree for every active employee as opposed to nearly two retirees for every active worker at GM. As such, Chrysler could agree to large pension increases for the UAW rank and file – something difficult for GM to bankroll – if the union allows it to out-source more work to low-cost automotive suppliers.
“To some extent, whoever is the lead company has the best chance of winning,” industry analyst Stephen Girsky of Morgan Stanley reportedly said in a recent report on the contract talks.
In a cautionary note, he added that “sometimes the lead company gives away so much in order to be the target, that they obtain little if any benefit from it,” Reuters said.
The news agency recalled that Chrysler was the target when the UAW contracts last came up for renewal in 1999 and, riding high at the time, the company agreed to a moratorium on plant closings, a move analysts thought would hurt Ford more than anyone else.
But, Reuters noted, the closings ban came back to haunt Chrysler, complicating its restructuring programme when it suffered a financial nose dive a year later.
Reuters said there is no clear front-runner for who will be this year’s target and Girsky said the UAW could conceivably delay announcing its choice, preferring instead to negotiate simultaneously with all three companies.
