The United Auto Workers union has ratified a new contract with American Axle & Manufacturing Holdings that will slash the hourly wages received by new workers at the automotive parts maker, union officials told Reuters.


The four-year labour contract, covering more than 6,500 members of the traditionally militant union at American Axle’s plants in New York and Michigan, was approved in voting that opened on Thursday and ended on Sunday, UAW officials reportedly said.


According to Reuters, 68% of the UAW’s members at American Axle approved the contract, which prompted a one-day strike that wreaked havoc with full-size pickup truck production at General Motors – American Axle’s largest customer – late last month.


The short-lived strike was the most significant the UAW has staged since 1998, the report said.


Wendy Thompson, president of UAW Local [branch] 235, based in the metropolitan Detroit area and American Axle’s biggest UAW unit, told Reuters the majority of her members had voted against the contract because it establishes a so-called two-tier wage system under which new recruits will receive less pay than veteran employees.


The system violates a long-standing insistence on equal pay for equal work at the UAW, Reuters noted.


“We voted it down,” Thompson reportedly said, adding that 56% of Local 235’s 3,000 members had opposed the contract.


Sean McAlinden, an economist and labor expert at the Center for Automotive Research in Ann Arbor, Mich., agreed that acceptance of a two-tiered system marked a “tremendous sea change” for a union that has always insisted on equal rights on the shop floor, Reuters said.


He reportedly noted the UAW’s national leadership had set a precedent by tentatively agreeing to a two-tiered wage system last autumn, in contract talks with leading automotive parts suppliers Delphi and Visteon, however.


McAlinden also told Reuters the American Axle deal was “very win-win” in many ways, beginning with the fact that it could facilitate UAW efforts to boost its declining membership by unionising more non-union automotive suppliers.


Thompson reportedly said new UAW recruits at American Axle would now start at a wage rate of about $US13.50 an hour and move up to $US17.50 an hour over their first eight years with the company.


That’s a big step down from wages between about $25.50 to $30.50 currently, but McAlinden told Reuters the new rate was better than workers got at most automotive suppliers, the vast majority of which are non-union.


The UAW reportedly said the new contract also banned plant closings and maintained generous health-care benefits at American Axle.


And it provides union members with what McAlinden described as “a whopper of a signing bonus” totalling $5,000 per worker, Reuters said, noting that annual bonuses of $1,000 will also be paid.