Upcoming negotiations between Visteon Corporation – spun off from Ford three years ago – and the United Auto Workers union (UAW) are a crucial chance for the parts maker to become more competitive with non-union rivals, according to The Detroit News.

The newspaper said that Visteon is bound by a 1999 master agreement with the UAW that pays hourly workers the same rates as Ford, General Motors and the Chrysler.

That means Visteon pays workers $US23 an hour, compared with an average of about $14 at other parts makers – a disparity that puts Visteon at a sharp disadvantage when competing for new supply contracts, the Detroit News said.

“The master agreement wage patterns are not competitive for a Tier 1 supplier,” Visteon’s lead negotiator, Bob Marcin, told the Detroit News. “I am going to go to the table to say that we need some help. What Visteon needs is a path to competitiveness.”

The newspaper said the UAW leaders are aware that Visteon lost $470 million in the past two years – and is at a major disadvantage to non-union suppliers – but it’s unlikely the union will allow a so-called two-tier wage structure between Detroit vehicle makers and suppliers. Union officials did not respond to interview requests from the Detroit News.

The newspaper said that the UAW’s current contract covering wages and benefits for 327,000 workers with GM, Ford, Chrysler, Visteon and Delphi Corporation expires on September 14 and noted that Visteon still has more than 20,000 Ford hourly workers on its payrolls, who it would like to transfer back to Ford eventually. But Ford also is looking to shed manufacturing workers as part of a broad restructuring – hampering Visteon’s effort to downsize, the report added.

Citing Marcin, the Detroit News said that, with little room to manoeuvre, Visteon plans to work closely with Ford and the UAW during the labour talks to find creative solutions to close the competitive gap with non-union suppliers.

The newspaper said Visteon will be bargaining side by side with Ford, Chrysler and GM and will carry the least weight at the table. With Ford planning to close five US plants and aiming to reduce health care costs, Visteon’s needs will be overshadowed, the Detroit News added.

The newspaper said that, in a number of cases recently, the UAW has shown a willingness to bend a little to help Visteon get healthy. For example, last year, Visteon was awarded new, non-Ford supply contracts in North America that will generate $600 million in new business and half of that work will be performed at plants not covered by the master agreement where workers are paid wages competitive with non-union parts factories, the Detroit News said.