As talks with the United Auto Workers continue, domestic automakers may be using global production strategies to leverage lower wages from the massive union, Automotive News is reporting.
News that Buick may import most of its lineup from outside North America, or Ford shifting production from Michigan to Mexico, could be weighing on conversations to keep production in the U.S. and Canada at union plants.
“It’s a veiled threat to the workers,” Gary Chaison, a professor of labor relations at Clark University told Automotive News.
The automakers may be saying: “If you ask for too much, we can take the work out of the U.S. So, give us a reason not to shift more production overseas,” he added.
It was widely expected that the UAW would be looking to narrow the pay gap between its veteran workers and newer, Tier 2 workers who make considerably less during its talks with the automakers.
Automakers, for their part, have potentially looked to appease the UAW by announcing plant upgrades and more shifts for the cars it produces in North America. Already, General Motors in Canada said it would invest $12 million into its Oshawa Assembly Plant on top of larger investments in North American plants, including its Arlington and Flint Truck Assembly Plant. They were all announced after talks with the UAW started in July.
Those plant improvements may have be announced to leverage demands from the UAW to increase pay for its workers.
In North America, Tier 1 workers make about $28 per hour, and Tier 2 workers make around $15 an hour. According to the report, workers in Mexico make $8.24 an hour and Chinese auto workers make just $4.10 an hour.
Automakers are in the business of making money for their owners/investors. Automakers are not in business to pay UAW members CEO pay for their assigned tasks.
If UAW members don’t like what they’re getting paid, let them seek work in the Southern States at the transplants. No union dues there.
They get to keep more of what they earned.
They aren’t going to be making a lot of money for anybody when none of their employees are able to afford the product they’re building.
Also, $28/hr is not CEO pay. CEO pay is $50 million a year regardless of whether or not you drive the company into the ground, destroying the lives of hundreds of thousands.
Being able to afford the product you’re building is a silly metric.
I used to design $400k lab equipment, and that was in 1990 dollars. You don’t think Jaguar line workers actually drive Jags, do you?
koshchei, employees get paid what they’re worth. If the rank-and-file employees want to get CEO pay, let them become CEOs.
There’s a reason why CEO’s get paid what they get paid, even if they fail at what they are paid to do.
Truth is, rank-and-file employees would do better if they could. Even in foreign countries, employees with the smarts get ahead, get paid what they’re worth.
“There’s a reason why CEO’s get paid what they get paid.”
Yes, but it’s usually not merit these days. The process of setting executive compensation at large employers has become quite divorced from performance or from market demand for executives. The main reason why is that large-company CEOs all serve on other large-company boards, and collectively have a major interest in continuing to sign each new contract at the 75th percentile and not rocking the boat.
True, $28/hour is not CEO pay–but it IS above the median wage in the US by almost $8/hour. The problem is, the average UAW wage is more like $45/hour, which is quite a bit more than mid-level management that only makes $60-$70K/year without overtime privileges.
I’d be willing to bet most UAW workers delivers plenty more value-add than the average “mid level management”er. Viewed narrowly in the context of peak bubble US, it’s hard to argue UAW wages are (anymore) much out of line.
But, as this article hints at, the automaking business is very much international. And, for reasons both of history, mindshare, prestige and others, a business beset with pretty much permanent overcapacity. Nobody has pricing power in the auto business. When even temporary rockstars like Fisker are just that; temporary; darlings, what bargaining power does a one in a million line worker have?
The problem with the UAW hanging on to more-expensive-than-international wages, is that auto building is a skill that takes some time to get good at. A senior UAW worker is likely “worth” a good bit more than some newly hired dude in Mexico, but he got that way by starting out a newly hired dude as well. Insisting on preventing new hires in the US from being paid what other “interns” are being paid, just ensures that tomorrows senior workers, perhaps “worth” $45/hr, will all be abroad. With Americans getting $5/hr flipping burgers instead.
Cat, the seeming eagerness of folks like you to see American workers’ pay reduced as much as possible always makes me wonder: What country do you live in? And do you depend on income from a job? I must humbly admit, I’m among those non-Captains of Industry who do.
I think realistically auto labor isnt worth $28 to the companies, not even with state consessions etc.
I don’t think it’s the wages that are making union labor uncompetitive. It’s the work rules, the narrowly defined job functions, the lack of hiring freedom, and the unaccountability of individual employees that drive up costs and thereby keep wages from growing.
When a minor issue stops the line and everyone has to stand around with their hands in their pockets while representatives of all the different trades are assembled before anyone can resolve the issue in a common sense manner, that’s unions hurting employers and employees. It hurts employers because it costs productivity just so every union gets its piece of flesh, and it hurts employees because they’re discouraged from showing initiative and distinguishing themselves as capable. The unions all feel entitled to their carve outs now, but lots of working people will cease to be working people because unions will drive the jobs elsewhere, as they’ve been doing for the past 40+ years.
tonycd, it isn’t about reducing anyone’s pay. It’s about competitiveness and profit. The globe is much larger than just the US, the current stock market tumble notwithstanding.
To answer your questions, “What country do you live in?” I live in SouthCentral New Mexico but just recently returned from two weeks in Cabo in Old Mexico, six weeks in various cities in Brazil, S.A., two months in Germany and Holland, and four days at Spadeadam in Scotland.
There’s more to this world than the UAW, and I recently saw some of it.
“do you depend on income from a job?” No longer because I am now fully retired as of 1 Jan 2015, but since I retired from the USAF in 1985 I have been self-employed maintaining, refurbishing and repairing homes for the real-estate business owned by my wife’s parents. Now that’s tough work!
For more than 30 years I was a paid consultant to the automobile dealerships owned by my four brothers in CA, AZ, TX and AL, until they sold them at the end of 2012. I must have given them sound advice because they each retired as multi-millionaires while I continue to live in dire poverty.
The UAW’s track record over more than four decades sucked and they manage to collectively bargain many of their members out of their jobs in 2008, while simultaneously driving GM and Chrysler to their financial graves.
Now the UAW is up to their old tricks again? I cannot blame the automakers for wanting to pack up their toys and moving to Old Mexico. I hope more follow suit a la Mazda and Toyota.
I say that’s a good thing!
All the UAW wants to do is reap the benefits and squander the profits of their employers without taking any risks suffered by the shareholders.
I bet those Mexicans would be grateful to have a job in their own country.
Cat, bless you for your decades of hard work. But that said, the assertion that the 2008 economic collapse spilling over into the auto industry was somehow the fault of the auto workers union is, quite simply, irrational on its face.
I’m sincerely sorry your unjustified bad luck in this industry has so embittered you that you would wish devastating job losses on thousands of your fellow working Americans as some sort of “tough medicine” life lesson, but I cannot bring myself to support it. Mass job losses are proven to cause alcohol problems, delinquent kids, divorces, suicides. I can’t get bring myself to wish for that.
Automotive Blackmail, is nothing new and it was obvious it was coming to the U.S sooner or later. As production in the U.S. becomes increasingly non viable,then the companies are going to try and force the UAW to drop it’s wage demands.
Jetta hecho en México.
The $28 dollar tier 1 is too high, the tier 2 rate is too low.
Well this is it that whole double-digit yield thing for the shareholders originated from Wall Street. It’s the mainstay of all major corporations now.
I wonder about longer-term automation on the plant floor.
Robots aren’t consumers though.
Due to the reduction in workforce caused by automation, manufacturers will be forced to pay taxes, SS and Medicare on each robot on the assembly line. Bonus: Since most robots replace multiple workers, they’ll be taxed according to how many individual workers they replace.
At that point, we would have to agree that the robots are replacing “Tier 1” workers.
You’re running that picture again…
Oh, they are.
I’m okay with it.
No one is complaining.
DA-YUM
I have a close friend that works at a D3 plant in the city. He tells me that their hires are tilted toward making the workforce as diverse as possible. You can guess what this has done to his workload as a line inspector-engine assembly.
When I asked why they did not hire the most qualified to work these positions, he did not have an answer. Then again he hates most of the union leadership positions on just about everything because as a former business owner, he knows the union actions will kneecap the company yet again.
Society is devolving, get with the program.
The Transplants have an leg up here. Sure, they are effected by the same idiotic hiring rules. They minimize the effect of these rules beforehand — plants are located in low crime / low degeneracy / low Democratic Party Registration areas. And post hire, they have much more leeway when it comes to discipline and firing.
Does this surprise anyone? The manufacturers will move the plants to China and Mexico anyway to get the lowest priced labor.
after seeing what the uaw does to the D3 I have no sympathy for them. the transplants pay descent wages and they hire americans and add to their plants here. Don’t like seeing jobs go overseas but the Union militancy has forced the companies to move overseas. THey are living in the dark ages and think that they hold all the cards. I won’t buy a UAW built vehicle and i think many americans feel the same way. The uaw dug their own shit hole graves and now they can live in it. Good riddance to a bunch of mafia style criminals. They deserve much less than they get.
So I’m guessing Ford isn’t donanting to The Donald this year then.
My employer is doing this with labor, management, and white collar jobs alike, because everyone is a commodity whose cost must be minimized. As an engineer, it’s a real thrill to train/help people who may eventually take your job. Representation would only slow things down, like sandbags against a tsunami.
The myth of “free trade” as good for American workers has been tried and proven false. (I used inverted commas there, because it’s only free for imports of goods into the US and exports of jobs out of the US, but never the other way.) In the 30 or so years that this country has been run on a platform of aggressive free trade, the American middle class has been greatly reduced in numbers and those who remain are constantly faced with the danger that one CEO decision can send their jobs to China, Malaysia, India, etc.
It’s no good to have cheap imported consumer goods if the manufacturing jobs that afford the salaries to pay for them are gone.
Where are my tariffs? I want my tariffs!
You’re completely, dead wrong in your diagnostication. Free trade is what allows American consumers to get as much value for their money as possible. As early as possible. Meaning, they will see current shortcomings the quickest. Giving them earliest possible access to correct those shortcomings. Via inventions, entrepreneurship etc. that creates the economy of tomorrow. And hence the jobs of tomorrow. Any slowdown in consumer exposure to the very latest due to import restrictions, means someone else is ahead of us in creating the next generation of everything. It’s not a place anyone will want to be.
Instead, what has caused the decimation of the middle class over the past 4 decades, is financialization. Asset pumping and massive inflation (properly counted as amount of money/credit in circulation, not some silly obfuscation built around the nominal cost of some entirely arbitrary basket of “consumer” products), has many-times multiplied the delta between the compensation received from an hour of work, and a given share of America’s total resources/assets. With by far the lion’s share of that delta having been transferred to those in the financial industry directly, or those within the broader economy whose job interfaces most closely with the financials; in general executives, but secondarily also their direct handmaidens.
All because a nation of economic illiterates has been an easy sell on “free money”, “bailouts”, “stimulus” blah, blah, and all manners of other terms for what is nothing more than the same old fallacy that $10 worth of paper and $5 worth of ink, can somehow be magically turned into $1 trillion of net-new “value” by using the ink to put Washington’s face on the paper.
Get rid of that idiocy, and wages may nominally drop a bit, but the asset price superstructure/bubble will drop fivefold, which is another way of saying productive workers’ share of total claims on America’s wealth will many-double.
Maybe because I’ve worked in both union and non-union companies, I’m going to agree with the non-union ones here. Unions used to serve a very valid function in preventing abuse by the companies in the line of employee safety and working condtions. However, they’ve carried their power too far, their extreme wage demands driving labor industry out of this country. When a “common laborer” can make sometimes two or three times as much in wages as a mid-level manager supposedly supervising them, things have become skewed all out of recognition.
Unions as they stand are no longer necessary. OSHA now stands as the worker’s voice for labor safety, though admittedly sometimes it seems to work too slowly to offer timely benefit. A balance needs to be reached where the union’s power must be directly linked to the success or failure of the company. The union workers earning in direct relation to the volume and pricing of the product they make. Good workers should be retained, but bad workers who habitually abuse their seniority privileges especially, should be released.
Where are your tariffs? They’re on the trucks being shipped to the US, letting the American pickup truck get priced to ridiculous highs above that of even some of the most prestigious cars available in the US outside of the so-called Supercar market. That’s where they are.
Farago is smiling. Those who believe in the benevolence of the employer also believe in Santa Claus. Good luck to your grandchildren with that position.
Since cars are a commodity, I shop for a domestic manufacturer which builds with union labor. I am middle class. My customers are middle class. A virtuous economic circle is created by supporting my customers with my purchases.
No compromise is needed. My F150 was the best price / performance mix in the market, as was my wife’s Fusion and the Mustang convertible we aspire to put in the third garage.
Outsourcing overseas is about the least patriotic thing a company can do.
“Unions as they stand are no longer necessary.”
They are necessary but to a lower degree as long as management screws over their workers, which occurs in many companies.
The craziness that unions have should be eliminated. Stop demanding stuff ALL the time and just work! Many people, even today, Wish to be employed instead of UN-employed which will happen to union workers.
Companies, though, should STOP giving overpriced compensation packages to managers!
It’s this Inequality that will Never change and why unions still have their uses today.
Each side will abuse their powers and each are a counter for one another.
The problem is that each refuses to budge and that it’s management that ultimately wins, unfortunately, as it can always move the factories elsewhere and don’t have to take the workers along with them.