DETROIT — The leader of the United Auto Workers union has rejected a third tier of lower wages for members who make auto parts.
Speaking Wednesday at the union's national bargaining convention in Detroit, President Dennis Williams said the UAW already has too many tiers of lower wages.
Williams was responding to reports that General Motors Co. and Ford Motor Co. may propose a third tier of pay. He already is under pressure from union members to end a second tier of wages that's about half the $28 per hour made by longtime workers.
He told delegates that he heard people talking about the third tier, which would pay less than the $15.28 starting wage for second-tier workers, on their way in to the convention center Wednesday morning.
"I'm thinking they got too many damn tiers now," said Williams, who received a standing ovation.
Actually, a third tier of wages already is in place at several General Motors factories in the Detroit area for a small number of workers who build battery packs and place parts in the right sequence to be assembled on cars. Without the lower tier, the work may have gone to Mexico or another country with lower labor costs.
Williams told members about bridging the gap in wages, an apparent reference to the first and second tiers. But he also said they're competing in a global economy.
Many at the convention spoke in favor of pay raises for veteran workers. Longtime UAW workers have not had an hourly pay raise since 2007, although they have received hefty annual profit sharing checks. But there's no guarantee of getting checks every year.
Williams didn't address pay raises in his speech, but has said in the past that there are ways to give raises and keep the companies competitive.
In his speech, he said workers shared in getting the auto companies through bad times and "we must equally share in the good times."
Contract talks with between Fiat Chrysler, GM, Ford and the UAW start this summer. The union represents about 137,000 workers at the three companies. The current contract expires in September.
The convention, which takes place every four years, sets the agenda for the union's bargaining efforts with the auto companies and other industries.
This year's talks are the first to come after the auto industry fully recovered from the Great Recession, and could be contentious as the union seeks a slice of the industry's billions of dollars in profits. Auto sales are expected to hit nearly 17 million in the U.S. this year, close to historic highs. They fell as low as 10.4 million in 2009.
Auto companies, mindful of the recession, are reluctant to increase U.S. labor costs and once again be at a cost disadvantage to foreign companies. They actually want to reduce labor expenses, contending that their costs already have grown above competitors.
An analysis done by the Center for Automotive Research, a think tank based in Ann Arbor, Michigan, shows that to be true, at least for General Motors and Ford.
GM's total hourly labor costs, including wages and benefits, total $58 per hour, followed closely by Ford at $57. Both are more than $8 above Honda and Toyota, whose costs are below $50 per hour, the analysis found. Chrysler, with costs totaling $48 per hour, is below Honda and equal to Toyota, but higher than Nissan, Hyundai, BMW and Volkswagen, according to the analysis.
Mercedes-Benz had the highest labor costs in the U.S. at $65 per hour, while Volkswagen was the lowest at $38.