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UAW's last Tier 1 auto hire watches talks closely

Worker embodies thorny issue in negotiations

Nick Thielen was hired months before his plant added Tier 2 workers.

TOLEDO, Ohio -- Meet Nick Thielen, the last UAW-represented production worker in America hired at full Tier 1 pay and benefits.

A machine operator at Fiat Chrysler Automobile's Dundee Engine Plant in Dundee, Mich., Thielen was hired on June 27, 2011, when almost all other Detroit 3 plants were hiring only Tier 2 entry-level workers at about half the pay and benefits of Tier 1 workers.

Thielen, who counts himself fortunate to have a Tier 1 job, embodies one of the thorniest issues in this year's national contract talks. Now, along with the rest of the 138,000 UAW-represented workers at the Detroit 3, he is watching closely to see how the union and automakers resolve that issue: how to get Tier 2 workers on a path to full pay.

Interviewed in late August at a restaurant in his native Toledo, Thielen said he is fortunate to be working 50-hour weeks at a wage of $30.50 per hour. At the Dundee plant alone, nearly 200 co-workers hired after him earn slightly more than half that.

Thielen is watching the UAW negotiations with the Detroit 3 in hopes the union can raise Tier 2 wages to those of veteran workers -- ideally in one swoop, but if that's not possible, at least over time.

The UAW's four-year contracts with the Detroit 3 expire Sept. 14.

"I'm definitely grateful that I got in when I did and for the opportunity I have," Thielen, 33, said. "But also I realize [that] the dynamic of two different wages working side by side creates a level of tension and unfairness."

Before bargaining started in earnest after July 4, UAW President Dennis Williams vowed he would "bridge the gap" between Tier 1 and Tier 2 pay.

It's a hotly contested issue, along with jobs, a raise for veteran workers and whether health care costs can be controlled by pooling active-worker plans.

For their part, the Detroit 3 are trying to keep raises limited to profit-sharing and overall labor cost increases at about the rate of inflation.

Luck of the draw

Circumstances converged to make Thielen the last Tier 1 production worker hired at the Detroit 3.

When Thielen was hired in 2011, Dundee Engine and the Toledo Assembly Complex were the only two Detroit 3 factories that had labor contracts separate from the national agreements.

As such, the two plants could still hire at full wages and benefits, even as the others, beginning with the 2007 national contracts, relegated all new production workers to Tier 2 compensation. The Detroit 3 now have about 35,000 Tier 2 workers combined, or about a quarter of their work force. Almost all were hired since 2011.

"I'm definitely grateful that I got in when I did and for the opportunity I have. But also I realize [that] the dynamic of two different wages working side by side creates a level of tension and unfairness."
Nick Thielen

Thielen was part of a group of 15 workers hired into Dundee together -- all at Tier 1 terms -- just three months before workers at the plant and Toledo Assembly agreed to join the national agreement negotiated in the autumn of 2011. Of the group, Thielen had the highest Social Security number, making him the last official Tier 1 hire at the Detroit 3.

This year, about 827 UAW members at Ford were promoted from Tier 2 to Tier 1. But they have a defined-contribution pension, which is expected to pay retirees less than the defined-benefit pension that Thielen and other Tier 1 workers enjoy.

Thielen said because of his Tier 1 wage, he has earned enough money that his wife was able to stop working and stay home with their children, now 9 and 5 years old.

He said it would be a struggle at the beginning Tier 2 wage of $15.78 an hour to save money for retirement and the kids' college or even to take major vacations. The Tier 2 starting wage equates to straight-time annual earnings of $32,822.

No gripes, but ...

Thielen said he doesn't hear Tier 2 workers complaining about their wages during breaks or as he's working alongside them. "There're conversations here or there about it, but people understand it's not something we decided as workers," he said.

Thielen said he never would have applied for work at Dundee, which makes four-cylinder engines for FCA, as a Tier 2 worker. He said at the time he was a machinist at a nearby nonunion machine shop that paid him $13 an hour with opportunities for regular pay raises.

Instead, Thielen hired in at Dundee at $23 an hour as a technical specialist, which is a production worker who performs some machine maintenance, whereby he can change tooling and adjust machine settings.

Under that special designation, Thielen has received systematic wage increases every six months, bringing him to his current wage of $30.50 an hour.

In the next year, he will attain full salary of $32.71 an hour, which is a skilled-trades wage. Many workers with his designation have journeyman's cards. When Dundee moved to the national contract in 2011, the plant stopped hiring technical specialists and hired workers only for production or skilled trades.

When Thielen last checked six months ago, he was No. 358 in seniority at the plant out of about 590 workers there. About 200 workers have hired in at Tier 2 since his 2011 start date.

Dundee, which was opened in 2005 as a joint venture involving Chrysler, Mitsubishi and Hyundai, is now fully owned by FCA. It has always put a premium on the quality of its work force, insisting on lots of experience or a two-year degree to get hired in the early days.

'Temporary sacrifice'

Thielen said the national negotiations will reveal whether the UAW insists on keeping the technical specialist designation at Dundee and, with broader implications, whether it can close the pay gap between Tier 1 and Tier 2 workers.

FCA CEO Sergio Marchionne said this summer there is a 50-50 chance that Tier 2 can be eliminated in the current round of bargaining.

Like Thielen, he says there are philosophical and practical justifications for ending a practice that pays one worker more than another for doing the same work.

Thielen said he understands that when the UAW accepted a Tier 2 wage in 2007 it was to help the automakers financially and help to keep jobs from going elsewhere.

But now the carmakers are healthy, he said, and it's time for change.

He added: "The lower wage is part of the sacrifice the UAW made to get us a deal and bring us more work. But I view that as a temporary sacrifice, not a long-term sacrifice."

You can reach David Barkholz at dbarkholz@crain.com -- Follow David on Twitter: @barkholzatan

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