DAVID BARKHOLZ

Union speak: UAW's FCA deal sets floor for GM, Ford bargaining

'Pattern is unique to each company,' Williams says

David Barkholz covers labor for Automotive News.

UAW President Dennis Williams was asked last night whether the union’s tentative contract with Fiat Chrysler Automobiles would serve as the pattern for deals with Ford and General Motors.

Williams, typically a straight shooter, tortured the answer during the Q&A portion of a joint press briefing with FCA CEO Sergio Marchionne announcing the agreement.

But the gist of it -- and this is strictly my interpretation from growing up in an autoworker household and listening to union-speak over the years -- is that the UAW extracted the best deal it could from the smaller FCA. GM and Ford, on the other hand, could expect more pain.

“This is a contract that we can very well pattern, all right, but pattern is unique to each company,” Williams said.

“When I look at a pattern, it's about the economic part of it and then it's about whether or not the company has a greater ability to pay, right, and that each company is different in the sense of what they were able to make. And the balance is do we do a structure, and it doesn't have to be identical to be pattern. OK?”

Translation: GM and Ford made billions more than FCA since the last contracts in 2011 and they’re going to pay their hourlies more than FCA this time around.

That’s potentially great news for the 53,000 UAW-represented workers at Ford and the 51,000 at GM. They’ll get a contract we’ll call “Pattern-Plus.”

Not so much for the 37,000 workers at FCA. They get “Pattern Light.” In effect, the FCA deal establishes the floor for the deals that the UAW will proceed to negotiate with GM and Ford.

Is that fair? No. Are FCA workers going to be angry when all the ink dries and their Ford and GM brothers and sisters file bigger tax returns next year? Yes.

But what’s fair about this industry?

Were the government bailouts of GM and Chrysler fair to their competitors? Was it fair to FCA that its federal bailout came in the form of loans with big cash interest payments while the government recapitalized GM for non-interest-bearing stock in the carmaker?

Was it fair that only GM was permitted by Washington to keep billions of dollars in tax-loss carryforwards to avoid future income taxes, while FCA lost those in the Chrysler bankruptcy?

Put bluntly, Williams and Marchionne played the hand they were dealt in these negotiations. Though details are yet to be seen, they tackled the big issues in these talks and they tackled them first.

At the press conference, each leader said progress was made in closing the pay gap between entry-level Tier 2 workers and long-time employees. Some kind of health care co-op is in the works, whereby the UAW will pool the buying power of active workers across the Detroit 3 to lower the fees of providers and insurance plans.

And Williams stressed that veteran Tier 1 workers would share in the financial success of FCA. That could take the form of a wage increase for the first time in 10 years.

As we’ve seen with the hourly profit-sharing programs, sharing in FCA’s success typically yields less than sharing in the success of GM and Ford.

Fair or not, this year’s contracts continue that pattern.

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

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