The UAW has ended two-tier wages for the majority of workers at a Lear Corp. seat plant in Indiana, but certainly not all.
A new four-year UAW contract ratified Sunday promises wage parity for about 450 of the 760 workers at Lear’s Hammond, Ind., plant, said Tom DiDonato, Lear senior vice president of human resources.
The UAW did not release the vote count on Sunday, describing the approval as “overwhelmingly” in favor.
But to keep Lear’s labor costs competitive at the plant, the company was able to get the UAW to accept a new job category for 310 subassembly workers with maximum wages at contract’s end of $15.25 per hour vs. a maximum of $21.58 per hour for seat assembly workers, DiDonato said.
Starting pay at contract’s end also will be substantially lower for subassembly workers at $12 an hour vs. $16.50 for assembly workers, DiDonato said.
“We reclassified a lot of jobs into that category,” he said.
Subassembly workers in Hammond affix trim and other parts to seats before they are fully assembled and shipped on a just-in-time basis to Ford Motor Co.’s Chicago Assembly Plant for installation in vehicles. The Ford assembly plant builds Explorer SUVs, Taurus sedans and Lincoln MKS sedans.
Putting all workers on a track to earn $21.58 an hour would have been cost-prohibitive for the seat maker, DiDonato said.
With the new lower-wage category in place, Lear expects its labor costs at the plant to rise modestly over the contract “consistent with the cost of living,” DiDonato said. “This contract was well within our budget,” he said.
UAW Local 2335 President Jaime Luna stood by earlier remarks that two-tier wages had been eliminated at the plant.
The nearly 300 subassembly workers earning less have first dibs on job openings in the assembly plant, he said in a written statement today. And even those in subassembly received wage increases, including about 170 workers who are coming over from a nearby supplier plant and will see their wages jump to $11 an hour from $8.50 today, Luna said.
“Every single worker under the contract is getting a raise,” he said.
Livable wage victory
During a telephone press conference earlier in the day, Luna called the contract a victory for a livable wage.
Line worker Rochelle Weathersby said during the call that her wages will jump from about $13 an hour today to the $21.58 an hour maximum over the course of the contract. For many workers like her, that can mean $16,000 to $19,000 more annually, Luna said.
Ending the two-tier system at the Detroit 3 was named a top priority by new UAW President Dennis Williams at the UAW Constitutional Convention in Detroit in June.
Two-tier wages are divisive on the factory floor because it pays new employees lower wages and benefits than veteran co-workers for doing the same jobs, said Jerry Dias, president of Unifor, the successor union of the Canadian Auto Workers.
It is especially onerous because the new hires are on a different compensation track and can never catch veteran workers, Dias said.
The UAW and Chrysler Group, General Motors and Ford Motor Co. are expected to begin negotiations in earnest in January.
The Lear hourly workers staged a one-day strike a week ago before the tentative agreement was reached. The strike caused minimal production losses at the Ford factory in Chicago that it supplies.
The union accepted the two-tier system at the Detroit 3 in 2007 as part of a concessionary contract aimed at helping the automakers restore profits.
Parts suppliers including Lear implemented a two-tier system years earlier to check labor costs.
About one-quarter of the nearly 130,000 UAW-represented hourly workers at the Detroit 3 receive the lower two-tier wage and benefit package today. They receive slightly more than half of the $28 an hour in wages paid to longtime UAW members.
Lear, which emerged from Chapter 11 bankruptcy in November 2009, posted 2013 adjusted earnings of $510 million, down slightly from $548 million a year earlier. Core operating earnings rose 10 percent to $839 million last year. Revenue increased 11 percent to $16.23 billion.