A new UAW contract that eliminates lower pay for new hires at a Lear Corp. seat plant in Indiana is the opening salvo in a fight over so-called Tier 2 wages that will play out next year in contract negotiations between the UAW and the Detroit 3.
Lear's tentative agreement last week with 760 UAW-represented workers at its Hammond, Ind., plant followed a one-day strike. The settlement, which was set for a ratification vote on Sunday, Sept. 21, ended a threat to production at Ford Motor Co.'s Chicago Assembly Plant, which is supplied by the Lear plant.
Ford's Chicago plant builds Explorer SUVs, Taurus sedans and Lincoln MKS sedans.
The new Lear contract is notable for ending Tier 2 wages in which new hires receive lower pay and benefits than veteran workers for the same job.
"The agreement ends the system that locks newer workers into lower wages, paving the way for all Lear workers to get ahead and provide for their families," said Jaime Luna, president of UAW Local 2335, in a statement last week. The local represents hourly workers at the plant.
Luna declined to share contract details except to say the top wage under the new agreement is $21.58 an hour.
Under the contract that recently expired, newer workers could earn a maximum of $16 an hour, according to published reports. Assuming the new contract is ratified, all workers eventually will be able to earn the maximum wage.
Ending the two-tier system was named a top priority by new UAW President Dennis Williams at the UAW Constitutional Convention in Detroit in June.
The UAW accepted the system at the Detroit 3 in 2007 as part of a concessionary contract designed to help the automakers restore profits.
Parts suppliers such as Lear implemented two-tier wages years earlier to reduce labor costs.
The UAW and Ford, General Motors, and Chrysler Group are preparing for contract talks next year. The four-year contract expires in September. In June, Williams and other UAW executives said two-tier wages would be a key negotiating point in those talks.
About one-quarter of the nearly 130,000 UAW-represented hourly workers at the Detroit 3 earn Tier 2 wages and benefits. They receive slightly more than half of the $28 an hour in wages paid to longtime UAW members.