How do you know UAW negotiations with the Detroit 3 have started in earnest?
If you’d asked me a week ago, I’d have said when the UAW completes its special bargaining convention held every four years so the rank and file can talk tactics and make desires known for the upcoming negotiations.
General Motors, though, has prompted me to add a corollary.
Now I’m convinced it’s a UAW contract year when GM announces its U.S. plant investment plan, as it did April 30 when it outlined $5.4 billion in spending over three years.
The last time GM announced such a comprehensive plan was in spring 2011. That, not coincidentally, was the last contract year with the UAW.
The implication of announcing billions of investment just before UAW negotiations is: Workers, if you play ball and keep your pay-raise requests under control, then look at all the investments in new jobs that await you.
“But, Mr. GM, we haven’t had a wage increase in 10 years,” I heard UAW members saying at the bargaining convention. “And we need money to bridge the huge pay gap between us legacy workers and our entry-level Tier 2 co-workers.”
All true. But workers should realize that GM plans to invest in new jobs. But pay raises? That’s a very tough sell. In the end, the Detroit 3 only plan to raise their overall U.S. labor costs at the rate of inflation over the four-year duration of the new contracts likely to be finalized and voted on in September.
Rate of inflation
Truth be told, Detroit 3 labor costs have edged up only at the rate of inflation over the past 10 years.
In 2011, the last UAW contract year with the Detroit 3, GM announced $2 billion in new U.S. plant spending. And the announcement was made on May 10. Funny, that was another year in which GM and the UAW were really trying hard to tamp down rank-and-file salary expectations.
UAW Vice President Cindy Estrada, who leads the union’s GM department, attended last week’s big GM announcement. She took umbrage at the suggestion that the timing of the announcement was aimed at negotiations.
“I don't think this investment was made because of bargaining. I think this investment is about [union workers]. ... This investment defines the relationship,” Estrada said. (Hat tip to Staff Reporter Mike Colias for the quote.)
In reality, the $5.4 billion overall investment -- about $1.8 billion per year -- is a deceleration of the company’s capital spending on its U.S. plants since its bankruptcy six years ago.
GM spent $16.8 billion since June 2009, an average of about $2.8 billion annually. Yet $5.4 billion sure sounds impressive.
And about those planned investments in the next three years: They typically contain important small print that longtime industry observer Dave Cole is fond of pointing out. The investment is subject to business conditions being favorable before the money goes in, says Cole, chairman emeritus of the Center for Automotive Research in Ann Arbor, Mich.
In other words, they are promises only, unlike raises that would have to be paid whether the automaker was doing well or not.