DETROIT (Bloomberg) -- The UAW, seeking to close the pay gap between veteran and newer workers, will begin formal negotiations with the biggest U.S. automakers next month, union Vice President Jimmy Settles told reporters today.
The union will start talks with Ford Motor Co. on July 23 at Detroit’s Cass Tech High School, Settles said Monday. Negotiations with General Motors Co. and Fiat Chrysler Automobiles NV will open July 13 and 14, he said, adding he didn’t know which would go first.
“We’ve got to negotiate smart,” said Settles, who leads Ford negotiations for the union. “We don’t want to negotiate the company out of business.”
Ford wants to reduce labor costs for its more than 50,000 U.S. hourly employees. The automaker, whose current four-year UAW contract expires Sept. 15, contends that those expenses are uncompetitive. The company’s average U.S. labor cost, including benefits, is $57 an hour, about $9 more than at Toyota Motor Corp. and Fiat Chrysler’s U.S. unit, according to the Center for Automotive Research in Ann Arbor, Mich.
Ford Motor Executive Chairman Bill Ford, who along with Settles was at the dedication of a Detroit baseball field named for his late father, William Clay Ford, said the company is confident that it can reach an agreement that results in competitive labor costs.
“The relationship is there, information is being exchanged every day, so there will be no surprises,” Ford said. “It’s always a compromise.”
Tier 2 wages
Veteran workers at Ford make $28.50 an hour, a level that hasn’t changed in a decade, and entry-level employees are eager to achieve wage parity with their senior colleagues. Under a two-tier system the union accepted in 2007 and is now eager to end with automakers healthy again, new hires’ hourly rate is $15.78 to $19.28.
Ford has said lower, entry-level wages have been critical to its ability to hire more than 15,000 U.S. workers since 2011. That exceeded a pledge the Dearborn, Michigan-based company made to the UAW to add 12,000 by 2015.
Ford has said it had 90,000 employees in North America at the end of last year, an increase from 84,000 a year earlier and 75,000 at the end of 2011, when it reached the last four-year agreement with the UAW.
Ford’s net income fell 56 percent last year to $3.19 billion as it converted two factories to produce a new aluminum- bodied version of the F-150 truck. Ford’s F-Series line of pickups, the top-selling vehicle in the U.S. for the past 33 years, accounts for 90 percent of the company’s global automotive profit, according to Morgan Stanley.