Bitter pill for UAW at GM's Orion plant

DETROIT — General Motors has expanded its use of lower-paid workers in a suburban Detroit assembly plant to help defray the cost of making self-driving electric vehicle prototypes, through a deal that has raised tensions within the UAW.

GM and the UAW this year reached an Autonomous Vehicle Memorandum of Understanding that lets the automaker offer reduced wages and benefits for some jobs at its plant in Orion Township, Mich. The plant makes Chevrolet Bolt EVs and its self-driving variant, the Cruise AV, as well as the Chevrolet Sonic.

The agreement could be used as a template for lowering costs at other car plants that have experienced production declines because of slow-selling products. GM is analyzing the future of its car plants as its production shifts toward more crossovers, SUVs and EVs, according to the union.

But the arrangement aggravates a sore spot with the UAW. The workers are typically paid less than employees of the Detroit automakers, and union leaders worry that their presence in an otherwise underused plant effectively takes work from higher-paid employees covered by the UAW's main contracts.

"Everyone agrees that this situation sucks," Cindy Estrada, a UAW vice president, wrote in an April 19 letter to members. "But what would suck even more would be to have GM shut down any of our plants."

Estrada referred to the new jobs as "outsourcing," but the workers, part of a GM subsidiary called GM Subsystems Manufacturing, are UAW members with lower pay and benefit levels.

Some subsystem workers replaced traditional GM plant workers who are being moved to other positions in the plant, according to a source with knowledge of the agreement. But the source said no layoffs occurred as a result of the deal.

GM, in a statement to Automotive News, confirmed that there were no layoffs, but declined to comment on specifics of the agreement "due to competitive reasons." GM said the deal is "designed to address what is hoped will be increased production of autonomous units over time."

GM has announced plans to invest more than $100 million to improve the Orion plant and its Brownstown Battery Assembly plant, also outside Detroit, for Cruise AV production. Brownstown is building roof modules, and assembly of the fourth-generation Cruise AV is expected to begin at Orion in 2019.

International and local union leaders declined to discuss the new agreements.

The deal to cut labor costs at the Orion plant is at least the second of its kind. A previous Autonomous Vehicle Memorandum of Understanding was agreed upon in September 2016.

Both agreements, according to Estrada's letter, are based on a small-car pact that the UAW struck during GM's 2009 bankruptcy restructuring. That deal kept the Orion plant open to make the Chevrolet Sonic subcompact car but allowed about 125 workers from LINC Logistics Co. to work in the plant on logistics and parts sequencing. The workers became UAW members but were paid lower wages and given different benefits from those of GM's hourly workers.

The union and GM also are in discussions regarding a similar deal, known as a competitive operating agreement, for GM's Lordstown Assembly plant in Ohio.

UAW spokesman Brian Rothenberg on Friday, May 4, said the union "is totally opposed to any proposal like this at Lordstown while people are on layoff."

GM in April said it soon plans to eliminate one of two daily shifts in Lordstown, which makes the Chevrolet Cruze.

Estrada said the agreements were necessary to keep the plants competitive and operating.

"GM would like to walk away from the UAW, shut down our plants and move work and future technology to cheaper locations outside the U.S. -- which GM's competitors are already doing," she said.

It's not unusual for automakers to pay different groups of workers differently, but it's not typically done in an assembly plant or to replace traditional workers. The union has pushed strongly in recent years for all workers at a plant to have a path to achieve the highest wages, which the subsystem workers do not.

"It's an unfortunate situation, but to secure the work, the union seems to need to agree to these things," said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, Mich. "They don't like it. They don't want to do it."