The United Automobile Workers and Fiat-Chrysler open contract talks today. General Motors talks started Monday, and Ford begins late next week.
According to Detroit News business columnist Daniel Howes, these talks are new territory for the Detroit Three and the UAW.
For one thing, Howes tells us that for the first time in at least eight years, the federal government isn’t involved in the talks.
“More importantly, they’re managing prosperity, where for decades these companies and this union were trying to manage decline as they were losing market share and struggling to make significant and serious money in their home market,” he says.
The UAW gave up a lot of ground in their effort to help keep the auto industry in Detroit from going under, and now that the Detroit Three has reported over $67.7 billion in profits over the last four years in North America, Howes thinks the union’s expectations are high.
He says that the middle ground in these talks is unknown, but suspects that the union will first focus on wages, attempting to close the gap left by the two-tier structure as well as increasing financial incentives for members, and tweaking the current profit-sharing formula.
Howes expects health care to be another large focus in the negotiations.
“The UAW hourly workers have a very good health care program, have for a very long time. It’s very much part of [the UAW’s] DNA and what they offer to their membership,” he tells us. “I think that’s something that the companies are going to be looking to close the gap a little bit, because their health care expenses are continuing to go up, up, up.”
But while the companies are currently sitting in a prosperous position, Howes says that both they and the union may have some difficulty achieving their goals and might have to manage expectations.
“We are in about the sixth year of year-over-year market expansion,” he tells us. “That’s the longest time since the 1960s, and I don’t think anybody expects that that is going to go on ad infinitum.”
Howes says that both the union and the Detroit Three need to be prepared for a slowdown in the market, and that could discourage the companies from meeting the UAW on all of their terms.
A lot of people think of these contract negotiations as simply an economic transaction, but he tells us it’s important to remember that there’s more to it than money.
“It’s three parts. It’s one part politics, one part theater, and one part economics, and they really don’t get to the economics more until the end,” Howes says. “So a lot of what you’ll hear in the coming months is going to be ... the politics and the theater, as they’re trying to calibrate how people react and get them prepared for what they think is going to happen.”
Howes explains that nothing about these talks is guaranteed at this point, and that we’ll “just have to wait and see.”
Daniel Howes tells us more about what to look for as negotiations continue in our conversation above.