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New UAW deals keep status quo when big change was needed, experts say

Jamie L. LaReau, Detroit Free Press on

Published in Automotive News

DETROIT -- Nearly 12 weeks after the previous contracts expired between the UAW and the Detroit Three, including a 40-day nationwide strike against General Motors, work on a new deal is near the end.

But experts say it's just the beginning because the automakers face a difficult future that the new four-year union contracts fail to safeguard against.

"I'm a little worried for the home team," said Erik Gordon, professor at the University of Michigan Ross School of Business. "Neither the company or labor had the guts to get together to say, 'OK, we're going to stay viable. It's going to cost you something and it's going to cost me something.' Now they all face the same future. They're going to give up market share to other automakers and hope somehow they can get that back."

The UAW ratified four-year contracts with GM and Ford Motor Co. weeks ago. Fiat Chrysler Automobiles reached a tentative agreement with the UAW on Saturday and is awaiting ratification.

GM and Ford said the contracts allow them flexibility to continue to invest in technology for electric and self-driving cars while protecting good-paying jobs for employees.

"Our goal was to reach an agreement that works for our shareholders, our employees and our company, as we confront the realities of a rapidly transforming industry," GM CEO Mary Barra said during GM's third-quarter earnings call with analysts. "Our contract does the right thing for our employees without compromising competitiveness or flexibility."

 

The UAW has said the new contract offers its members job security because the automakers promised to invest billions in U.S. manufacturing.

But some industry experts say the contracts fall short of giving the automakers enough flexibility to retool factories or reduce labor to compete in a quickly changing world that's headed toward electrification. And, with health care costs remaining the same, wage increases and a cap on temporary workers, pundits question the economic benefits for the automakers.

"All three face an unclear future as to what their companies will be five to 10 years from now," said Marick Masters, a business professor at Wayne State University. "Is there enough consolidation in the industry? Do the companies have the financial ability to get a jump ahead on electric vehicles and autonomous driving? I'd look at them to consider more mergers and consolidations on a global scale over the next five to 10 years."

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