DETROIT — The union that once set the gold standard for American wages is giving up pay raises in exchange for a piece of the auto industry’s profits and the promise of thousands of new jobs.
Under agreements struck with Ford and General Motors, most of the companies’ factory workers will get profit-sharing checks instead of annual raises. They’ll also get a signing bonus. In turn, the automakers will increase their workforces and invest billions more dollars in their factories.
It’s an unusual turnabout for the United Auto Workers. For decades, its members’ pay and benefits were the envy of workers around the world, and it wouldn’t hesitate to strike to protect them. But the agreement signals a new reality. After the industry nearly collapsed two years ago, the UAW is no longer fighting the Big Three but fighting to compete against rivals who pay their workers far less.
“We are aware of the competition that Ford and General Motors and Chrysler face,” UAW President Bob King said Tuesday after announcing terms of a new four-year contract with Ford.
Ford Motor Co. and the UAW agreed on a four-year contract Tuesday, three weeks after the union reached a similar agreement at General Motors Co. The companies are promising at least 17,000 new U.S. jobs over the life of the contracts, and are offering workers signing bonuses and profit-sharing payments.
But the companies will be able to contain their costs by not paying annual raises to their U.S. factory workers and by hiring thousands of new workers at lower wage rates.
Ford workers will get at least $16,700 over the four-year contract, in the form of a $6,000 signing bonus, $7,000 in lump-sum and inflation protection payments and at least $3,700 in profit-sharing this year. That’s more generous than GM’s agreement, which guarantees workers at least $11,500.
