Oct 18, 2010
Trying to defy the industry maxim that small cars mean small profits, General Motors wants to pay all workers at the plant where it makes its new Chevrolet Cruze compact about half the wages that some other unionized workers earn.
The plan drew about 100 protesters outside UAW union headquarters in Detroit over the weekend, Automotive News reported.
Already, the UAW and GM management have agreed that about 40% of the workers at the Orion Township, Mich., plant will make about half of the $28-an-hour wage that so-called tier-one workers earn, the Detroit Free Press says. Besides the Cruze, the plant will also make the Buick Verano, another compact car.
Lower wage scales for new hires is only the start. Eventually, GM wants to transfer all big-earners out of the plant to make way for only the lower-paid workers:
“We have become ‘red circle,’ ” Mike Dunn, who heads the UAW local at the plant, said in a video to members seen by the Free Press. “No other tier ones will be able to transfer into Orion.”
GM says creating a plant with workers at lower wages than the rest of GM is necessary to reduce costs to the point that small cars become profitable again. For long, Detroit’s Big 3 automakers either have had a choice of making small cars at a loss in the U.S. or at a profit in Mexico, South Korea or other lower-wage markets.
But Detroit makers may no longer have a choice. As tighter restrictions on fuel efficiency force automakers to produce smaller cars, there will be fewer big, high-profit vehicles that can be made in the U.S.
In the past, concessions like this one from the UAW would have been hard to imagine. But the UAW gave in during GM’s financial troubles that culminated in its bankruptcy reorganization filing last year.
The Free Press says:
UAW agreements allow GM to use the second-tier wage in an entire facility. The landmark agreement that allowed for the use of a two-tier wage called for a 25% companywide cap on lower-wage workers starting in 2015, but didn’t put caps on individual plants.
Orion workers who accept offers from GM to work in Lordstown, Ohio, will help pave the way for all the workers at the Orion plant to be paid a lower, second-tier wage.
Many Orion workers who were laid off at the UAW’s $28 first-tier wage received letters this week offering them a first-tier job at General Motors’ Chevrolet Cruze compact car plant 250 miles away in Lordstown, said Pat Sweeney, president of UAW Local 5960 in Orion. The Lordstown plant has 375 assembly and stamping jobs open, Sweeney said, although he did not know how many Orion workers were offered jobs.