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Auto Workers May Get Profit Sharing Deal Says UAW

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On: Thu, Dec 9, 2010 at 4:25PM | By: Sherry Christiansen

Auto Workers May Get Profit Sharing Deal Says UAW

Ford Motor Company, General Motors, and Chrysler Group are anticipating next year’s impending labor contract negotiation process, and Detroit's Big Three Automakers are all contemplating increasing profit sharing for their employees. To some this may be a bit surprising, since profits haven’t returned to pre-recession levels. 

The issue of profit sharing is a significant component in the early stages of the labor negotiation process, and while formal negotiations have not yet started, union leaders and executives have broached profit-sharing increases in early negotiations, according to two unidentifiable sources familiar with the efforts.

According to Automotive News: "All of the companies have been hinting at profit- sharing changes."  General Holiefield of the United Autoworkers Union said yesterday in an interview;  "it was not just within Chrysler but the Big Three.” Holiefield also said, “Bob King has got to get his arms around it.”

Before GM and Chrysler filed bankruptcy last year, the union made concessions in the middle of the contract period. One such concession was to discontinue pay for workers who had been laid off. The UAW’s current 4-year labor agreements expire Sept. 14, 2011. 

According to Holiefield: “We want to find the best possible bang for all of the employees, across the board, not a program that would pay some and not others.”

The companies do not have the ability to hire back all of the autoworkers who have lost their jobs. However, automakers seem to be striving to be sure that current autoworkers' best interests are being addressed. Whether the proposed increase in profit sharing is a reflection of concerned corporate managements, or due to strong and competent union representation, is unclear.

“The companies want to try and reward the hourly workforce without bringing back some of the cost items that made them non-competitive,” said Art Schwartz, former GM negotiator

From the perspective of the automakers, profit sharing is a viable option because it occurs only when there are extra funds being generated. In terms of net income. Ford reported $1.69 billion, GM had $2.16 billion, and Chrysler experienced a net loss of $453 million. The morale boost and intangible incentives created by these profit sharing programs create win-win scenarios that can benefit employees and corporations simultaneously.

“They’re always thinking about ways to improve the process, about ways to improve the products and about what it would take to naturally keep the company afloat,” said Holiefield.

New labor negotiations will cover many other topics in addition to profit sharing. Hopefully, both sides will be able to reach acceptable and mutually beneficial terms in all phases of the negotiations. Corporate management and workers alike have experienced plenty of adversity in recent years. It would be a very positive scenario for both interests to unite and to move forward in a cohesive manner.


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