Detroit 3 labor costs to ‘rise steadily’ over next 4 years under new UAW contract
Last year’s contentious negotiations with the UAW will prove costly for the Detroit 3 automakers, according to a forecast from the Center for Automotive Research.
Kristin Dziczek, vice president of industry, labor and economics at CAR, said the average hourly labor cost for Ford Motor Co., Fiat Chrysler Automobiles and General Motors will “rise steadily” over the next four years, despite vows by each company heading into the talks to keep those figures in check.
Fiat Chrysler will see the sharpest rise between now and 2023, from $55 per hour to $66 per hour, CAR estimates. GM’s hourly labor cost will rise from $63 per hour to $71 per hour, while Ford’s hourly costs will jump from $61 now to $69 in four years.
A company’s hourly labor cost includes wages, profit-sharing payments, bonuses, health insurance, pension contributions and other factors. It’s a weighted average by workforce composition, including top-wage legacy workers and lower-wage in-progression workers and temps.
By comparison, Dziczek said the labor costs for transplant automakers, which are not unionized, will rise about $2 per hour between now and 2023. Coming into the 2019 negotiations, the Detroit 3 had between a $5 and $13 labor-cost gap with its foreign rivals.
Labor experts say the increase was to be expected, despite the automakers’ goals heading into negotiations.
“When the companies are doing well, it makes no sense to expect labor costs aren’t going to go up,” said Art Schwartz, a labor consultant and former GM negotiator. “Anyone who went into this thinking the labor cost would stay the same or go down was dreaming.”
