Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) are planning to ask the UAW Union for creating a new lower-pay tier in the U.S. factories. The two companies recently announced that they might consider negotiating with United Auto Workers union for the reason mentioned above. At present, UAW has just two-tier system of workers’ wages. This includes the lowest-paid tier with maximum wage being $19.28 per hour and the top tier with $28 per hour for the assembly workers. The automakers want a third tier for the jobs that involve low skills.
Different solutions to be discussed with UAW
The spokeswoman for Ford Motor Company (NYSE:F), Kristina Adamski, said that the company was open for 2015 negotiations in order to explore and discuss various solutions with UAW. According to her, this would allow the company to add more jobs as well as investment in the U.S., while also introducing competitive labor rates.
Meanwhile, Katie McBride, the GM Spokeswoman said that the company will look for ideas that will not just benefit the employees, but will also enhance the competitiveness of the company.
The idea of lowering the labor costs
The labor cost offered by Ford, at present, is $57 per hour, while that of GM is $58 hourly. If the new tier is being introduced, it will help the companies in reducing the labor cost. This has become important as the two are facing stringent competition from their rivals in Europe and Asia. The Asian and Euro-Zone rivals of these companies are paying much lesser labor costs to the workers at the non-union plants in the U.S.
Both Ford, as well as GM, offer higher workers’ cost than Fiat Chrysler Automobiles NV (NYSE:FCAU). This detail was revealed by CAR, i.e., the Center for Automotive Research in their study regarding the 2014 labor costs.