UAW wants health care pool of three U.S. automakers to cut costs

Negotiations will start July 23 with Ford, Settles said. Talks will open July 13 and 14 with GM and Fiat Chrysler, he said, adding that he didn’t know which would go first. Williams didn’t officially confirm the July 13 start date, but said “they’ve got it on my calendar.”

The three automakers want labor costs that are in line with those at foreign competitors’ U.S. operations. They hope to keep hiring entry-level workers at less than the $28 an hour that their senior union employees earn and are considering asking for a new tier of even lower-paid workers in their U.S. factories, people familiar with the matter said in March.

Ford’s average U.S. labor cost, including benefits, is $57 an hour, about $9 more than at Toyota Motor Corp. and FCA US, according to the Center for Automotive Research in Ann Arbor, Mich. GM’s all-in hourly labor expense is about $52.

See also: UAW Union Endorses Ford’s Tentative Health Care Agreement

GM and Ford, even with the higher labor costs, are more profitable than Fiat Chrysler. Ford’s net income fell 56 percent last year to $3.19 billion, while GM’s earnings slid 26 percent to $3.95 billion and Fiat Chrysler’s declined 37 percent to $568 million. GM had the lowest gross margin of the three last year, at 11.45 percent of sales, followed by Ford’s 12.4 percent and FCA U.S.’s 13.38 percent.

The union and U.S. carmakers set up a second tier, with less-expensive benefits and lower pay, in 2007 to try to end losses in North American operations. During the bankruptcies of GM and Chrysler in 2009, those companies were given the freedom to hire an unlimited number of workers at the lower wage.

UAW workers at GM and Chrysler had agreed not to strike during the talks in 2011 for the current labor contracts. This year, union members at all three automakers have that power.

—With assistance from Keith Naughton in Southfield, Mich.