* UAW vows to “bridge the gap” between new hires, veteran workers
* New workers earn up to 44 pct less than “legacy” workers
* More jobs moving to Mexico, where GM is building new factory
* Mexico to produce 26 pct of N.American autos in 6 yrs
By Bernie Woodall
DETROIT, March 25 (Reuters) - The United Auto Workers union on Wednesday said getting raises for workers at the Detroit automakers will be a top priority in contract talks this summer, but more jobs and production are shifting to U.S. plants without unions and Mexico.
In the next six years, Mexico’s auto production will rise to more than a quarter of the North American market, according to industry consultant IHS Inc.
Earlier this week, General Motors Co said it would build a factory in Mexico to assemble a new generation of compact Chevrolet Cruze sedans, although the company said that would not affect a Lordstown, Ohio, plant that builds the same model.
The rise of Mexico as an auto assembly hub is just one factor working against the UAW as it launches contract talks with Ford Motor Co, General Motors and Fiat Chrysler Automobiles this summer. Another factor is that UAW membership has plummeted by 75 percent since 1979 to just under 400,000 workers, although membership has risen in the last five years as auto sales have recovered.
UAW President Dennis Williams said he wants to end a two-tiered wage structure that has resulted in thousands of newly hired workers earning $16 to $19 an hour, compared with about $28 an hour that veterans earn doing essentially the same work.
“They got too many damn tiers now,” Williams said Wednesday. The UAW’s goal, he said, “is to raise everybody up and bridge the gap.”
The union agreed to the two-tier pay and benefit structure in 2007 as the Detroit automakers were skidding into the red. Now, with the Detroit Three solidly profitable, union leaders want payback.
But Williams use of the term “bridge the gap” is troubling to some UAW members.
“I want to see the complete elimination of the two-tier language in our contract,” said Scott Houldieson, who represents workers at Ford’s Chicago plant.
The careful language reflects union leaders’ concern that the Detroit automakers keep investing in UAW-represented factories and keep those plants competitive with non-union plants in the southern United States and Mexico.
For decades, UAW leaders have talked about the importance of keeping labor costs at each Detroit company roughly comparable.
Today, the majority of vehicles sold in the United States are not made by UAW members, and Asian and European automakers are steadily expanding their non-union factories in North America.
“It’s one, big, fat labor market. You can’t have one set of workers making $10 and another making $60 (including benefits). Silverados from Fort Wayne and Silverados in Mexico at completely different labor costs,” said Sean McAlinden, chief economist at the Center for Automotive Research (CAR.)
American automakers pay Mexican workers $8 to $10 per hour, including benefits. Even among the Detroit Three, there is a gap, according to the CAR: GM’s labor costs average $58 per hour, while Ford is at $57 per hour and FCA workers average $48. That difference is partly because FCA has more workers earning the lower, entry-level wage.
At non-union plants in the southern United States, average wages are below FCA’s levels. At Hyundai Motor Co’s plant in Alabama, for example, average wages are $42 an hour. Hyundai is studying whether to expand production at its Alabama plant to build more sport utility vehicles.
“A lot of the new jobs depended on the second tier,” said Arthur Schwartz, labor consultant and former GM labor negotiator. “You get rid of it and you are just opening the door” for more U.S. jobs migrating to Mexico. (Reporting by Bernie Woodall; Editing by Joseph White and Lisa Shumaker)