Suppliers Have a Stake in Detroit 3 Labor Talks

Source: Automotive News

TRAVERSE CITY, Mich. — Manufacturing managers and supplier executives at the CAR (Center for Automotive Research) Management Briefing Seminars here will be talking about new components, supply chain trends and factory floor issues that will save or cost automakers millions of dollars.

But a few hundred miles from Traverse City, negotiators are talking through a supplier deal sure to have a far greater cost impact: labor rates.

This year’s UAW-Detroit 3 contract negotiations could have a ripple effect across the North American industry.

It’s not just the possibility of a strike or other job action, says Kristin Dziczek, vice president of industry, labor and economics at CAR in Ann Arbor, Mich.

“In one sense, the UAW is the largest single supplier to the Detroit 3 automakers, who purchase labor from them,” Dziczek said. “The ‘buy’ that negotiators are overseeing reflects about $65 billion over the next four years.”

The talks between the UAW and Ford Motor Co., General Motors and Fiat Chrysler Automobiles began last month in the Detroit area with ceremonial handshakes. But they are widely expected to become contentious as the two sides grapple with the nitty-gritty that affects worker and automaker financial well-being.

Traditionally, automakers use the quadrennial contract talks to lay out future investment plans in terms of what products will be built in what plants — helpful information for suppliers looking at their own forecasts for future business.

For suppliers with unionized and nonunionized work forces in the U.S., the UAW-Detroit 3 talks also bear watching because the patterns and some of the terms are likely to trickle down to the supply base, Dziczek said. Although the UAW lacks the sway it once had to command improved wages and benefits, “there are still things they do in these contracts with regard to how they handle temporary workers or health care and other things that do resonate through suppliers.”

Dziczek also said that if during negotiations the union and the automakers “do something innovative, others will look at it.”

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