One major focal point of the bargaining convention could be the tiered-wages system, in which "Tier 2" entry-level workers are compensated at half the hourly rate of so-called "Tier 1" legacy workers.
DETROIT, MI - Some 900 delegates from more than 800 local unions in the U.S. will converge on Detroit Tuesday and Wednesday to hash out a collective bargaining program ahead of negotiations with the Detroit Three automakers and others this summer.
The UAW Special Convention on Collective Bargaining begins at 9 a.m. at the Cobo Center on both days.
The delegates expected to attend will represent more than 1,500 employers in auto, aerospace, agriculture, health care, public service, education and other sectors.
One major focal point of the bargaining convention could be the tiered-wages system, in which "Tier 2" entry-level workers are compensated at half the hourly rate of so-called "Tier 1" legacy workers.
Delegates are expected to call for limits on Tier 2 Wages, or even doing away with the pay setup altogether, according to Automotive News. The average compensation per hourly worker is higher at General Motors and Ford than it is at all foreign counterparts operating in the U.S., with the exception being Mercedes-Benz.
FCA, formerly Chrysler Group, is more in line with foreign competitors because the Auburn Hills company was allowed to hire a greater number of Tier 2 workers as part of its bankruptcy.
There are about 40,000 Tier 2 workers, according to Automotive News. Those workers comprise about 29 percent of the Detroit Three's 137,000 hourly workers. By company, Tier 2 workers account for 42 percent of the hourly labor force at FCA, 29 percent at Ford and 20 percent at GM.
The tiered system was first implemented in the late 2000s as a way to boost hiring at automakers at a time when the Detroit Three were struggling.
Now, all three have been profitable for the past several years. In 2014, General Motors reported net income of $2.8 billion, down from $3.8 billion in 2013, but still marking the Detroit automaker's fifth straight year of profitability.
Ford Motor Co. also reported a fifth-straight year of bottom-line growth in 2014, with full-year net income of $3.2 billion, a drop from net profit of $7.2 billion in 2013.
FCA US, formerly Chrysler Group, reported a drop in net income to $1.2 billion for 2014, compared to a net profit of $2.8 billion in 2013.
The profitability of the automakers versus the argument that lower wages means more hiring could force some kind of compromise on the tiered system, with wages meeting somewhere between Tier 1 and Tier 2.
UAW contracts with the Detroit Three automakers expire in September. The negotiations, which occur every four years, begin this summer.
In 2014, the auto industry supported 532,000 jobs in Michigan, more than any other state in the U.S., according to the Center for Automotive Research. Ohio was second with 305,000 jobs.
David Muller is the automotive and business reporter for MLive Media Group in Detroit. Email him at dmuller@mlive.com or follow him on Twitter