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Sources: UAW, Ford, Chrysler far apart in talks

Sources: UAW, Ford, Chrysler far apart in talks

September 8th, 2011 by TOM KRISHER, AP Auto Writer in News

DETROIT (AP) - Ford, Chrysler and the United Auto Workers remain far apart in labor talks with just a week left before their contracts expire, two people briefed on the talks said Wednesday.

Negotiators for the two companies and the union have started serious talks on wages in the past few days, even though the union's contracts with all three Detroit carmakers expire at 11:59 p.m. on Sept. 14, the people said.

General Motors Co., on the other hand, has been talking pay with the union for about two weeks and is ahead of its crosstown rivals, said another person briefed on the talks. All three people asked not to be identified because the companies and union have agreed to keep negotiations private.

Contracts between the UAW and Detroit's automakers are widely followed because they set the wages for about 111,000 autoworkers nationwide. They also set the bar for wages at auto parts companies and other manufacturers.

This year's talks are the first since Chrysler and GM accepted government aid and emerged from bankruptcy protection in 2009. So far, talks between the union and the companies have been amicable, despite little movement on wages with Chrysler Group LLC and Ford Motor Co., two of the people said. The lack of progress raises the possibility that the contracts could be extended beyond next week's deadline.

Union spokeswoman Michele Martin said talks with all three companies are making progress, but she declined to give details.

Both sides must reach agreements and union members must vote on the deals before new contracts can take effect.

UAW President Bob King has said he'd like to reach agreements with the companies before the contracts expire. But during the last round of contract talks in 2007, the union kept working under contract extensions until it reached deals with the companies in October and November.

King has said both sides are discussing profit sharing instead of the traditional hourly pay raises. Payments tied to profits would cut the companies' fixed costs and give workers an interest in seeing carmakers make money. In exchange, King wants to raise the pay of entry level workers who now make $14 to $16 per hour, about half the pay of a longtime factory worker.

In a sign of how cooperative the UAW and carmakers have become, King has said he wants to keep the Detroit companies' costs competitive with foreign-based companies. Ford and GM still have labor costs that are higher than foreign rivals with U.S. factories, while Chrysler's costs are more competitive.

Ford and GM hope to cut their labor costs in the new contract, while Chrysler hopes to hold its costs steady. Both the union and companies are looking for ways to cut expenses beyond pay, such as wellness programs that would reduce health insurance premiums.

Talks between the union and companies began in late July, and at Ford and Chrysler, have centered on attendance policies, work rules and other issues, two of the people said.

The people said they did not know on what issues the two sides had reached agreement.

When union negotiators reach agreements with the companies, they may have a tough time selling them to the rank-and-file, many of whom want to win back lost pay raises and other concessions made to the companies during the financial crisis.

Ford workers are particularly sensitive about compensation after CEO Alan Mulally's $26.5 million pay package for last year and the company's restoration of merit raises for white-collar workers.

Mulally, who was hired away from Boeing Co. in 2006 and has led Ford's remarkable turnaround, made roughly $12,740 per hour last year. That is 439 times the hourly rate of $29 paid to longtime workers on the assembly line.

But Mulally told The Associated Press in an interview that most of his pay is based on Ford's performance.

"The vast majority of my compensation is at risk, because the numbers that you see are only realizable if we profitably grow the corporation," he said in an interview Friday in New York. "That's the way it should be."

Mulally has received at least $124 million in stock and cash since joining the company. He ranked ninth on the list of highest-paid CEOs for 2010, according to AP research.

Of his 2010 pay, all but $1.4 million was stock and options, a performance bonus and incentive pay tied to performance, according to documents the company filed with the Securities and Exchange Commission.

Under Mulally's leadership, Ford has recovered from a $12.6 billion loss in 2006 to make a $6.6 billion profit last year. The Dearborn, Mich., company also made nearly $5 billion in the first half of this year.

Mulally said he believes so much in linking pay to performance that most of Ford's management and salaried workers are compensated in the same way.

Mulally confirmed in the interview that Ford and the UAW are talking about profit-sharing.

"We're continuing to talk together about how to align all of our compensation even more," he said.

He went on to say that when everyone in a company is aligned to a common goal, companies perform better.

But Judy Wraight, an instrument repair worker at Ford's Dearborn, Mich., engine plant, said no one deserves as much money as Mullay has been paid. She pointed out that Japanese auto executives are paid far less.

She called him greedy and said factory employees deserve better pay.

Wraight predicted that UAW leaders will have trouble getting workers to approve a contract in part because of Mulally's pay package.