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GM, UAW see no impact from VW's low US labor costs
* U.S. automakers to negotiate new labor deals this summer
* Fate of UAW's lower, 2nd-tier wages key in talks
* VW's US plant workers earn half what most UAW workers do
By Ben Klayman
DETROIT, May 25 (Reuters) - Volkswagen AG (VOWG_p.DE) has opened a U.S. assembly plant that boasts ultra-low labor costs, but General Motors Co (GM.N) and United Auto Workers officials do not see it affecting this summer's labor talks.
"I'm not sure there's any impact," GM North American President Mark Reuss said of the lower wages at the VW plant. He spoke with reporters on Wednesday after announcing a $69 million investment at the U.S. automaker's Detroit-Hamtramck assembly plant. [ID:nN2597725]
"The partnership we have with Joe Ashton and Bob King is to be competitive in our workforce in these plants in the United States and North America," he added, referring respectively to the head of the UAW's GM department and the union president.
Reuss told assembled workers that GM was investing in the company's relationship with the UAW as it heads into the talks for a new labor deal.
GM filed for bankruptcy in 2009 after the U.S. housing downturn and a spike in gasoline prices the year before that caused consumers to turn away from its high-profit but fuel-hungry trucks and SUVs.
The automaker emerged from bankruptcy 40 days later thanks to a $52 billion taxpayer-funded bailout. It sold shares in an initial public offering last November.
Since exiting bankruptcy, GM says it has invested $3.4 billion in its U.S. plants, creating or retaining more than 9,000 jobs. Earlier this month, it said it would invest another $2 billion in 17 U.S. plants, creating or retaining more than 4,000 jobs. [ID:nN1088442]
GM's U.S. rivals, Ford Motor Co (F.N) and Chrysler Group LLC (FIA.MI), also will negotiate new deals with the UAW this summer, and a key issue will be the so-called second-tier wages, which at about $14 an hour are roughly half those of veteran union-represented employees.
When discussing the labor talks, union officials have repeatedly emphasized job security. On Wednesday, Ashton said hourly workers earning second-tier wages make up only 3 percent of the Big Three U.S. automakers' workforce and had become an "obsession" for many.
"This will be just like any other normal set of negotiations," Ashton said. "GM, Ford and Chrysler were very profitable this year with their labor costs.
"People are starting to realize, especially in this country, how productive the Big Three auto workers are."
While agreeing that the share of workers being paid second-tier wages will rise as U.S. automakers add jobs, Ashton said there are still some workers on layoff who, when recalled, will make the higher, traditional wages. He acknowledged the U.S. automakers need the second tier to be competitive.
Moving workers earning the lower wages up to a higher level will be discussed during the contract talks, but agreeing to cut wages further is not on the union's agenda, Ashton said.
UAW President King said last fall that in the contract talks the union would aim to ensure its members shared in U.S. automakers' profits. [ID:nN24267251]
Analysts say the lower labor costs at the new VM plant in Chattanooga, Tennessee, represent a threat to U.S. automakers. [ID:nN23206693]
Barclays Capital estimated labor costs at the VW plant, including wages and benefits, will average $27 an hour, on par with the UAW's second-tier workers when benefits are included.
VW's labor costs are well below those of both the Detroit Three and other foreign automakers. For example, Ford's labor costs are around $58 an hour, including wages and benefits.
Ashton said the UAW is emphasizing organizing the nonunion workforces at the U.S. plants of foreign automakers. But even if it fails in that endeavor, it can resist agreeing to lower wages, he said.
The auto industry helped build the U.S. middle class, and $14 an hour is not a middle-class wage, Ashton said.
"We're not looking to make the plants uncompetitive, but we're looking (for) people to make a decent wage, and that will be part of our negotiations," he said. "I think $13.87 an hour, you can apply for food stamps."
At the GM plant on Wednesday, 50-year-old quality engineer technician Brenda Ray said she was upbeat about the contract talks but was in no mood to match the pay of VW's Tennessee workers.
"I don't think I should go down to anyone's standards," the 26-year GM veteran said. "They should come up to ours." (Reporting by Ben Klayman in Detroit; editing by John Wallace)
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