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Detroit Three, UAW Will Square Off Over Wages, U.S. Jobs

The Big Three U.S. automakers and the United Auto Workers union will kick off bargaining Monday for new contracts that would set how much more robust, post-recession profits the industry shares with workers, and determine union costs to win more U.S. jobs, reports Reuters.

UAW leaders said they will insist on raises for 139,000 blue-collar workers at U.S. plants run by Ford Motor Co, General Motors Co. and Fiat Chrysler Automobiles after rounds of bargaining in 2007 and 2011 that led to substantial concessions. Union leaders and chief executives of the Detroit Three are scheduled to stage public handshakes next week, starting Monday. Their current contracts expire Sept. 14.

Union President Dennis Williams has said he wants to narrow the gap between veteran workers, who make about $28 an hour, and employees hired since 2011 with a “second tier” hourly wage of $16 to $19.

Labor accounts for a declining share of a vehicle’s cost, said Sean McAlinden, chief economist at the Center for Automotive Research, noting that the three automakers’ costs for UAW members fell to 5.7 percent last year from 11.5 percent in 2007.

But executives at the Detroit Three said their ability to add more UAW jobs depends on offsetting increases in wages or benefits with gains in productivity. Health care costs promise to be a central issue, as the automakers face paying a so-called “Cadillac tax” of 40 percent on rich UAW medical plans starting in 2018.

John Fleming, head of Ford manufacturing, said the company expects to boost productivity by 6 to 7 percent in all its factories. “Every dollar that we don’t take out is a dollar that your competitor can spend on making their vehicles more competitive,” he said.

The automakers’ leverage is strengthened by the union’s failure to organize auto plants in the southern United States operated by Asian and European manufacturers, and by the growing capability of Mexican auto workers and suppliers to build cars for the U.S. market.

Ford jolted the union on Thursday by announcing plans to move production of its small Focus and C-max hybrid cars out of a factory in suburban Detroit by 2018. The company said the Wayne, Michigan, factory’s future would be a subject of bargaining in this round of talks.

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Detroit 3 Raise Asian Currency Issues

WASHINGTON – The Detroit Three automakers on Wednesday urged Congress to take action to stop efforts by Japan and South Korea to shore up their currencies, The Detroit News reported.

The automakers prodded Congress to “send a clear message to the governments of Japan and Korea: Do not intervene in currency markets.”

It’s the latest effort by the automakers to raise the issue of currency. It follows a meeting earlier this month with the senior auto adviser on currency issues.

The American Automotive Policy Council — representing General Motors Co., Ford Motor Co. and Chrysler Group LLC, said both countries were engaging in “currency manipulation” that “unfairly boosts these nations’ auto exports and hurts American jobs.”

Automakers have complained for more than a decade that Japan and Korea haven’t done enough to open their markets and allow their currency to move at market rates. A proposed Korea Free Trade agreement remains stalled in Congress — largely because of concerns of midwestern Democrats that the deal doesn’t do enough to open Korea’s auto market.

The automakers cited Japan’s decision last week to add another $56 billion to its special fund for currency interventions on top of the massive reserve already in place — and Japan’s Finance Minister Naoto Kan told the Japanese Diet last week that the government is ready to intervene in currency markets to depreciate the yen.

The group said Korea has been intervening repeatedly throughout 2009 and into 2010 to manipulate the value of its currency — the won.

“We urge you to make clear to the governments of Japan and Korea that the U.S. Congress considers such interventions unacceptable and that any decision to proceed with or continue such interventionist policies will be strongly and directly challenged by the United States in defense of fairness and American jobs,” the leaders said.

The group also sent a letter to the Japanese ambassador to the United States, Ichiro Fujisaki.

“American auto companies will consider intervention in foreign exchange rate markets by the Japanese government that weakens the yen as unfair competition directed at the American automotive market and American workers as the industry begins to recover from the economic recession,” they wrote. “We will encourage our government to take strong and equivalent action in response to prevent harm to American jobs.”

An official at the Japanese embassy who handles auto issues didn’t immediately return a request seeking comment.

Korea and Japan remain the two most closed automotive markets, according to the Organization for Economic Co-Operation and Development — which ranks the pair 29th and 30th of 30 total countries. Import penetration in both countries’ auto market is less than 4.5 percent. They argue it’s primarily because of non-tariff barriers like currency valuations.

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