Outsourcing slashes pay of auto parts workers

DETROIT – Last week Chrysler Group announced the sale of its 60 percent stake in its New Castle, Ind., parts plant to Metaldyne Corporation. Along with the sale, it was announced that plant workers will be forced to take a pay cut from $28 to $18 an hour. Last December, according to company documents, Metaldyne and Chrysler arranged for Metaldyne to run the New Castle plant while Chrysler maintained majority control. The 1,400 workers, members of United Auto Workers Local 371, are enraged over what they perceive as a breach of their contract with DaimlerChrysler. The Local filed a grievance last fall and is looking for further avenues to fight back.

Ford has also taken measures to outsource production in order to cut costs, moving parts production to Visteon, a majority-owned subsidiary. The other member of the Big Three automakers, General Motors, spun off Delphi for similar reasons. Following Chrysler’s pattern, Ford recently announced the beginning of the process of moving parts production from its Visteon plants to parts supplier Johnson Controls. Ford expects to cut as much as $25 per worker per hour in this action.

Both Ford and Chrysler are projected to profit between $1 and $2.5 billion in 2003, even though the number of unsold cars left in dealers’ lots is the largest in years due to the decline in sales. Most analysts agree the projected profits come, not through increased sales, but through reducing labor costs – wages, benefits, overtime, and hours of workers.

The biggest trend in cost-cutting is not in outsourcing, however, but in layoffs and projected plant closings, with the UAW losing 40,000 autoworkers since 1999. Meanwhile, retiree numbers have grown steadily and costs of health care and pensions continue to rise.

Four years ago, the UAW negotiated what is considered to be an excellent health insurance package for its auto members, and a moratorium on plant closings for four years. This solid contract, according to a recent Reuters report, may be under attack this year as contract talks open in July. The Big Three are begging for “relief” in order to become “more competitive.” They certainly have their eyes on reducing the quality of the health care package and their pension liabilities.

The author, a UAW member, can be reached at jwendland@politicalaffairs.net