Workers at the Lear Corporation’s automobile seat manufacturing plant in Hammond, Indiana on September 21 ratified a new four-year collective bargaining agreement that phases out a two-tier wage structure in place at the plant since 2009.
Under the terms of the old agreement, starting pay for workers hired after 2009 was $13 an hour. They topped out at $16 an hour, well below the $20 an hour earned by workers on the job when the old agreement went into effect.
The Lear workers belong to United Auto Workers (UAW) Local 2335.
The company agreed to the phase out the lower pay for new hires at its Hammond plant after a one-day strike that began on September 13.
“The tide is turning for auto parts workers, who for too long have been stuck with fast-food-like wages,” said Jaime Luna, president of UAW Local 2335. “The agreement is a victory not just for the workers at our plant, but for thousands of auto workers across the country who do the same hard work we do and will benefit from the higher standard we achieved by taking a stand in Hammond.”
By the last year of the agreement, new hires will be making $21.58 an hour. For some that means a raise of between nearly $16,000 and nearly $19,000 a year.
That’s good news to Lear new hires like Rochelle Weathersby, a single mother who has to work a second job to make ends meet.
“This is a life-changing raise for me,” said Weathersby. “To go from $13 to more than $21 in four years means I may not have to work seven days a week like I am now. I hope I’ll be able to help my son pay his college bills, which I’ve always dreamed of doing.”
Non-new hires will receive a $0.50 an hour raise in the first and third years of the new contract and a $1,000 bonus in both the second and fourth year.
During the negotiations, the company proposed that its two-tier wage structure remain in place.
When the negotiations failed to produce an agreement, Local 2335 members voted in August to authorize a strike.
They kept working while negotiations continued, but on September 13, they walked off the job.
The next day, Lear agreed to end its two-tier wage structure, and the workers returned to work pending ratification.
Lear’s Hammond plant produces seats for Ford’s Chicago assembly plant that makes Explorer SUVs and Taurus sedans.
The Chicago plant relies on a just-in-time logistic system that gets parts to the plant only hours before they go to the assembly line.
A strike at Lear that lasted any longer than it did could have curtailed or even stopped production in Chicago.
Local 2335 in 2009 agreed to two-tier wages to help Lear get out of bankruptcy.
Since then, Lear has been doing much better.
Automotive News reports that Lear’s adjusted earnings for 2013 were $510 million, down a bit from 2012 when its adjusted earnings were $548 million.
Lear reported 2013 revenue of $16.23 billion, up 11 percent from 2012.
Lower pay for new hires has become common in the auto industry, both at the companies that assemble the final product and companies that supply the parts.
The UAW agreed to two-tier wages for workers at Ford, Chrysler, and General Motors in 2007 when the companies were experiencing a downturn.
But since then the three companies have seen a reversal of fortune.
Despite a massive recall that cost GM $1.3 billion, its net earnings for the first half of 2014 were of $308 million. Ford reported $2.3 billion for the same period and Chrysler reported $1.1 billion.
Negotiations on a new contract with GM, Ford, and Chrysler begin in earnest in January, and some UAW members at the three companies are hoping to end the two-tier wage system.
After hearing the good news out of Lear, Jerry Dias, president of the Canadian union that represents auto workers, expressed hope that the same thing could happen when his union and the UAW negotiate new collective bargaining agreements with the three US-based auto companies.
“This is a positive step by the UAW to eliminate inequities on the shop floor,” said Dias president of Unifor, which represents 300,000 Canadian workers including those in the auto industry. “It is time for auto workers on both sides of the border to share in the recovery of the industry, and I congratulate the UAW on taking this step.”