Auto Talks Set To Begin During Uncertain Economy

NOTE: Jeff Gilbert will be at the start of today's talks. Follow his Twitter feed (@jefferygilbert) for instant updates. Check out his Facebook page (facebook.com/carchronicles) for extra coverage.

AUBURN HILLS (WWJ) -- The UAW begins talks with the big three auto companies today looking to win back concessions and gain jobs. The car companies want to stay competitive, and tie compensation to performance.

Both sides already agree on one thing. They never want to see the inside of a bankruptcy courtroom, or a congressional hearing room again.

"It will be a tough set of negotiations," says UAW Vice President Joe Ashton, who will lead the union's talks with General Motors.

Tradition would have the union starting talks with GM, which settled first last time, but the UAW decided to break with tradition, and open with Chrysler today. While it's not been formally announced, talks at GM are expected to begin Wednesday, and the union's expected to be knocking on Ford's door Thursday.

In between, we'll see how well the auto industry is doing when Chrysler and Ford reveal second quarter earnings Tuesday. GM earnings come out next week.

Even if they all post profits, analysts say the recovery remains fragile, and companies have to do all they can to make sure they stay out of financial trouble.

"We're not going to get another bailout," says Sean McAlinden, chief economist of the Center for Auto Research. "It's a very risky economy."

McAlinden sees some sort of profit sharing as the only solution. He says, in their home markets, profit sharing makes up as much as forty per cent of a Japanese auto workers compensation.

"If the company ever gets seriously in trouble, seriously in trouble like our companies were in 2008 and 2009, those bonuses can be eliminated or delayed," he said. "And their labor costs fall by forty per cent, and they lay no-one off."

The auto companies have all said they want to see pay connected to the performance of the individual and the company. The union has been willing to accept that, but says the companies need to be ready to write some big checks.

That's a realistic possibility, says McAlinden. He says workers could end up with two checks a year, topping eight to ten thousand dollars.

The union is also looking to add more jobs.

"You saw what happened to the auto industry, and we're starting to get jobs back," said VP Joe Ashton.

"The vast majority of members want jobs, and they want job security," Ashton told reporters at an event last week. "They never want to go through what we had to go through in 2009, where they faced bankruptcy and plant closing."

Ashton will be seeking to get GM to re-open two idled plants, and add shifts at other plants. GM says they will only do that if there's market demand. To do otherwise, the company says, would be irresponsible.

"Of course we want our employees to enjoy and share in our success, absolutely," said GM VP Cathy Clegg. "We all know there are things we can't go back to."

Analysts say the leadership of the UAW does not want to do anything to put GM, Chrysler and Ford into an uncompetitive position. But, those leaders have to put together a deal that workers will accept.

Sean McAlinden says negotiators will be focusing on one goal.

"How to keep people happy and productive—they were obviously a big part of the success of the comeback of the companies in the last two to three years—and on the other hand avoid those risks."