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UAW-FCA contract may sneak in more temps

by David Zatz on

Automakers hire many temps, who get lower wages and (more importantly) fewer benefits, to fill in the gap when regular workers are on vacation, sick leave, and such, and sometimes to boost production on weekends and off-peak periods. As temps, they can be discharged at will.

factory

Foreign automakers use large numbers of temps in their U.S. plants, cutting labor costs. All new production hires at Nissan’s plant in Canton, Mississippi, and the Volkswagen plant in Chattanooga, Tennessee, are temporary or contract workers that are paid about $12/hour.  They not only don’t get benefits, they have no job security and, depending on state laws, may not even qualify for unemployment compensation.

Volkswagen’s use of contract and temp workers is one of the prime reasons the German company has the lowest average hourly labor costs (about $38/hr.) of any automaker building vehicles in the U.S.

According to a report in the Chattanooga Times Free Press, Volkswagen’s contractor supplier, Aerotek, recently supplied 200 new workers to the Chattanooga plant. According to Lucas Hiler, an Aerotek account executive, they make an average of  $11.50/hr. but can transition to regular employee status with starting wage of $15.50/hr. after six months. Mario Duarte, a VW human resources manager, says about 80% of workers at the plant make about $20.00/hr.

Temps also makes wage comparisons between automakers more complicated. Hourly wages for permanent employees in most plants are roughly comparable to, or higher than, the Tier 2 rate at unionized plants. In addition, permanent employees are eligible for bonuses and other additional payments, something that’s not always true for temps.  Volkswagen does offer bonuses and regularly scheduled raises to its contract workers.

FCA is only allowed to use staff for 4% of work hours, and cannot use them from Tuesday through Thursday (except on holidays.) According to Bloomberg, as quoted in Automotive News, the new hundreds-of-pages-long contract between FCA US and the United Auto Workers would double the use of temps to 8% and allow them to work at any time.

The higher use of temps would increase FCA US’s flexibility and cut its labor costs, possibly making up for the ever-so-slow elimination of lower-paid “Tier 2” workers — those hired starting in mid-2009, who earn far less than workers hired earlier.

David Zatz founded Allpar in 1998 (based on a site he had begun in 1993-94), after years of writing reviews for retail trades. He has been quoted by the New York Times, the Daily Telegraph, the Detroit News, and USA Today. Before making Allpar a full-time career, he was a consultant in organizational psychology. You can reach him by using our contact form (much preferred) or by calling (313) 766-2304


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