DETROIT (AP) — New contracts between the United Auto Workers union and Detroit’s three automakers substantially increased the cost gap between Detroit and foreign automakers with U.S. factories, an industry think tank says.
The Center for Automotive Research calculated that General Motors and Ford will see their total costs grow $8 per hour, while Fiat Chrysler’s will rise by $11 an hour during the four-year contracts that expire in 2023.
The think tank calculated that on average, foreign-owned factories will only see a $2 increase. But during a panel discussion run by the center Wednesday, experts said labor costs are only about 5% of the cost of a vehicle and automakers can find ways to offset the increases. But the panel said labor costs still may force vehicle prices up.
Total labor costs include wages, health care, pensions and other expenses.
Center Vice President Kristin Dziczek calculated that GM’s labor costs would rise from $63 per hour before the new contract to $71. Ford’s costs would rise from $61 to $69 per hour. Fiat Chrysler would see the highest increase, from $55 per hour to $66.
All three Detroit automakers reached agreement with the union last year on contracts. GM largely set the pattern for the new contracts, reaching an agreement in October after a crippling 40-day strike.