It's hailed as the best contract for autoworkers in 20 years. The four-year agreement boosting wages 12 percent and pensions 19 percent at Daimler/Chrysler is expected to set the pattern for the Big Three and Delphi Automotive Systems.
But while workers will benefit, the auto industry's next four years will bring mixed blessings for the Niagara Frontier economy.
A wave of attrition looms over General Motors Corp. and its spin-off Delphi Harrison, as an aging work force collides with automakers' drive for ever-leaner production. The two companies currently employ 9,900 in Erie and Niagara.
While autoworkers at GM's Tonawanda engine plant and Delphi Harrison Thermal Systems in Lockport will see a boost in pay, thousands will be eligible for retirement with 30 years service, posing a challenge for economic development officials as attrition carves away at an economic mainstay.
However, if the local plants are successful in winning new contracts and bucking the industry's slimming trend, they will need to replace the retiring workers, providing a boon for area job seekers.
"GM has the oldest work force in the industry," said Richard J. Hilgert, auto industry analyst at Fahnestock & Co. in Detroit. The company's average worker is 48 with 25 years of service, five years short of eligibility for full pension benefits.
GM and Delphi are expected to shrink employment by 5 percent a year on average, Hilgert said. Delphi, which was part of GM until this year, has demographics that are similar to its former parent.
In addition, Delphi workers will shortly face a deadline for retirement to remain within GM's pension system. However, the deadline currently set for Thursday may be extended as part of contract talks, industry sources said. Delphi has repeatedly pledged that its own pension benefits will parallel GM's.
If Hilgert's 5 percent attrition rate holds true in Western New York, about one in five GM and Delphi jobs will be gone when the new agreement expires in four years, a cut of nearly 2,000. That would be a setback for regional efforts aiming at a net increase of 50,000 jobs.
A study released last week by the Buffalo Niagara Partnership cited automotive-industry jobs -- along with electronics-industry jobs -- as just the sort of jobs area economic developers should target for growth.
Ford Motor Co. and American Axle & Manufacturing, the region's two other major auto industry employers, face different demographics, analysts said. Most of American Axle's 2,700 local workers are relatively low on the seniority rungs, having joined since the company's split from GM in 1994.
But company and union officials said it's a mistake to start counting the good-paying jobs gone yet. Efforts at GM Tonawanda and Delphi Harrison in Lockport to win new work may require help-wanted signs to be hung out to fill retiring workers' places.
"They (plants) have their five-year plans based on what they have in contracts," said Kevin Donovan, Buffalo area director of the UAW. "But there are other contracts sitting out there."
Local agreements being negotiated now will address minimum work force levels at the plants, he said.
Within four years, roughly half of production workers at GM Powertrain and Delphi Harrison will be eligible for retirement, Donovan estimated. But how many of them opt to leave is anyone's guess, he said.
Provisions of the Daimler/Chrysler contract, if extended to GM, will provide workers with incentives that work both ways. Full pensions will be 19 percent higher in 2003, rising from $1,200 a month to about $1,423 for workers covered by Social Security, according to reported details of the contract. That puts retirement in closer reach.
Higher wages, however, sweeten the prospect of remaining on the job. The contract's four-year raise of 12 percent will add over $100 a week to the typical assembly workers' paycheck, not including overtime.
Company executives were reluctant to predict where employment figures will end up.
"There are a number of variables -- contracts could be one of them" as well as leaner manufacturing methods, said GM Powertrain spokesman Dan Greene. The engine plant on River Road is vying for new products that will help offset declines expected in production of its existing engines. But winning new products means honing productivity figures, putting downward pressure on job totals.
The Tonawanda plant's reported employment total has fallen from 4,000 to about 3,800 in the past year by attrition, as lean manufacturing techniques reduce sharpen productivity.
At Delphi Harrison, "we are aggressively seeking additional business, and additional volume on our existing business," spokesman Lindsey C. Williams said.
However, company executives have said they expect to see a lower head-count than the current 6,100 figure for the Lockport headquarters and plant complex in coming years.
The company's recent $20 million capital injection from the Empire State Development Corp. contained no job creation requirements, lawmakers involved with the grant said, because it's expected that Delphi Harrison will need to increase business just to maintain currently employment levels.
The UAW is stepping up organizing to replace retiring auto industry workers, Donovan said. But higher efficiency at auto plants doesn't necessarily mean fewer jobs for workers, he said. Labor costs contribute only 15 percent to 17 percent of industry costs.
"There are ways to reduce costs without reducing the number of people," he said.