Recently, Mitsubishi Motors North America issued a press release indicating that the company reached a new agreement with the United Auto Workers. Various media outlets have reported some of the details of the agreement, which is instructive for both unionized and non-unionized employers in the auto industry and in manufacturing.

The union contract expired on September 5, 2008, but the workers continued working without a contract and during negotiations. As a result of the negotiations, the workers will take a pay cut, new workers will be hired at a lower wage and Mitsubishi made promises about continuing to operate the facility for a number of years into the future. For example, Mitsubishi promised not to lay off any workers until the date the contract ends. In exchange, the UAW agreed to a reduction of $1.67/hour in the base rate for production associates and the elimination of the $3.08/hour cost of living adjustment. The UAW and Mitsubishi agreed to increase the co-pays on medical expenses and that employees will pay a deductible. Although the current base rate for production associates will be $22.33, newly-employed production associates will start at a lower wage reported to be $14.00/hour. The agreement is in force and effect from October 6, 2008 through August 30, 2012.

In the meantime, the Bureau of National Affairs reported that the average wage increase for the first year of union contracts negotiated between January and October 2008 was 3.7%. However, the average increase in the manufacturing sector was only 2.5% for the first year of new contracts between manufacturing companies and the unions representing their workers.