SMILES and handshakes all around. On July 13th the bosses of General Motors and the United Automobile Workers (UAW) kicked off labour-contract negotiations, which occur every four years, between Detroit’s “Big Three” carmakers and the union that represents 140,000 of their workers. When the UAW last negotiated a pay deal in 2011 there was little to grin about. The carmakers were still reeling from the effects of the financial crisis, which drove both GM and Chrysler into bankruptcy—a fate that Ford only narrowly swerved. Then the union was in a conciliatory mood. Now that business is booming the UAW wants a share of the spoils.

America’s car industry is back. Over 17m vehicles will roll off dealers’ forecourts this year, close to an all-time high (see chart). The Big Three are raking in cash—between them they made net profits of over $7 billion in 2014. The UAW claims that the concessions it made in 2007, when carmakers were already in a deep financial hole, and again in 2011, are part of the reason that the good times have returned and that payment is due.

Dennis Williams, the UAW’s leader, has a couple of goals. One is to lift “stagnant wages”. Though workers have received bonuses and shares of the profits, basic pay has not risen for a decade. The union also wants to close the gap in pay between workers who were already in place in 2007 and the “second tier” hired afterwards, another concession granted by the UAW to help keep the carmakers in business.

GM, Ford and Chrysler (which has beefed up by merging with Fiat) accept that they will have to award modest pay rises and at least start to narrow the gap between the two tiers of employees. In return they want to find ways to boost productivity to offset the wage increases. They are also sure to demand help with health care by shifting more of the costs of schemes to workers. They want to trim now because in 2018 they face the imposition of an aptly named “Cadillac” tax, a provision of Obamacare that exacts a hefty levy on employers providing generous health insurance.

The carmakers have a point. They complain that their wage bills are still higher than those of many foreign rivals that have opened non-unionised factories in America in the past three decades and have eaten away at the market share of the three in Detroit. The domestic carmakers argue that for them to be able to make investments required to safeguard jobs and to comply with stiffening emissions standards—as well as introducing connectivity and developing self-driving cars—other costs will have to be kept in check.

They also want a more flexible workforce and the ability to close plants when good times turn bad. The “jobs bank”, which allowed laid-off workers to carry on drawing full pay indefinitely, was closed in 2009, but there are still generous provisions for unemployed car workers. GM, for example, will pay 75% of their wages for a year and 50% for another twelve months. If, as some analysts forecast, car buying is at a peak and will plateau or decline over the next few years, that could prove costly.

Mr Williams is a pragmatist who recognises that helping Detroit’s carmakers to withstand competitive forces is the best way to preserve jobs. But it will be hard for the UAW to make further concessions that more belligerent members will resent. The union needs to appear to fight hard for its members. “Right to work” legislation, in force in Michigan since 2013 and in place in other states where the carmakers operate, prevents unions from forcing workers to remain members, potentially weakening the UAW’s clout.

A good deal would also strengthen the UAW’s hand in its battle to unionise foreign carmakers’ plants in the South and win new members. The union’s campaign to represent workers at Volkswagen’s factory in Chattanooga, Tennessee, is likely to win over employees if it can drive a hard bargain. But if it does too well VW’s management will be less keen to recognise the UAW voluntarily.

Negotiating teams have until mid-September, when the current contract expires, to hammer out a deal. And the UAW has a weapon to wield that it voluntarily laid down after the government bail-outs of 2009: the right to strike. Mr Williams says that to do so would be a sign of failure. At least he recognises that the fates of his union and the carmakers are intertwined. Unfortunately, that will make it no easier to forge a deal that both sides will regard as a victory.