State of the Unions

Negotiations on a new, four-year labor agreement between the Big Three and the United Auto Workers are set against the backdrop of a slow economic recovery and growing public wariness of rich union contracts.
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Don’t mention the word strike around Bob King these days. This is the era of a kinder, gentler United Auto Workers union, the labor chief insists, one that is intent on using “creative problem-solving” rather than the more traditional strong-arm tactics to get what it wants during bargaining talks with Detroit’s Big Three automakers this summer.

Of course, it doesn’t help that the UAW is legally barred from using its heaviest weapon — historically disruptive strikes — against two of those three manufacturers, due to strictures placed in the bailout bills that helped General Motors and Chrysler emerge from Chapter 11 bankruptcy protection two years ago.

Even without those restrictions, though, protracted unrest isn’t part of the new strategy, insists King, the 64-year-old labor veteran elected UAW president last year. The union, he suggests, has come to recognize that its future is indelibly linked to that of the automakers it represents. Should the Big Three fail, as nearly happened in 2009, workers would see their own livelihoods go “up in smoke,” King warns.

But there’s another issue that is clearly weighing on the collective mind of union leaders as they prepare for their latest round of auto contract talks — the swirl of labor givebacks nationally that are being pushed by newly-elected officials from the Republican Party and the Tea Party movement. American voters — at least a majority of them, as evidenced by last year’s midterm elections — have grown weary of watching government workers enjoy rich benefit packages that have become a scarce commodity in the private sector.

The sea change that’s under way within government has helped create a sense of caution among UAW leaders. Where before unions used membership dues to contribute financially to political campaigns — and demanded unwavering support in return — the tide has clearly changed.

The Big Three, for example, now represent a minority of the overall U.S. automotive market, and when one adds in the impact of productivity gains and other changes, the trend is clear. UAW membership has declined by three-quarters since its peak three decades ago.

The union’s future relevance may hinge not just on keeping GM, Ford, and Chrysler competitive, but on finally finding a way to organize key competitors — the score of foreign-owned, nonunion “transplant” assembly lines that have sprung up in right-to-work states such as Tennessee and Alabama. To win over reluctant workers, the UAW has come to realize that it must adopt a pro-business approach rather than sounding the traditional hymns of labor/management confrontation and worker solidarity.

To the Ramparts

Changing the tone of the conversation won’t be easy, as King himself is all too aware. Ironically, he carries both sides of the debate in his blood. His father was director of industrial relations at Ford. And although the younger King graduated from the University of Michigan, he was drawn to blue-collar life. At various times, he has worked the line with all three Detroit automakers. He got into labor politics in 1981 and, three years later, became president of the huge UAW Local 600, which represents workers at the immense Ford Rouge complex in Dearborn.

 

The local UAW office, on Dix Avenue, isn’t very far from where the legendary “Battle of the Overpass” took place on May 26, 1937. As several union organizers — including the future UAW president, Walter Reuther — posed for pictures on the pedestrian bridge outside the massive Rouge industrial complex, their picket signs contrasting a Ford sign in the background, they were jumped by as many as 40 security personnel hired by Harry Bennett, the lantern-jawed Ford security chief.

Reuther described the beatings: “Seven times they raised me off the concrete and slammed me down on it. They pinned my arms … I was punched and kicked and dragged by my feet to the stairway, thrown down the first flight of steps, picked up, slammed down on the platform, and kicked down the second flight. On the ground they beat and kicked me some more.”

Even some of the women who had been passing out leaflets were beaten. Dearborn police largely stood by, even as the mob turned on reporters and photographers, demanding notebooks and film. But James “Scotty” Kilpatrick of The Detroit News kept some of the plates from his Speed Graphic camera hidden. When they were published, they created a national outcry (and led the Pulitzer committee to institute a prize for photography). If the company thought it would scare off any attempts to organize its employees, the assault backfired. Chastised by the National Labor Relations Board, Ford eventually agreed to recognize the union.

The bitterness that grew out of those early conflicts dominated the relationship between labor and management for decades to come. Indeed, confrontation seemed to be the only effective way of doing business. The UAW would, every three years, name a so-called “strike target.” The decision was based on which automaker would likely deliver the most lucrative contract. That agreement would then be used as a pattern for the rest of the industry.

More often than not, for the better part of a half-century, there were costly work stoppages before weary negotiators would shake hands and smile for the media cameras.

In 1967, however, the UAW slammed GM with a record 67-day walkout which Jefferson Cowie, a professor of labor history at Cornell University, described as a “titanic clash between two massive permanent entities. They were both the backbone of America at the time.”

 

A New Direction?

Wary of the confrontations, both sides insisted they would and could change their ways, and nowhere was that goal more obvious than during the Chrysler bailout effort of 1979. Aware that Chrysler was running out of cash and could only survive with the help of a federal loan guarantee, former Chairman Lee Iacocca announced that he would need the help of all stakeholders; otherwise, he colorfully added, “the pieces of the mosaic will fall off the wall.”

It wasn’t easy for UAW management at the time to sign on to Iacocca’s plea. Much of its leadership had grown up listening to tales of Reuther and his comrades-in-arms. But the gruff UAW president, Doug Fraser, cautiously signed on — and, in the end, it was his arm-twisting of Congress, as much as Iacocca’s legendary persuasiveness, that sold lawmakers on the bailout.

Then came Saturn, the ambitious — if ultimately failed — effort by GM to create “a different kind of car company,” as its ad campaign once boasted. The UAW agreed to major changes in work rules designed to improve quality and lower costs, in return for a stake in management and winning workers potentially huge payments should the project succeed.

But there were plenty of skeptics inside the UAW who resisted the new approach. With the backing of the so-called New Directions movement, a classic labor activist, Owen Bieber, beat out the more moderate Don Ephlin to succeed Fraser. Rather than being rewarded for building new ties to Ford, where he served as the UAW’s chief liaison, Ephlin was tarred as having sold out to management.

The backlash became even more apparent when the fire-breathing Steve Yokich replaced the largely ineffectual Bieber. Under Yokich’s tenure, GM was hit with a nearly two-month-long series of local walkouts that, by some estimates, cost as much as $2 billion before the contract was finally settled.

That strike, as one insider explained at the time, was the result of two sides intent on their “mutual destruction.” At the time, former GM Chairman Jack Smith seemed bent on breaking up the UAW. The union seemed equally intent on showing the automaker that it could call the shots if it didn’t get what it wanted. In the end, the UAW got most of what it had pushed for as GM faced steadily increasing competition.

 

Staring Into the Abyss

By 2007, the national economy was quickly going into the tank — although no one yet realized just how deep the hole was going to be. Against that backdrop, the general public had come to realize that the UAW represented autoworkers who were simply taking home too much in pay and benefits. In a major shift, the union began to entertain the idea that it would have to agree to big concessions.

Stunningly, the talks ended without a major work stoppage, even though the union would wind up accepting the seemingly anathema idea of a two-tier wage structure, among other key givebacks. Ron Harbour, chief analyst with Harbour & Associates, a consulting firm in Troy that has long tracked factory floor productivity, estimated at the time that Detroit’s automakers, with the new four-year contract in hand, “are on a course to match the productivity and costs of their import rivals.”

Yet, even as those changes were being implemented, it soon became apparent the UAW hadn’t given enough. By late 2009, the Big Three CEOs traveled to Washington, hats in hand, pleading for a bailout. If they thought Chrysler had a hard time in 1979, the automakers were stunned as lawmakers chastised them for all sorts of perceived evils — GOP legislators, in particular, used the forum to assault the unions. As a result, the UAW would have to drop the hotly debated “Jobs Bank,” a program that ensured a paycheck for idled workers.

And that was just the beginning. The eventual changes to the Big Three contracts generated far more than the estimated $2 billion in savings the UAW had granted the automakers back in the early 1990s.

But the payoff, said retired union president Ron Gettelfinger, could be described in a single word: “Jobs.”

“We took a lot of risks here,” he said at another point, especially when it came to approving the so-called VEBAs, employee-run health care trusts that took billions of dollars in medical care liabilities off the books of the Big Three automakers — but which would be “on life-support of their own for some time,” Gettelfinger warned.

 

What’s Next?

From a 1979 peak of 1.5 million dues-paying members, the UAW rolls declined to 376,000 at the end of 2010, according to documents filed with the U.S. Labor Department. While falling U.S. market share and overseas expansion played a part in the drop, productivity efforts certainly haven’t helped the union. Factories that once employed 5,000 workers now produce more cars — with better quality and at a lower cost — using fewer than 2,000 union workers.

Then there’s the challenge of the imports. The bad news is that European and Asian automakers now sell more vehicles in the U.S. than the domestics. The good news is that an ever-increasing share of those “foreign” models are actually rolling out of North American assembly plants (roughly two-thirds of all Toyota products).

Actually, that’s not necessarily good news for the UAW, which has had modest success organizing outside of its traditional base: nurses and government workers, for example. Where it has failed miserably is in organizing the transplants.

Today, there are two UAW-represented transplants — the Ford/Mazda plant in Flat Rock and the Mitsubishi plant in Normal, Ill., that was originally run as a partnership with Chrysler (a third plant, the so-called NUMMI joint venture between GM and Toyota in California, closed last year).

Now, under King, a renewed organizing drive has begun. “This is about whether we survive as a meaningful force in America or not,” the UAW president declared during a conference in Washington, D.C., earlier this year. And this time, he insisted, the union will put serious muscle behind the effort. It has issued a set of what it calls “democratic guidelines” that it claims the transplants should follow in order to permit workers to decide, “fairly and freely,” whether to accept the UAW.

Those companies that decline to accept UAW demands will face a very public campaign accusing them of human rights violations, King warned. And it won’t be limited to the U.S. “We’ll do it globally,” he says.

When the union names its organizing target among the transplants, it will be a very public push, says Richard Bensinger, director of the UAW’s organizing department. “We’re going to have some big events at their big events,” he warns.

 

No Targets … Yet

Depending on which theory you believe, the UAW is making progress behind the scenes with the Big Three. In an unusal shift, King says he was seriously hoping not to have to name a strike target for the new contract (the current contract expires on Sept. 14). Indeed, if recent negotiations are any indication, even the customary midnight deadline may turn into a soft goal.

The union chief emphasized that “We’re now talking all the time,” so the formal summer start of negotiations will be more “photo op” than anything else. Communication is critical, King insists, as “creative problem-solving is the ideal we’re both striving for.” Confrontation, he says, is a thing of the past.

Can this approach pay off? It depends on whom you ask. “I think we’re in very uncharted waters,” says Harley Shaiken, a longtime follower of the UAW and a labor professor at the University of California, Berkeley. King’s “rhetoric is very different and reflects a very different context,” he says. “The previous way of doing things went up in smoke with the increasing globalization of the auto industry and the (2009) collapse of the domestic automakers. This is an attempt to make sure the union prospers in the 21st century.”

The challenge for King, adds Shaiken, will be to prove that his new approach is working. That method will be measured, at least for now, in terms of jobs. There, it seems, King may be able to make his case. With sales rebounding, all three of the automakers have been adding to their workforces. In early May, GM announced a new $2 billion investment in its domestic plants, following earlier commitments totaling $3.4 billion.

All told, GM will be adding about 13,000 new jobs when the various investments are all up and running. Of course, GM today employs barely 100,000 workers — a mere 10 percent of the workforce it claimed at its peak. (The percentage is a bit misleading, as the high point includes jobs that went with subsidiaries like Delphi, which have been spun off over the years. But the decline is still massive.)

Significantly, the “Poletown” plant on the Detroit-Hamtramck border, which produces the Chevrolet Volt, is on the investment list. GM is keeping many of the details of its potential commitment a secret for now, suggesting it may not only want to play out the headlines but also seek to negotiate further concessions.

Ford has likewise been making it clear it hasn’t gotten everything it says it needs to be competitive. The automaker says it pays its U.S. union workers $8 an hour more than what nonunion factory employees make at the “transplants.” On average, Ford employees are earning $58 an hour.

At what point do friendly talks devolve into hardball negotiations? Union leaders know they’ll be pressed between the proverbial rock and a hard place. There are many in the rank-and-file who are fed up with the talk of globalization, and who question whether Ford really needs a few bucks more out of every paycheck — especially in light of the more than $25 million in wages and bonuses handed to CEO Alan Mulally for 2010, a figure that is “unfortunate,” says King, who suggests Mulally has a “blind spot” that could impact contract talks.

But the union boss took a far softer tone than might have been expected of his predecessors — or, indeed, of King himself in years past. And that suggests that the UAW is intent on staying focused on the heart of the matter as it has defined things in 2011: Prosperity for the auto companies is the only way to ensure that workers get a steady paycheck and good benefits — even if they are less generous than they used to be. db

 

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