Tuesday, April 19, 2011

New Life for the United Auto Workers (UAW)?

The United Auto Workers Union (UAW) is preparing for new contract negotiations with what are now known as the “Detroit Three,” as opposed to the “Big Three.” Two articles provide insight into the future prospects for the UAW in general, and into the issues likely to dominate the contract talks. Jim Grossfeld has an article in The American Prospect that focuses more on the “big-picture” issues; Dale Buss has an article on AutoObserver that provides better coverage of the industry-UAW issues.

Grossfeld starts by reminding us of the historic role the UAW played in US history.
“Few today appreciate the impact the UAW once had on American life.”

“During the 1950s and 1960s, the UAW not only won the labor movement's best contracts but, under Reuther's leadership, became a catalyst for the American version of social democracy. The UAW's fingerprints are all over the most important reforms of that era -- from Medicare, to voting rights, to the birth of the environmental movement. At a time when organized labor largely parroted industry opposition to pollution controls, Reuther defied the carmakers and threw the UAW's then-considerable political weight behind the Clean Air Act.”
The UAW has a new leader, Bob King, who seems to believe that the union can turn itself around and regain some of that past glory.
“That's the kind of unionism, and sense of social solidarity, that King seeks to resurrect. The fate of the Auto Workers, he'll tell you, is bound up with the outcome of battles facing other workers both at home and abroad. For him, it's partly an article of faith.”

“This vision is central to King's organizing strategy. Pressure from community leaders, coupled with support from activists in other countries, can give the UAW power beyond its numbers. As King sees it, mobilizing that power is fundamental to any hope his union has of organizing the "transplants": the foreign carmakers whose domestic operations created a parallel, wildly successful, and almost entirely nonunion U.S. auto industry.”
Buss provides us with a graphic that details the decline of the UAW.

Buss also provides this background information:
“Only about one-third of UAW members are auto workers any more. A huge portion of them now are direct state employees, especially in Michigan, including staffers at colleges and universities, and workers at health-care organizations and even casinos.”
King’s goal of organizing the “transplants,” foreign-owned plants, mostly in the anti-union South, is critical to any hopes of growing the size and influence of his union. His ambitious plans have been coupled with an increased willingness to be flexible. He hopes that a dialogue between the union and management at these plants can be established rather than a confrontation.

This approach sounds like so much wishful thinking.
“....these plants offer some of the best-paying manufacturing jobs in the country's most impoverished region. Against that backdrop, managers' warnings that a UAW contract would send the companies packing have had a potent effect on Southern autoworkers.”
The recent changes accepted by the union in the past few years have brought UAW compensation almost down to the level of the transplants. Buss provides this bit of data:
“The sacrifices helped GM achieve an average labor cost of $58.15 an hour last year, just $2 more than Toyota’s cost, according to the Ann Arbor, Mich.-based Center for Automotive Research.”
It is not clear what the UAW can bring to the table to entice workers in these plants to look favorably on a union contract. Both authors point out that it is more likely that the UAW will have to accept more changes in compensation. The entire industry wants to move from a fixed-wage basis to a pay-for-performance model. Such a concept could provide many details to negotiate, and could provide even better long-term compensation for workers. Union members in the past have dwelt on certainty not year-over-year averages. Buss points out that this sort of approach is common in the transplants that King wishes to target.
“....up to 40 percent of the compensation of Japanese production workers is contingent.”
The Detroit Three seem to be priming the autoworkers for the coming negotiations by providing especially generous bonuses this year.
“Any new profit-sharing provisions would have to present the significant potential for larger payback than current programs. Ford soon will pay hourly bonuses averaging $5,000 even under the existing profit-sharing program, while GM’s indicated payout is about $4,300, and Chrysler’s, about $750. Meanwhile, Big Three salaried workers get 10 to 15 percent of their pay in bonuses.”
It would seem that the only way the UAW has to make transplant managers more interested in talking with him is by accepting compensation changes that would bring the union even further in compliance with standards at the nonunion plants. That does not sound like a strong basis for negotiations, but it still might be a good move.
"’If the UAW accepts pay for performance, King will have irreversibly changed the auto industry and maybe much of U.S. manufacturing,’ says one industry observer. ‘He will have shown the transplants that when he talks about changing the UAW, he really means it’."
King’s has a backdoor approach to dealing with the transplants. Many of the parent companies have quite different relationships and benefits with the workers in their home countries. King hopes that forming international alliances will provide a path to gain some leverage in negotiations.
“....King seeks to establish a permanent presence in the transplants' backyards to press the case that battling union organizing is a violation of human rights. "We are going after them with every ounce of energy and resource we have," he pledged, and he is forging ties with an array of potential allies ranging from Chinese union activists to former President Jimmy Carter. The UAW's global campaign will be a costly effort -- but if the UAW is unable to win recognition at the transplants, few think the union will be able to arrest what one industry observer termed its ‘swan dive into oblivion’."
There is yet another new twist in the tale of the Detroit three and the UAW.
“Under the bailout packages for GM and Chrysler, the union’s pension trusts picked up huge chunks of ownership in each company. The UAW stands to gain financially as those stakes are transformed into shares in public stock offerings such as the “new” GM’s $22-billion IPO last fall. The union trust for Chrysler will own about two-thirds of the company’s shares as it goes public again. ‘So if the union strikes a bad deal with Chrysler this time, and it drives the share price down because the stock market perceives it as a bad deal, the union has just hurt itself,’ Harbour said. ‘The union has never been in that position before’.”
It will be interesting to see how this all plays out. The UAW is still an influential voice, and the labor movement in the US could use some rejuvenation. Contract negotiations with the Detroit Three are due to be completed by September of this year.

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