[A-List] US economy: auto workers

["Michael Keaney" <michael.keaney@xxxxxx>]

THE UAW: USING TRADE-OFFS TO GAIN TRACTION
It's helping Detroit cut costs in exchange for membership growth
David Welch in Detroit.
Business Week. New York: Sep 8, 2003. , Iss. 3848

The outlook for Detroit auto makers is fairly grim these days. They've lost
billions of dollars in the rough market of the past two years, and they have
few hot new models on the horizon to bail them out. The Big Three also
continue to lose market share to Japanese rivals whose younger workforces
don't burden them with the billions in retiree pension and health costs that
weigh down U.S. carmakers. Nor is Detroit likely to get significant help
from the United Auto Workers when its labor pacts expire on Sept. 14. The
union blames the companies' woes on poor management and has no intention of
slashing members' rich wages or benefits to bail them out.

Despite the hard line, though, the UAW and the Big Three have inched in the
past year or two toward some new common ground. The union has agreed to
allow GM, Ford, and Chrysler to shed thousands of jobs through buyouts,
attrition, and by outsourcing work to lower-wage parts suppliers. In effect,
union leaders are helping auto makers to restructure by turning over parts
jobs that pay $22 an hour to suppliers that pay just $14. Overall, the Big
Three is likely to dump nearly 50,000 jobs by 2007, or about one-fifth of
their collective workforce, estimates Sean McAlinden, labor analyst with the
Center for Automotive Research in Ann Arbor.

In return for its accommodating posture, the UAW has persuaded Detroit to
help bolster its badly depleted membership, which has slid to half the 1.5
million members it had 20 years ago. The union has gained the most from this
swap at the parts suppliers, which the auto makers have leaned on to meet
the UAW's demands for hands-off behavior in union organizing drives. The
most recent example: In mid-August, Dana Corp., which produces everything
from chassis to brakes, announced a so-called neutrality pact with the
union, agreeing to forgo formal union elections and allow the UAW to launch
organizing drives without management opposition. The UAW already has won
more than 10,000 new members since 2001 through similar deals with parts
makers Johnson Controls Inc. and Lear Corp. "We're concerned about keeping
the Big Three competitive," says UAW Vice-President Bob King, who's in
charge of organizing. "But we're also concerned about the future of the
union."

The jobs-for-members swap also may help the UAW crack its decade-long goal
of unionizing the foreign transplants. After more than four years of
conflict, the union finally has persuaded DaimlerChrysler Corp. to remain
neutral in sign-up drives at its nonunion U.S. factories. UAW President
Ronald A. Gettelfinger and Vice-President Nate Gooden reached a secret
understanding with DaimlerChrysler officials at the company's headquarters
in Stuttgart, Germany, last fall, BusinessWeek has learned.

That paved the way for the union to quickly sign up 3,100 workers at two
truck plants in North and South Carolina that belong to Freightliner Inc., a
DaimlerChrysler subsidiary -- with little public notice. The UAW plans to
follow suit at the truckmaker's other two U.S. factories, then move on to
the big prize: the Mercedes factory in Vance, Ala., which opened in 1996.
Skittish company and UAW officials decline to speak publicly about the deal,
although the UAW's President King, who's in charge of organizing, makes no
secret of his plans to go after the transplants. "We can only maintain good
wages and benefits at the Big Three if their competition is paying [them],"
too, says King.

The impact of all these moves could soon be felt across the industry. While
the union isn't likely to grant immediate relief in its new contracts, the
Big Three will see their costs decline as suppliers make and assemble more
parts. The suppliers themselves face higher expenses, since many now pay as
little as $10 an hour for nonunion labor. But that could be offset by the
added business they will be getting from the Big Three.

Long term, even the transplants could be affected. Their $500-per-vehicle
labor cost advantage vs. Detroit could begin to erode as the UAW lifts the
price of labor for parts, since the transplants buy many of their parts from
the same U.S. suppliers. And if the UAW finally succeeds in unionizing
Mercedes' 2,100 Vance workers, the union could gain enough psychological
momentum to sign up workers at the other transplants, labor experts say. The
union has failed repeatedly to win unionization elections at Nissan Motor
Co. and Honda Motor Co. over the past decade. But unionizing even a few
would begin to even out the competitive footing across the industry. "The
union desperately needs a win" among the transplants to maintain its ability
to set wages, says McAlinden.

That desperation is behind the union's willingness to trade the loss of
higher-wage, company-run parts plants for a leg-up with organizing in the
union-hostile South. In recent years, the UAW has kept quiet as Chrysler has
made plans to sell up to five parts plants. Still, it took four years for
DaimlerChrysler's German execs to accept the trade-off. In 1999, both
Freightliner and Mercedes mounted stiff opposition to UAW organizing drives,
defeating them handily.

This time around, when Freightliner agreed to neutrality, top brass even
joined union organizers at worker meetings to drive home the point that
management wasn't fighting the union. "Management made it clear that the
plant would be competitive" even if workers joined the union, says one UAW
organizer involved in the campaign. Still, unionizing other transplants
won't be easy even if the UAW wins at Mercedes, as union officials expect to
do after the current contract talks. After all, the UAW has nothing to trade
the Japanese for labor peace.

Where the union has leverage is with parts makers. Back in 2001, Johnson
Controls, which makes seats and auto interiors, agreed to stop fighting
unionization, in part under pressure from Ford, a major customer that wanted
to maintain peace with the union. The UAW has since organized nine Johnson
plants. Dana is already partly unionized; the union now hopes to recruit the
rest of its workers.

The suppliers aren't thrilled to accept unionization. But they say they can
stay competitive as long as the UAW doesn't try to hold them to the $22 the
Big Three pay. Says one parts executive: "If they get greedy, it will be
disastrous for the union and the companies."

Clearly, the UAW has much ground to regain. Detroit's market share -- and
hence the UAW's -- fell to 60% this year as the transplants grabbed more
sales. In parts, the union now represents just 23% of the workforce, down
from 55% in the late 1970s. Unless it can turn those numbers around soon,
its contract talks with the Big Three may look more like begging than
bargaining.

A Union Moving Beyond the Big Three?

After many ups and downs at parts suppliers and transplants, the UAW appears
to be making headway

JAN., 1997
UAW workers strike at two Johnson Controls seat-making plants in Ohio. When
the company tries to hire strikebreakers, its primary customer, Ford Motor
Co., refuses to take the seats, thus pressuring Johnson to give in to the
union.

MAY, 1999
Lear Corp. agrees to remain neutral in UAW recruitment drives, allowing the
union to sign up 4,000 workers at 14 auto-parts factories the company
acquired.

DEC., 1999
The UAW starts a recruitment drive among Toyota's 9,000-worker plant in
Georgetown, Ky., but withdraws without an election the next year due to lack
of support.

OCT., 2001
After management resistance, 6,300 Nissan workers in Smyrna, Tenn., vote
two-to-one against the UAW. It was the fourth failed unionization attempt in
12 years.

JUNE, 2002
To end strikes at four parts plants, Johnson pledges neutrality at 26
factories employing 8,000 workers; about 1,000 have joined the union so far.

JAN., 2003
After four years of talks with the UAW, DaimlerChrysler agrees to stop
opposing unionization in the U.S. Some 3,100 workers join the union at two
of its Freightliner truck plants in North Carolina. The UAW expects to sign
up 2,100 Mercedes workers in a nearby Alabama factory.

AUG., 2003
Auto-parts maker Dana Corp., already partly unionized, pledges neutrality in
UAW campaigns.