Opinion

UAW gives comfort to Big 3 competitors

Strikes help Japanese, hurt promising U.S. vehicles

James E. Harbour

I’ve often wondered what passes for strategic thinking at Solidarity House. The United Auto Workers union says little about this publicly, but it looks like the union is sticking with a familiar theme: brute force.

Historically, this approach has freed the union from long-term strategic thinking. Brute force pushed forward a drive for instant gratification: More wages; cost-of-living allowances; free health care; huge pensions; more paid vacation and holiday time; supplemental pay for plant shutdowns; guaranteed wages for plant closings and time not worked; a complex system of plant-level job classifications that dictated more workers doing less work; time and a half pay on Saturdays and double time on Sundays — even if the employee didn’t work 40 hours on Monday through Friday.

So the UAW leveraged strikes and strike threats to an astronomical cost per labor hour of $85. But make no mistake: Management must take a large share of the blame for the industry’s troubles with their decisions on products and manufacturing. And the managers agreed to the UAW’s demands.

The UAW used brute force against General Motors Corp. in the 1998 strike in Flint, a walkout that cost GM billions of dollars. Plant after plant was closed, and thousands of workers hit the street. If this was an expression of strategy, it was a disaster. To the extent it was able, GM sent work elsewhere. The city of Flint was devastated, and auto workers watched their future evaporate.

Then this February, the UAW struck American Axle over pay and benefits for about 3,800 workers. After granting major wage and benefit concessions to bankrupt Delphi Automotive and Dana Corp., the union decided to take on a marginally profitable company that was the sole producer of front- and rear-drive axles for GM trucks and SUVs.

The UAW did not see that the market for these vehicles was disappearing as the economy tanked and gas prices hit $4 a gallon. Ten plants were making these midsize and full size pickups and SUVs. Output was cut by about 330,000 vehicles in the first half of this year.

As the strike’s impact filtered through GM’s factory system, about 30 plants were closed and thousands of workers got unplanned vacations. GM says it lost $2.6 billion, including supplemental unemployment benefits pay for laidoff workers. Many states were forced to pay unemployment benefits out of already stressed budgets.

Ironically, GM would have booked a similar loss anyway — even without a strike. Given market conditions, the company would have cut production or put another $4,000 to $5,000 on the hoods of these vehicles to move them off dealer lots. If this was union strategy, it was ill-timed and self-defeating.

Equally perplexing was the strike at the new GM Lansing Delta assembly plant that produces the popular Buick Enclave, GMC Acadia and Saturn Outback crossovers. These are crucial and highly competitive new products — a $1 billion investment that, coincidentally, promised secure jobs for 3,000 union workers.

Then it was time to bring GM to its knees by striking the Fairfax, Kan. assembly plant that produces a key element of GM’s future direction — the Chevrolet Malibu. Most analysts said the Malibu, a Car of the Year recipient, was as good as or better than the Toyota Camry and Honda Accord, which have come to define the family sedan.

GM was distressed by walkouts that disrupted production at a critical introductory period for a billion-dollar car that customers seemed to love. But you can bet Toyota and Honda were happy. What kind of strategy gives encouragement to the main enemy?

It should be no surprise that the majority of the foreign-owned auto assembly plants are mainly located in the Southern right-to-work states, nor should it be a surprise that these plants are principally nonunion. The Japanese, South Korean and European automakers make no bones about it: They don’t want the UAW in their plants and will do whatever is necessary to keep them out.

Once upon a time, brute force was understandable as a union tactic. After all, that’s what the companies were using to suppress union membership in the early years of union organizing. But today, it’s a prescription for continually declining market share for GM, Ford and Chrysler.

There’s only one way that we can make sense of recent developments coming out of the UAW head office. Union leaders may indeed have defined a new strategy: It is to exit the auto business.

James E. Harbour is the founder of the Harbour & Associates consulting firm, a former manufacturing executive at Chrysler Corp.