UAW Fades as Union Shrinks in Size, Power
UAW Fades as Union Shrinks in Size, Power
The United Auto Workers could emerge from the government-led restructurings of General Motors Corp. and Chrysler LLC in a relatively solid financial position: The trust funds for retired union members’ health care will own big stakes in both car makers, and veteran workers will continue to make an average of $28 an hour.
But from a political standpoint, the union will be left with dramatically reduced clout, and a limited ability to resist future job and benefits cuts.
"Right now, the position of a worker in Chrysler and GM is a lot less influential than 15 or 20 years ago," said U.S. Rep. Peter Hoekstra, a Michigan Republican.
A true test of the union’s power is looming in the new labor agreement it is hammering out with GM. The company wants to close 16 plants, ending 21,000 UAW jobs, according to the union.
GM also wants to increase imports of small cars it makes in low-wage countries such as Korea and, for the first time, China, which the union opposes.
The union and auto maker remained locked in "intense negotiation," according to one UAW official, over givebacks as part of a new viability plan due to the U.S. Treasury by June 1.
In the last several days the UAW has asked Congress to intervene to push GM to change its plans, and urged its members to call or email the White House asking President Barack Obama "to stand up for the interests of American workers and retirees in the restructuring negotiations."
On Wednesday, Sen. Sherrod Brown (D., Ohio) questioned Treasury Secretary Timothy Geithner on the issue, urging him at a hearing to require GM to make small cars in the U.S. as a condition of its government bailout. Mr. Geithner replied that the administration’s focus was on helping GM restructure so it can be viable without government aid. He added that the administration wouldn’t be involved in "detailed decisions" about how GM does business.
UAW legislative director Alan Reuther said he believes a number of members of Congress find it unacceptable "that a company can get government assistance but can shift its manufacturing footprint overseas at the same time."
He held out hope that President Obama’s auto task force could be persuaded to intervene on behalf of the union.
GM’s plan for plant closings would be a big blow to the UAW, and stand in stark contrast to the vast power it once wielded to protect its members.
In the 1960s, UAW boss Walter Reuther (Alan Reuther’s uncle) consulted frequently with Presidents John Kennedy and Lyndon Johnson on a broad range of issues, including civil rights. Just 11 years ago, GM tried to make modest work-rules changes at parts plants in Flint, Mich., and the union went on strike, halting production of GM trucks. It cost the company about 500,000 vehicles and more than $2 billion in net losses before the strike ended in a compromise 54 days later.
In the government’s proposed restructuring of GM and Chrysler, the UAW has come away with big victories. Veteran workers will continue to earn an average $28 an hour, several dollars more than workers in many foreign-owned U.S. car plants. And the union’s health care trusts will own 55% of Chrysler and 39% of GM.
Creditors of both companies have complained the UAW is getting a sweet deal. GM has offered bondholders just a 10% stake in exchange for at least $24 billion in debt.
But the union’s ability to use its ownership stakes to protect workers will be limited. The Chrysler trust will have one seat on Chrysler’s board, but that member will have a duty to protect the fund’s financial interests, not the union’s.
And although it’s likely Chrysler will have to close plants and eliminate more jobs, the UAW has agreed not to strike against Chrysler for six years. Any disputes would be settled by binding arbitration. Labor experts believe the union will have to agree to a no-strike clause with GM, too.
Louis McSwain, a 58-year-old pipe fitter who has worked at a Chrysler Jeep plant in Detroit for 15 years, said the union no longer seems to be able to make the car makers stick to promises on bonuses, overtime and employment for life. "We had a whole bunch of guarantees," he said. "Look what the guarantees got us."
So far this year, Mr. McSwain has earned about $32,000. At this point in 2008, he’d taken home about $70,000, thanks to overtime, and for the year made $129,000. This year he’ll be lucky to make half that, he said.
Over time, average union wages are likely to trend downward. New hires to Detroit union jobs will earn about $14 an hour, and will get reduced benefits. The Big Three agreed to limit their workers paid this "tier 2" wage to no more than about 20% of their total work force.
But the union might eventually have to allow more workers to be hired at the lower wages. One of the Detroit makers could, for example, offer to re-open a plant or expand production, but only if it could hire more workers at the tier-2 wage. If the union balks, a company could threaten to move production abroad.
—John D. Stoll contributed to this article.