Fat profits make lean a tough sell

March 17, 2011 http://detnews.com/article/20110317/OPINION03/103170345

Fat profits make lean a tough sell


United Auto Workers bargainers are coming to town next week to prepare for national contract talks later this year with Detroit’s automakers. All you need to remember are three numbers:

First, $6.6 billion, the profit Ford Motor Co. booked last year. Second, $4.7 billion, General Motors Co.’s earnings in 2010. And, third, $133 million, the sum total of long-term stock awards Ford granted its top 20 executives — $56.5 million of which, pretax, ended up in CEO Alan Mulally’s portfolio. Cash bonuses for last year? Those are still to be released.

That sound you hear is the slow-motion crash of the UAW’s collective jaw hitting the ground, partly at the size of the executive bonanza and increasingly at the realization of the union’s good fortune. I mean, it ain’t easy to plead poverty at the bargaining table when the haul of 20 execs leading a single company exceeds — in one year — the endowments of many small colleges.

Paint, meet the corner. Yes, yes, I know: I’m being too simplistic. Ford’s turnaround is real and sustainable (appears to be); the business model is more focused (yes); the product line from the States to Europe to Asia is better than it’s been in, well, forever; and the brass is being compensated for stellar performance, an overdue payday after some very lean years.

Because all of that is more or less true and because Ford’s pay-for-performance is, indeed, paying off, no one paying attention should be surprised when UAW President Bob King and his fellow bargainers press the case to get more for their people — preferably as soon as possible.

They’d better. Because if the past two months prove anything, it’s how quickly things can change and how fundamentally. In the space of a traditional four-year deal, the UAW and its three Detroit automakers went from uncertain concessions (’07) to bankruptcy and restructuring (2008-09) to near-record profits (’10) to fresh uncertainty now.

Just as the U.S. economy appeared to gain momentum, oil prices rocketed above $100 a barrel on rolling instability in the Middle East. Saudi Arabia is squeezing pro-Iran elements in Bahrain, following coups in Egypt and Tunisia. And Japan, the world’s No. 3 economy, is battling the after-effects of a historic earthquake and devastating tsunami that sparked a still-unfolding nuclear accident.

Amid so much change so quickly with such widespread implications for the global auto industry, global equity markets, consumer confidence and global economic growth, how enduring is any bargaining agenda — union or management — likely to be by the end of September, much less be the backbone of a four-year agreement?

Four years? Two years? Four weeks is more like it, considering the past two months. With the obvious exception of the harrowing weeks following the global economic meltdown of ’08 and the GM and Chrysler Group LLC bankruptcies of ’09, the UAW’s decades-long relationship was built on an expectation of certainty and clarity.

Except those commodities are in dwindling supply. Deepening national debt concerns in the United States and Europe justifiably worry investors, whose jitters shape equity markets and, eventually, consumer behavior. The climb out is not likely to be quick or easy, as the embarrassing budget wrangling and self-interested complaining in Washington and state capitals attest.

The new commodities are uncertainty, ambiguity and flux, likely to be underscored by the automakers’ push to broaden variable profit-sharing payouts to their UAW members in a bid to keep fixed costs lower. In theory, the goal is enabling the automakers to better weather wild swings in market demand without resorting to mass layoffs.

But selling uncertainty (variable pay) as a hedge against more uncertainty (global change) may not be the promising tactic it appeared to be just a few months ago. Especially not with fresh reminders of economic instability, fat corporate profits and executive payouts that make hourly profit-sharing checks look like walkin’ around money.

Remember, the intentions of Ford’s Mulally and GM CEO Dan Akerson to use the power of profits to recast the UAW contract aired before the gyrations in the Middle East spiked oil prices and before Wisconsin Gov. Scott Walker’s collective bargaining reforms energized labor and voices claiming to speak for the middle class.

The terms of engagement are changing, again, and it’s only March.

Seniority Lists
Bargaining Committee

Mike Herron
Tim Stannard
Zone at Large – 1st
Danny Taylor
Zone at Large – 2nd
Mark Wilkerson
Joe McClure
Chad Poynor
Steve Roberts
Derek Lewis
Bill Cundiff
Kirk Zebbs
Don Numinen
Jay Minella
Danny Bragg
Chris Hill
Rashad Thomas
Keith Oswald
Chris Brown

1853 Officers

Tim Stannard
Mike Herron
Vice President
Darrell DeJean
Financial Secretary
Mark Wunderlin
Recording Secretary
Peggy Mullins
Trustee (3)
Jay Lowe
Dave Clements
Dave Spare
Sgt. at Arms
David C Spare
Ashley Holloway
E-Board at Large (2)
David Ryder
Steve Roberts

GM Unit Chair
Mike Herron
Leadec Unit Chair
Larry Poole
Ryder Unit Chair
Patrick Linck
AFV Unit Chair
Katherine McGaw
Retiree Chair
Mike Martinez