Old, new Detroit clash in auto talks

July 14, 2011 http://detnews.com/article/20110714/OPINION03/107140345

Howes: Old, new Detroit clash in auto talks

DANIEL HOWES

If the quadrennial dance known around here as the United Auto Workers’ contract talks with Detroit’s automakers had a name, this year’s would be called the box step.

Why? Because all sides are preparing to begin this bargaining free-for-all, opening in less than two weeks, packed neatly into boxes largely of their own making. And those are likely to limit their efforts to get what they want, perhaps more than any time in a long time.

Ford Motor Co. will arrive at the table rich in profits that fueled massive payouts to executives, starting with CEO Alan Mulally’s $56.5 million long-term stock award, a base salary of $1.4 million and a cash bonus for last year of $9.45 million. Ford’s net income over the past five reported quarters totaled $9.2 billion, the kind of performance that makes pleading poverty effectively impossible — and Ford knows it.

Likewise, General Motors Co. booked $7.9 billion in net income over the past five quarters. Even if lingering federal oversight limits — for now — how richly the automaker can reward its top executives, and even if the legacy of bankruptcy means some things lost will never be recovered, it’s unlikely GM can get to the end of these auto talks without delivering some kind of permanent wage increase to the UAW’s rank-and-file.

Chrysler Group LLC, the profit laggard in the bunch, nevertheless is delivering impressive year-over-year sales gains, improving product quality and showing an Italian-influenced swagger (courtesy of Fiat SpA CEO Sergio Marchionne). But all that might prove less effective in bargaining still to be governed by a federally imposed no-strike clause and the threat of arbitration.

Which means there’s a 50-50 chance Marchionne, who’s managed to mostly get whatever he’s wanted in Fiat’s rescue of Chrysler, could actually lose an arbitration gambit he helped draft with members of President Barack Obama’s auto task force.

In a bid to keep fixed labor costs under control and roughly equivalent to foreign competitors operating in the United States, all three companies say they want to sweeten the union’s profit-sharing program. That’s a tough cultural shift to sell to aging union workers who see risk far more clearly than reward in the high-risk, high-reward promise of variable pay.

Enter the UAW and its president, Bob King. Here’s a guy who, in a single speech, manages to describe a 21st-century union devoted to keeping its major employers globally competitive and to take a rhetorical whack at greedy executives even as a sizable contingent of his members pushes for the return of guaranteed benefits, base wage increases and renewed cost-of-living adjustments.

In other words, the Old Detroit of fat executive bonuses and fresh hopes for regilding union contracts — and all that flabby caricature projects — is preparing to collide in this year’s bargaining with a New Detroit that knows it must keep fixed costs low, treat employee groups as one team, tie compensation programs for all to performance and stay focused on product excellence.

The problem is success. It enables folks to quickly forget the bad, old habits of sloth and entitlement — in management and labor — that pushed an iconic American industry over the edge and through a tempering fire of restructuring, bankruptcy and radical change.

Reviving the tired ways of Old Detroit, which includes the sorry spectacle of richly rewarding the top while holding the line for everyone else, to ensure a New Detroit is a losing proposition.

It would show an America living outside the Detroit bubble of headquarters and plant cities that even an existential crisis failed to bury the ugly totems of decline, denial and capital destruction. It also would invite the ridicule and contempt it deserves.

The Detroit to emerge from the talks will determine just how enduring the domestic auto industry’s turnaround is, whether the global financial meltdown and twin bankruptcies imposed a permanent culture shift, and how successful — if at all — the UAW’s attempt to organize foreign automakers operating down south is likely to be.

The difference this time is that all sides have a choice, and they should choose wisely.

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