UAW chief endorses profit sharing
July 18, 2011
UAW chief endorses profit sharing
King won’t press wage increases in order to keep Big 3 competitive
BRYCE G. HOFFMAN
/ The Detroit News
United Auto Workers President Bob King says the upcoming contract talks between his union and Detroit’s Big Three can serve as a model of cooperation and compromise for a nation riven by partisan strife.
In a wide-ranging interview with The Detroit News on Friday, King said the UAW and the American automakers demonstrated in 2007 and 2009 that they could come together to save a dying industry.
Now, he said, the companies need to share their newfound profits with their workers. But King also said the UAW cannot afford to turn back the clock and make General Motors Co., Ford Motor Co. and Chrysler Group LLC uncompetitive.
Instead, King says workers need to trade wage increases for profit sharing. That would keep the automakers more competitive with the foreign automakers, and insulate them from future market declines.
“Do they want base wage increases? Of course,” he said of his members. “Anybody does. But that isn’t the most important priority.
“The single most important thing to our membership is long-term security. People don’t want a guillotine hanging over their head. They don’t want to have to worry about whether they have a job tomorrow or not, or if their pension is secure, or if their health care is secure.”
All three Detroit automakers have said privately that they welcome this approach. But labor experts wonder if King can deliver the votes necessary to ratify a contract that does not roll back concessions made over the past four years and put more money in his members’ pockets permanently.
“What the workers want is to know that they’re not going to lose ground — that their standard of living is not going to be eroded,” said Kristin Dziczek of the Center for Automotive Research, an industry think tank in Ann Arbor.
“The companies’ history of profit-sharing has not been very consistent or strong. There have been many years when it was zero and one when it was just $50. That’s not enough. It’s going to have to be significant and reliable.”
King is a very different sort of leader from his predecessor. Ron Gettelfinger was a tough-talking pragmatist who was all about jobs — protecting those that were already here and working to add more wherever possible.
King is about jobs, too, but he believes the best way to guarantee them is by thinking globally. He is an intellectual and an idealist who wants to put the UAW at the forefront of the global labor movement.
“We’re committed to building a global middle class. We want to export that,” King said.
“But all of my efforts internationally are aimed at protecting jobs here. It’s really pragmatic. It stops the race to the bottom.”
That approach makes sense, says labor expert Harley Shaiken of the University of California, Berkeley. With well below half of all cars and trucks sold in America produced by UAW members, he said the only way the union can protect its members from further job loss is by working with its counterparts overseas to raise the standard of living of their members.
“Bob’s a visionary, but he’s very much a tough, pragmatic visionary,” said Shaiken, who said King is going further than any of his predecessors in building international solidarity.
“Bob is establishing new institutions. He’s trying new things.”
But Shaiken said King runs the risk of getting out too far ahead of his members on this issue and the issue of wages.
Some say he already is.
“A lot of people feel like we need some guaranteed money,” said Gary Walkowicz, a worker at Ford’s Dearborn Truck Plant. “People are looking to get back a lot of the things we gave up.”
Walkowicz helped defeat the deal King cut with Ford in 2009, and he says he is prepared do the same thing this time around.
But King is confident he can deliver a contract that rewards workers while protecting the companies from any significant additional fixed costs. He says the past few years have taught union members just how dependent their jobs are on the automakers’ success.
And King said the success GM, Ford and Chrysler now enjoy is relative. All three companies still face stiff competition from foreign competitors — including new entrants from China and India. The economy also remains weak, with auto sales in the United States and Europe well below historic highs.
“I think our members are really smart. They understand that,” King said. “The hell that we went through over the past few years — nobody wants to see that repeated.”
He knows that, King said, because the union has been polling its members, formally and informally, in the run-up to this year’s national contract negotiations, which are due to begin next week.
“We have a good sense of what they think the priorities are,” King said. “They don’t want to go back into a time of insecurity.”
That means keeping the companies competitive and growing, King said.
Tying rewards to success
After World War II, autoworkers shared in the prosperity of Detroit’s automobile manufacturers. They negotiated gold-plated union contracts that were the envy of workers around the world.
But when automakers’ profits withered in the face of foreign competition, their labor costs remained just as high.
As a result, it cost GM, Ford and Chrysler thousands of dollars more to produce vehicles in the United States than foreign-bred companies such as Toyota Motor Corp. and Honda Motor Co., which opened their own factories in this country.
In 2007 and 2009, the UAW negotiated game-changing contracts with the three domestic automakers, all but closing the competitive cost gap. Guaranteed wage increases could widen it again if profits fall.
King believes a better way to reward workers is to create a mechanism: The more successful the auto companies are, the more their workers would be paid.
UAW members already enjoy some profit sharing, but King and the companies are discussing a richer, more complicated scheme. It would pay workers more but tie those payments to more than bottom-line earnings — adding metrics such as quality and productivity to the mix.
“It is complex. We’re breaking new ground in some ways,” King said.
“How do you really get membership their fair share of the upside and keep the companies viable?”
King is amenable to considering quality, because he said better vehicles will lead to better sales, which in turn will lead to more union jobs.
Other measurements may be much more difficult to sell. At least one automaker would like to make worker attendance part of the formula, too.
Of course, profit sharing will not be the only issue on the table in this year’s negotiations.
King would like to see the UAW given a seat on the boards of all three companies, for example.
The union-run trusts that are responsible for retiree health care have seats on GM and Chrysler’s boards. But King is talking about direct representation for the UAW itself.
German unions enjoy that privilege, and he thinks American unions should, too.
“I have a strong optimism based on the excellent leadership we have at all three companies,” King said.
“All of this polarization that’s happening in Washington is crazy. We’ve got to work together.”
Background: The son of a Ford labor executive began working at Ford Motor Co. in 1970 after graduating from the University of Michigan and serving in the Army. The journeyman electrician earned a law degree from University of Detroit in 1973.
What he says: “The hell that we went through over the past few years, nobody wants to see that repeated.”
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