By on January 29, 2011

During the government’s bailout of General Motors, the UAW agreed to a number of concessions, including management’s ability to use “Innovative Labor Practices” in order to build a fuel-efficient subcompact car in the US. As a result, the 1,600 workers at the firm’s Lake Orion plant had a choice: the 800 most senior workers would return at the $28 “tier one” wage, while another 500 workers would be able to return only if they accepted a 50% pay cut, pushing them into the union’s “second tier” of wages. Workers forced into the tier two, which typically applies only to new hires, were not allowed to transfer to other Michigan plants, and could neither vote on the agreement, nor strike because of it. After all, the bailout’s green-tinged sales pitch meant that building a subcompact in the US was a politically necessary move, even if it went against every UAW principle… which is why it’s awfully ironic that the safety valve for this deteriorating situation is a factory building trucks.

Lake Orion worker have been protesting their union for months, becoming a lightning rod for criticism of the UAW’s two-tier wage system and union leadership’s willingness to sell out the rank-and-file. And now, GM and the popularity of its full-sized pickup trucks are coming to the rescue.

According to the Detroit Free Press, GM sent out a letter to the UAW’s Lake Orion workers, allowing Tier 1 employees to transfer to its Flint Assembly plant in order to keep from being bumped into the second tier. Of course, workers who accept this deal will no longer be enjoying the “green jobs” that are said to be the future of the business, as Flint builds Heavy-Duty versions of the Chevrolet Silverado and GMC Sierra… and if Flint ever shuts down, Tier 1 workers won’t be able to return to Lake Orion as the goal is to make that plant 100% Tier 2. For now though, Tier 1 Orion workers’ options are

1. Choose to work in Flint. That may be an attractive option for the more than 600 workers who were already driving through the Flint area to work in Orion.

2. Apply for a spot working in Orion at the full wage. GM will fill those spots by seniority, so the workers choosing this option will be able to transfer to Flint if they don’t make the cut.

3. Stay in Orion, no matter what. If the worker’s seniority does not make him or her one of the about 800 making the full wage, this option indicates the worker will willingly take the 50% pay cut.

Many Orion workers had already transferred to plants such as Lordstown. If they accepted only a $4,800 relocation bonus, they retained rights to come back to Orion after six months. That would qualify them to choose one of the options in the letter.

By working to mop-up the bad feelings at Lake Orion, GM is signaling that it’s taking UAW resentment of the “Innovative Labor Practices” seriously. Unfortunately, that resentment is increasingly with the two-tier system itself, and this decision only keeps Tier 1 workers from falling into Tier 2… the system that breeds shop-floor resentment remains. Moreover, the Tier 1 workers who are transferring to Flint may have kept their higher wage level, but they’ve traded any job security that comes with working at a fuel-efficient car plant. If gas prices spike, HD pickup production will be the first to get cut, and the UAW’s Tier 1 Gypsies will be on the move again.

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18 Comments on “Trucks Save UAW’s “Green Car Compromise”...”


  • avatar
    GS650G

    maybe these people need to organize a union against the union. We hear from the faithful how bad companies will treat workers if not for unions, well now that the UAW has a chunk of these companies it seems they are being treated pretty harshly.
    It sounds callous and cruel but it’s time for these people to move on. If you’re out of work find anything else. 14 bucks an hour isn’t much,  Lowes or Home Depot pays that around here.

    If this deal was graduated, where you had 5 tiers starting at 28/hr and going down 5 an hour to 14 at least it wouldn’t be a full loaf/half loaf arrangement. Clearly the second tier is too low.

    Looking at this from the outside it does not appear the Union really negotiated on behalf of the members or involved them in this; Instead inside deals were cut with the crooked leaders and inept company management.

    • 0 avatar
      jpcavanaugh

      @it does not appear the Union really negotiated on behalf of the members or involved them in this

      You are correct.  The members are captives to the UAW, and the UAW is treating them as such.  The UAW has been in a position of declining bargaining leverage for years.  Now, having been presented with a choice between a unitied workforce sharing a shrining pie, and carving the union into multiple tiers, one of which gets more than another.  The Union was not representing the second group when the deal got cut, but will be forced to in the future as Tier 2 labor becomes larger in number.

      This is an impossible situation long term.  I fully expect a decertification election at some point in the next 10 years once Tier 2 workers become  a significant force.

    • 0 avatar
      John Horner

      The alternative would be for GM to build the small cars in Mexico, Korea, China, Brazil, etc.
      From that point of view, the UAW did what it had to do for there to be any jobs in Lake Orion.
       

  • avatar
    HerrKaLeun

    The root of the problem with unions is, that in the “forced union” states people are forced to be members. If someone WANTS to be  in a union, they have my blessing (and we all are selfish enough to want more money and benefits).
     
    the problem is, even the workers who don’t want to be members have to be (and need to pay dues, even when they like in this case can’t even vote).
     
    I know, pro-union people will argue “if you don’t want to be in union, don’t work there”. but unlike the job-bank people and the union big-shots most of us need to take a job and work to survive.
     
    I’m also not buying the argument that people HAVE to be members because they get the union wages too (some only get 50% anyway:). That is such a medieval argument where everyone had to be in church (or be burnt) because the church made sure you got to heaven…

    • 0 avatar
      ixim

      It’s rapidly becoming moot, Herrkal, what with the continuing slide in union power, but, without a union, a worker is just one against the much more powerful employer. That said, many unions, as well as big chunks of government, are badly in need of reform so they can actually help their constituencies.

    • 0 avatar
      HerrKaLeun

      it will be moot once all states are “right to work” states.
      I’m not against unions and they have (had) their place. I’m against people being FORCED to be members, like in most North states. I support the idea of any political group, religion or union… as long as membership is VOLUNTARY.

  • avatar
    jpcavanaugh

    When the UAW tries to organize the transplant factories, will they be selling Tier 1 or Tier 2 membership?

    • 0 avatar
      GS650G

      Good point.  This is not a selling point for workers at Nissan, Toyota or Honda. But with Card Check style tactics, good old fashion strong arm visits and the help of the courts the transplant workers might not have much choice. This leaves foreign countries as the last place to build something as complicated and expensive as a new car.
      It’s miraculous that transplants build here, given the rumor American workers are lazy stupid and overpaid. Of course that’s not true at all and these foreign companies have proven Americans can produce quality products.
      Join the UAW and make far less without any say in the matter.  The “vote” to allow them into the hall in the first place was really ballsy. As stated before,  they won’t be a minority group for much longer. They need to start kissing some Tier 2 butt right now.

  • avatar
    steve from virginia

     
    The entire situation is absurd, a ‘creative accounting’ similar to that used to float worthless US mortgage bonds to widows and orphans in Norway during the runup to the credit freeze.

    The bottom line is the inability of both the establishment and the public to face reality. This being the labor/wage/’productivity’/capital accounts can never be made to balance. Except for heavy trucks and vehicles for hire the rest of the industry’s product line does not provide any return.

    People cannot use cars directly to make money unless they become jitney operators. They have to make money at other endeavors to afford to own the cars. Car ownership is subsidized by the other activity. High costs of inputs across the economy are rapidly reducing the return on the other endeavors (as the article suggests). This ends the internal subsidy. This margin- shrinking emerges where it can: as unemployment, dramatic goods- price increases, gerrymandered labor agreements, riots worldwide and 43 million Americans on food stamps.

    Riots force input prices up further, tightening the screw.

    None of the hungry people are going to buy a new car. For them, energy conservation is not a matter of choice but is imposed by the bludgeon of Adam Smith’s invisible fist. How many will be on food stamps — and out of the car market — next year?

    The liquid market shrinks, supporting less and less auto industry. This is what has been happening in real estate. This is the reason why GM went bankrupt in the first place and the same reason why the entire industry will be bankrupt in a few years. They make toys for large children.

    Better that GM should go into the streetcar and farm tractor businesses. The heavy truck business is failing due to fuel costs.

    Maybe GM can repurchase EMD from Caterpillar. They make great diesel- electric railroad locomotives. Railroads are the future in this country, particularly all- electric railroad. Unlike cars, locomotives earn a return on their use.

    GM’s labor agreement was on top of dozens of other can kicking management exercises. The company’s success to date has been to convince workers there is divisible return on producing a good that in the end does not provide any for its customers.

    What’s impressive is GM’s ability to have kept the lie alive as long as they have.

    With bankruptcy built into the whole it is a matter of UAW workers ‘eating their cake’ and enjoying it as best they can, while they can.
    Let’s check back in five years and see if any of these workers has a job. I doubt it.

    • 0 avatar
      John Horner

      “Better that GM should go into the streetcar and farm tractor businesses. The heavy truck business is failing due to fuel costs.”
      GM used to make street cars, trains, buses, appliances (Frigidaire) and more. They ditched all of those things over the years. Ford used to be a major tractor and implement maker, but bailed on that as well. I doubt either company will go back into those businesses.
       

  • avatar

    You almost could not design a better system to ensure that those in the bottom tier are angry.  This is a flawed and unstable arrangement.
    If enough of the “promoted” workers at Orion will identify with those at the bottom I could see them de-certifying the UAW and forming bringing in someone else.

  • avatar
    indi500fan

    With the Egypt blow-up and rising oil prices, I’m guessing the party will be over in Flint shortly after it begins.  Orion will at least be building the Sonic which might get some attention at $ 4 / gallon.

  • avatar
    tparkit

    Steve writes:
    “…Better that GM should go into the streetcar and farm tractor businesses…. Maybe GM can repurchase EMD from Caterpillar. They make great diesel- electric railroad locomotives. Railroads are the future in this country, particularly all- electric railroad.”

    I hope we avoid that like the plague. If the Washington/UAW axis redirects into heavy electrical equipment, the federal government and allied state governments will soon fabricate markets for UAW products in the form of high-speed rail and communter rail initiatives, fed by all manner of vastly expensive, Spain-style “green” electricity generation/collection/transmission infrastructure.

  • avatar

    By working to mop-up the bad feelings at Lake Orion, GM is signaling that it’s taking UAW resentment of the “Innovative Labor Practices” seriously. Unfortunately, that resentment is increasingly with the two-tier system itself, and this decision only keeps Tier 1 workers from falling into Tier 2… the system that breeds shop-floor resentment remains.
    Not if the ultimate goal is to have Orion at 100% tier 2. If a complete facility is at the same pay rate there’s less resentment because everyone on that shop floor is earning the same.
    Here’s what I’d do. After Orion is 100% tier 2, give those tier 2 workers an opportunity to become tier 1 at another plant. Workers with zero absenteeism, a good work record, and high test scores will be eligible to apply for tier 1 slots at other facilities when they open up.
    Moreover, the Tier 1 workers who are transferring to Flint may have kept their higher wage level, but they’ve traded any job security that comes with working at a fuel-efficient car plant. If gas prices spike, HD pickup production will be the first to get cut, and the UAW’s Tier 1 Gypsies will be on the move again.
    Yeah but that’s the risk in any employment situation. There have been UAW gypsies since I was a kid and probably before that.

  • avatar
    John Horner

    Profit margins on GM’s heavy duty pickups are very high. Profit margins on small cars are very low. GM cannot afford to pay $28/hour plus benefits to people who assemble small, low price cars. They can, for now, afford that pay level to build heavy duty versions of the Silverado (which may well me GM’s most profitable product).
    Pretty simple, really.
     

  • avatar
    tomLU86

    Quite a conundrum for the UAW leadership, and the rank & file.   Since the UAW is now a stockholder in the form of VEBA (which the UAW expects to increase in value–good luck with that), how will the UAW leadership balance the needs of retirees vs active workers.

    Does the UAW serve the current workers who (must) pay union dues, or does the UAW seek to preserve the benefits of retirees, who don’t pay dues, but who are counting on the VEBA to increase in value.

    Tough call.  But looking at the world around us, the sad fact is that our society, at all levels, promised benefits that we cannot afford.   Corporations are no longer offering defined-benefit pensions, and those that have them are watering them down, ending them, or defaulting on them.  Public pensions are forcing cities to lay off cops and firemen because they can’t raise taxes fast enough to pay the retired cops pensions!

    So, with that in mind, the UAW leadership might want to start gently nudging the retirees to save money for things like retirement and health care, because it’s unlikely VEBA will make cut, and the tidal wave will work against ‘gold-plated’ retiree health benefits’.

    If the union could somehow motivate non-unionized Americans to “buy American”, it would help.  A lot!  But sadly, most people don’t care or, worse, the products they want are no longer even made in USA–like flat-screen TVs.

    Also, rather than defenders of the working man and woman, thanks to the masterful job municipal unions have done with their gold-plated retirements, those Americans who are not union members or govt workers will increasingly view unions with skepticism.

    The UAW is a key reason why US auto plants have fewer recordable on-the-job injuries than the transplants—a feat all the more impressive considering the average UAW autoworker is probably 15 yrs older than the average transplant worker, and older people are more prone to strains and sprains.    That’s what the UAW should pitch–”we want all workers to work in the safest, most reasonable environment”.  That’s one area the union and mgt can agree on because, while it costs time and money up front to create a safer workplace, it is cheaper in the long run for mgt.   And it is better for employees!    And if some UAW locals would accept job rotation, things would be even better for their remaining workers.

    Just some rambling thoughts…..

  • avatar
    Canuck129

    It looks like they still kept their eye care benefits.  Good for them.


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