The Truth About Cars » Union News http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 16 Apr 2014 19:53:57 +0000 en-US hourly 1 http://wordpress.org/?v=3.8.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Union News http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com VW Workers Reject UAW By Narrow Margin http://www.thetruthaboutcars.com/2014/02/vw-workers-reject-uaw-by-narrow-margin/ http://www.thetruthaboutcars.com/2014/02/vw-workers-reject-uaw-by-narrow-margin/#comments Sat, 15 Feb 2014 04:09:18 +0000 http://www.thetruthaboutcars.com/?p=742345 2012AerialfromWest

Workers at Volkswagen’s Chattanooga rejected the UAW in a vote that ended Friday night. 712 workers voted “No” to being represented by the UAW while 626 voted Yes. 89 percent of eligible workers turned out for the vote. The UAW failed to secure representation despite Volkswagen’s neutrality towards the UAW and their support of a German-style Works Council.

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Analysis: VEBA, The UAW And The Warren Walkout http://www.thetruthaboutcars.com/2013/03/analysis-veba-the-uaw-and-the-warren-walkout/ http://www.thetruthaboutcars.com/2013/03/analysis-veba-the-uaw-and-the-warren-walkout/#comments Mon, 04 Mar 2013 18:45:12 +0000 http://www.thetruthaboutcars.com/?p=479965

The 12-person protest that took place at Chrysler’s Warren, Michgan truck plant got little notice in the automotive news cycle, save for a couple of mentions on the usual aggregators. In truth, it’s not the juiciest story to sell in this click-driven wasteland, though these stories tend to raise the most interesting questions. This example highlights an issue that is going to dog the UAW for some time – how will the UAW control their workers when they are also the owners?

For the sake of context, let’s recap the story. 12 workers decided to protest a recently implemented schedule at the Warren plant, which is building the 2013 Ram 1500. As the Detroit News explains it

The new system — which has already sparked controversy at other Chrysler factories in Michigan — would split the workforce into three shifts, each working four 10-hour days a week. Those shifts would be staggered over six days, meaning that many workers would have to work Saturdays. 

Saturdays, of course, means time-and-a-half pay. If you believe the Detroit News, then the rank-and-file are unhappy about the move and are determined to fight it. But the UAW is distancing itself from the protest, noting that the move to the current schedule was first approved a decade ago.

The protest coincided with a report by the Detroit News, citing leaked internal documents that show rampant quality problems with the new Ram 1500, a crucial product for Chrysler that is enjoying a lot of momentum in a very competitive segment.

During the first hour of production Thursday, workers at the Warren truck plant built 58 pickups. But only 16 of those vehicles passed final inspection, according to company documents. Quality improved as the day went on, but just over half of the trucks assembled by the first shift were approved for shipment. A company source told The News that number should be at least 78 percent and higher than that to meet the plant’s quality goals.

Wednesday’s numbers were similar, and many employees were ordered to stay late to repair the defective vehicles, according to the source. But the number of problem pickups in the plant’s lots continued to grow. Though nearly 200 vehicles were repaired overnight, there were still 1,078 trucks parked outside the plant Thursday morning that could not be shipped because of defects, according to a company document.

The same report made sure to preface that “…morale problems sparked by the new shift schedule are only making these problems worse…”, adding another barb to a series that is uncharacteristically critical considering that the Detroit News is the hometown paper for Chrysler.

It would be tempting to ascribe more sinister motives to nefarious factions within Chrysler, the UAW or both, but the reality is that the issues plaguing Warren are really just a perfect storm of bad circumstances. On a base level, human are notoriously bad with change. Having chatted with former union members in domestic auto plants, it’s evident that these sorts of shift changes are often presented in a manner that glosses over the ugly details so that the union bigwigs can get the measure approved. When it comes time for the changes to be implemented, the rank-and-file are inevitably unhappy (though our source notes that the blame cuts both ways; caveat emptor and all that).

So, take a bunch of disgruntled workers adapting to a new shift schedule and throw in a new model launch. What did you expect? Workers and management singing kumbaya around the camp fire? It’s hard to think of a bigger recipie for disaster, save for having Bob King ride into Chattanooga on an organizing drive while piloting a Chinese-built Wrangler with a Romney/Ryan bumper sticker. Combining the shift change with a new model launch and production ramp-up may have been a poorly judged move, but in all likelihood, the defect rate will settle down in a month or two.

Meanwhile, the UAW, through the VEBA health benefits organization, currently owns roughly 41 percent of Chrysler. While Fiat is currently attempting to buy the remaining stake from the VEBA, the retiree health benefits of the union members are largely dependent on auto maker stock as well as the overall financial health of the companies. The two parties are currently locked in tough negotiations over the remaining stake, but this is likely too far removed from quality defects at one plant to have any effect on potential stock prices or the respective bargaining position of either side. What is in the mutual self-interest of both parties is the continued success of Chrysler’s auto sales – and with Ram and Jeep being the two pillars holding Chrysler up right now, the UAW knows which side their bread is butter on.

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CAW Strike At Key Parts Suppliers http://www.thetruthaboutcars.com/2012/10/caw-strike-at-key-parts-suppliers/ http://www.thetruthaboutcars.com/2012/10/caw-strike-at-key-parts-suppliers/#comments Mon, 29 Oct 2012 13:00:35 +0000 http://www.thetruthaboutcars.com/?p=465217

The drama over a possible strike at the Big Three was averted this summer, but it ain’t over yet; roughly 75 employees walked off the job at two key suppliers this weekend.

Westcast and Lear were affected by the job action. Automotive News, citing information from Westcast, reports that the exhaust manifold supplier has a 65 percent market share among the Big Three, and a 51 percent market share overall. General Motors will take the brunt of the job action at Lear, as workers walked off the job at their seat plant near Toronto. The plant supplies seats for vehicles assembled at GM’s Oshawa plant.

A statement released by the union regarding Westcast said that

“In the last few days, we’ve learned that General Motors intends to move the current work performed at Wescast to a facility in China. There is absolutely no reason that our members should agree to a new contract that undercuts their own jobs.”

Westcast announced this summer that it had struck a deal to be bought by Sichuan Bohong Industry Co, but the deal has yet to be finalized.

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Opel Turns 150, Commences Cutting http://www.thetruthaboutcars.com/2011/12/opel-turns-150-commences-cutting/ http://www.thetruthaboutcars.com/2011/12/opel-turns-150-commences-cutting/#comments Wed, 21 Dec 2011 15:03:58 +0000 http://www.thetruthaboutcars.com/?p=423088

Ever since Steve Girsky an his “merry band of hatchet men” touched down in Rüsselsheim, Bertel has been warning that GM’s European division was about to embark on a serious cutting binge. But our worst fears, namely that Opel could go away entirely, have yet to be realized. Instead it seems that self-destructive mutilation will be attempted first, in order to stem the gushing red ink at Opel where at least €1b in losses are expected next year. Automotive News Europe [sub] reports that the first round of cuts will hit Opel’s Internationalen Technischen Entwicklungszentrum (ITEZ, “International Technical Development Center), as an IG Metall union document foresees some 1,420 product development position cuts (from a staff of some 6,000).

Opel’s spokesfolks insist that the union’s numbers are “factually wrong and excessively high,” but only, in the words of ANE, because they “include people who are not on Opel’s payroll – like employees of service providers and supplier employees.” Furthermore, the automaker has not offered an alternative number for the expected cuts, and given the close cooperation between unions and OEMs in Germany, not to mention the detail of the IG Metall leak (200 employees will be offered severance payments when 550 positions are transferred to the manufacturing engineering department from product engineering), it’s tough not to conclude that the number is fairly close to GM’s actual plans.

And the cuts aren’t limited to workers: a battery-powered version of Opel’s forthcoming “Junior”/”Allegra” city car, as well as a long-rumored Insignia-based Coupe are said to be on the chopping block as well… so let go of any plans to wait for a reborn Buick Riviera. Oh, and don’t hold out any hope for the “production potential” Opel recently touted for its strange, low-cost RAK e Concept. Meanwhile, here are the other measures that Opel admits are coming down the pike:

• Stronger concentration on the carmaker’s core development mission and a reduction in project coordination tasks

• Increased use of modules and construction kits. “For example, we still have too many steering and seating systems. We have to improve significantly here,” the spokesman said.

• Deeper and earlier integration of suppliers. “There are no plans to put a stranglehold on our suppliers — we need to increasingly rely on suppliers’ innovative strengths,” the spokesman said.

In short, it seems that in order to save Opel, GM has to kill off much of what made Opel so valuable to it, namely its ability to develop premium global vehicles for the parent company. Instead it seems Opel will be forced to concentrate on selling into a brutal European market that seems set to contract as the Euro crisis drags on. Perhaps there is some truth to the rumors that Chevrolet will slowly replace Opel after all.

After all, cutting engineer positions is certainly the low-hanging fruit in Opel’s restructuring, but GM will likely have to go after assembly capacity (likely at Bochum and Port Ellesmere) in order to address the overcapacity issues that are at the heart of its (and many European automakers’) woes. That could create problems though, as this latest union leak confirms that Opel’s labor councils are prepared to fight. Opel’s outgoing union leader Klaus Franz has gone so far as to ask GM to sell Opel to its Chinese partner SAIC, a move widely considered a sign that Franz was trying to move back in touch with an increasingly militant union rank-and-file in the face of his own legal problems. While Franz portrays himself as the victim of a media smear campaign and threatens legal action against the Frankfurter Allgemeine Zeitung, his union appears prepared to fight the seemingly inevitable production cuts. And all this as Opel celebrates its 150th birthday.

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UAW Backs Off Transplant Organizing Goal, Attacks Hyundai http://www.thetruthaboutcars.com/2011/11/uaw-backs-off-transplant-organizing-goal-attacks-hyundai/ http://www.thetruthaboutcars.com/2011/11/uaw-backs-off-transplant-organizing-goal-attacks-hyundai/#comments Wed, 30 Nov 2011 20:23:15 +0000 http://www.thetruthaboutcars.com/?p=420851

At the beginning of this year, the United Auto Workers pledged that it would launch a campaign to organize the foreign-owned, non-union “transplant” factories in the US, threatening to tar uncooperative automakers as “human right abusers.” The campaign initially lost steam, but the UAW stuck to its pledge, re-iterating on several occasions that it would organize “at least one” transplant factory by the end of 2011. With one month left to accomplish that goal and no signs of progress in sight, the UAW has officially called off that goal. In fact, the UAW now hopes to simply pick an automaker to target by the end of 2011. Spokeswoman Michelle Martin tells Bloomberg

At this point, our hope is to make a decision about who we’re going to target by the end of the year. But obviously, we won’t have the organizing campaign completed by the end of the year.

This is not too surprising, considering the UAW announced last week that it would be focusing on dealership pickets initially rather than factory organizing. And sure enough, the first dealership picket has begun, targeting Hyundai dealerships. And yet, says Martin

This has nothing to do with the domestic organizing campaign. Hyundai is not the target.

Huh? If the UAW is not committing to organizing Hyundai’s assembly workers, why picket Hyundai dealerships?

The Freep explains that the union is targeting 75 Hyundai dealerships, in order to show international solidarity, a recurring theme in the presidency of UAW boss Bob King. Says King

The UAW has embraced a global vision of social justice and will mobilize its membership to defend labor rights here and in other parts of the world

So, what is the UAW picketing in solidarity with? Martin tells the Freep that Hyundai’s Korean unions are picketing across Korea to protest the firing of a worker whistleblower. According to Martin

The worker, who is employed by a Hyundai subcontractor, was fired after she reported the sexual harassment in 2010 to Korea’s National Human Rights Commission… The commission ruled in the worker’s favor and ordered the subcontractor to pay damages and rehire the worker, but the subcontractor has refused.

A UAW statement adds

Holding banners that read, “Stop Sex Discrimination at Hyundai” and “Reinstate Ms. Park,” UAW members from Los Angeles to New York, at more than 75 different dealerships, informed American auto buyers about an injustice to an autoworker on the other side of the globe.

“Though we may work for different companies and in different countries, as workers, we support each other’s struggles and know that one of the best ways to hold our employers accountable is through consumer action at dealerships,” said Mike O’Rourke, an 33-year employee and president of UAW Local 1853 at General Motors’ Manufacturing Facility in Spring Hill, Tenn.

Hyundai Motor America’s response: the worker was an employee of a subcontractor at Glovis, a Hyundai “affiliate,” therefore

the issue has nothing to do with Hyundai Motor Company

In other words, the UAW will be alienating itself from Hyundai’s US workers and dealers over one person who doesn’t even work for Hyundai. Standing on principle is great, but trying to block sales of cars will not exactly endear Hyundai’s assembly workers to the union. Meanwhile, similarly to the UAW’s last protest against Hyundai, there doesn’t seem to be as much moral clarity on this issue as the UAW would like it to appear. Of course sexual harassment has no place in the workplace, and  the circumstances of this case in particular do not sound good, but by hammering on the treatment of contracted employees, and by associating the contracter “affiliates” with the automakers they work for, the UAW opens itself up to criticism along the same lines.

The Freep is also reporting today that the UAW has called off a protest that was planned at GM’s Orion Assembly plant, over contract negotiations with a supplier at that plant. Workers at the GM affiliate supplier LINC, who organize and deliver parts for the Orion plant, make ten dollars per hour, less even than the “Tier Two” wages that most Orion assembly workers make. And yet, with GM’s stock (which funds part of the UAW’s VEBA account) remaining weak, it seems unlikely that the union will actually protest, let alone strike, over the LINC wages. Which raises a tough question for the union: why are they so concerned about transplant workers making $14.50 per hour and up when they are working alongside folks making $10 per hour? And if workers at a Hyundai supplier are Hyundai’s responsibility, why isn’t the UAW livid at GM for allowing LINC to hire workers for such low wages? And in light of these fundamental contradictions, a single case of apparent injustice half the world away seems even less relevant.

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Is Fiat Considering A Pullback From Italy? http://www.thetruthaboutcars.com/2011/11/is-fiat-considering-a-pullback-from-italy/ http://www.thetruthaboutcars.com/2011/11/is-fiat-considering-a-pullback-from-italy/#comments Mon, 21 Nov 2011 19:39:42 +0000 http://www.thetruthaboutcars.com/?p=419490

As the world struggles to come to grips with economic uncertainty, Bertel has been reporting that Japanese automakers are abandoning their homeland for lower-cost production centers overseas. Now, with economic turmoil shifting to Europe, it seems that Fiat could possibly be preparing for a pullback from Italy. Two basic factors are driving Fiat towards reconsidering its global manufacturing footprint: first, its struggles in the European market where margins are slim and dropping, second, its battles with Italian unions. Though Marchionne’s latest comments are ambiguous at best, some see these factors pushing the Italian automaker away from the market that gave it birth.

Bloomberg reports that Marchionne is calling Fiat’s 2012 profitability “uncertain,” as the CEO clarifies

More than volumes, the question is whether we can extract the same levels of margins. We are to some degree cautious on what is possible from Europe next year

Chrysler already contributes some 65% percent of Fiat’s overall profit. If the European market weakens, the Italian automaker could become even more dependent upon its American cousin. And if Europe’s economic uncertainty bleeds into the US market, Fiat could be in trouble. Credit Suisse analyst Erich Hauser notes that Fiat’s exposure to a weakened Europe could be a real cause for concern

The real concern is not so much the margin level in Europe next year, but the extent to which Fiat will consume cash in a downturn. If volumes fall further, then Fiat’s liquidity position could become an issue.

Marchionne’s response?

Globally we’ll be fine

And though that may be the case (depending on the US market’s performance), the problems inside Europe are mounting. And because Europe’s sovereign debt crisis is now centered on Italy, Marchionne’s scope for political maneuvering in that market may be compromised. That’s key because Fiat has been in a long confrontation with Italy’s labor unions. That conflict colored Marchionne’s recent optimism about Italy’s political future, as he noted recently on the departure of President Silvio Berlusconi:

Italy has a once-in-a lifetime opportunity to abandon the notion of an entitlement society. I think Italy is on the mend.

And Marchionne, a globally-known battler of union-led “entitlement societies,” is taking his fight to the Italian unions, as the WSJ [sub] reports that Fiat has canceled all of its agreements with Italy’s labor unions. According to the report

The latest decision amplifies special labor concessions made at some factories and applies them to all the productive plants in the country. It also comes as the new government vows to loosen Italy’s traditionally rigid employment laws.

And that move is stirring up political turmoil in the already-tumultuous Italian political system, prompting Antonio Di Pietro of the IDV to complain to AGI

By cancelling all trade-union agreements, FIAT is closing a circle, effectively announcing that the company is leaving Italy, using workers as the scapegoat. Employees are accused of being incapable of manufacturing innovative cars with a high added value and of selling them on the market

Legitimate fear or politically-motivated fearmongering? Only the future will tell whether Fiat can stick it out in Europe. But with its best production taking places in locations like Poland and Brazil, it’s going to be tough for Fiat to hack it out in Italy.

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UAW: The War On Transplants Is Still On, Dealers On The Front Lines http://www.thetruthaboutcars.com/2011/11/uaw-the-war-on-transplants-is-still-on-dealers-on-the-front-lines/ http://www.thetruthaboutcars.com/2011/11/uaw-the-war-on-transplants-is-still-on-dealers-on-the-front-lines/#comments Mon, 21 Nov 2011 16:32:23 +0000 http://www.thetruthaboutcars.com/?p=419473

With a tough negotiating session with its traditional employers now complete, the United Auto Workers are turning their focus back to the year’s primary goal: organizing the transplant factories. 2011 was supposed to be the year in which the UAW took down “at least one” foreign-owned auto plant, with the union’s boss even going as far as to say

If we don’t organize the transnationals, I don’t think there is a long-term future for the UAW

But as we found, the UAW is not welcome in the South, where most of the transplant factories are found. And with Honda, Hyundai, Toyota and VW all rejecting the UAW’s advances in some form or another, the union’s options are fairly limited. So instead of taking on the factories directly, the UAW is bringing back a questionable tactic from the days when it was misleadingly bashing Toyota for “abandoning” the NUMMI factory: they are taking the fight to dealerships.

Bloomberg reports

The United Auto Workers union, whose leader has staked its future bargaining power on organizing U.S. plants of Asian and European automakers, plans to start pressuring the companies through dealership campaigns.

Regional UAW representatives trained members about how the campaign will work at UAW Local 2209 on Nov. 19, said Mark Gevaart, president of the local in Roanoke, Indiana. The union hasn’t selected the automaker it will target and didn’t discuss when the drive will begin, he said in a phone interview.

The problem: as mentioned earlier, the UAW has already tried this on Toyota. And at the time, Toyota fired back with a pretty legitimate complaint, arguing

I still don’t understand why they are picketing our dealerships when the dealerships have nothing to do with the workers. Our workers make the ultimate decision if they want to unionize or not and for the past 25 years they have said no… Our team members want to make cars for people to buy. They don’t like it when people try to stop you from buying.

And here’s the funny part: the UAW has admitted that the dealership-picketing tactic didn’t help its cause, as President Bob King put it when he called off the last round of Toyota dealer protests

We said we were going to be the UAW of the 21st century and didn’t feel like that was accomplishing that goal

But hey, why not try it again? What’s the worst that could happen?

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UAW: Government Was Not Involved In Negotiations After All http://www.thetruthaboutcars.com/2011/11/uaw-government-was-not-involved-in-negotiations-after-all/ http://www.thetruthaboutcars.com/2011/11/uaw-government-was-not-involved-in-negotiations-after-all/#comments Sat, 12 Nov 2011 16:49:33 +0000 http://www.thetruthaboutcars.com/?p=417817

In a newsletter to members of Local 598, an editor revealed an interesting wrinkle in the recently-ratified contract negotiations, writing

With the option of strike off the table and the government still a part of our negotiations (literally sitting in the room with us ‘observing’ our talks), I don’t believe any better agreement could have been reached,

But now, reports Bloomberg [via Automotive News [sub]], local shop committee person Dana Rrouse insists that there was not actually a government official present at union negotiations. He tells the news service

That was a misprint. I didn’t get to proofread it. It went out and then I said ‘Where did you get that from?’ I mean, I talked about us still being under government, but nothing as far as they were sitting there.

The government still owns a large portion of GM’s stock, but it too says it was not involved with negotiations with the UAW. Which is probably the right position to be taking: with so much acrimony generated by the latest round of negotiations, there are few reasons to be associated with them. Still, it’s strange that such an explosive “misprint” should have made its way into a union newsletter. Even if the government were not involved in the slightest, as it insists it was, there’s clearly a perception among UAW members that the government remains a consistent presence in the auto industry.

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Opel: With Cuts Possible, Union Boss Faces Heat http://www.thetruthaboutcars.com/2011/11/opel-cuts-possible-union-faces-heat/ http://www.thetruthaboutcars.com/2011/11/opel-cuts-possible-union-faces-heat/#comments Wed, 09 Nov 2011 23:25:07 +0000 http://www.thetruthaboutcars.com/?p=417431

From his dream of a UAW-represented VW plant in Tennessee (ha!) to his desire for a seat on the boards of the Detroit automakers (double ha!), UAW President Bob King has a way of idealizing the German unions. And no wonder: while the UAW spent decades fostering a radical sense of entitlement, German works councils entwined themselves with their respective employers, earning places of power among the world’s largest automakers. But unions are a delicate balancing act in every country and culture, and even Germany’s unions, widely hailed as the example for the industry, can run into trouble.

Last time it was Volkswagen’s powerhouse works council, which erupted in a scandal over VW-funded sex tourism (with free Viagra and shopping trips for the wives!) back in 2005. With Opel’s union boss, Klaus Franz, becoming caught up in his own (slightly less lurid) scandal, GM’s acknowledgment that more cuts could be coming for Opel could prove just as explosive for the German works council model.

First, some background: GM Europe is not doing all that well, and Opel is big part of the problem. As the chart above (from GM’s Q3 financials release [PDF]) shows, an upward sales trend over the previous three quarters came to an end in the third quarter, and GM downgraded its entire Q4 outlook due to “continued weakness in Europe” and the fact that

ME will not reach target of breakeven EBIT- Adj. before restructuring charges due to declining economic conditions

As a result, GM CFO Dan Amman told the Q3 conference call

We’ve got to get the break-even point lower and the profitability higher… we are not betting on any improvement in the macroeconomic outlook in Europe.

And when asked if “getting the break-even point lower” might involve a few job cuts, Amman answered

We’re not going to rule anything out, we have to look at the whole picture

The Financial Times‘ headline “GM eyes further European cuts” came as something of a rude shock for Opel’s works council boss Klaus Franz, as the Economic Times reports

Opel labor leader Klaus Franz said he was “astonished” by the threat of a potential plant closing, saying GM’s current labor deal barred closures and factory job cuts through 2014.

In fact, GM Europe’s bad news came just as Franz was pushing for more assembly jobs in Europe, telling Reuters

GM would like to have the subcompact (Agila) produced in South Korea. Instead, we will fight to have it built in Gliwice (Poland), starting in late 2014… We are making the case for assembling the next generation of the Antara in Bochum (Germany) together with the Chevrolet Captiva, since it is based on the compact high-roof architecture.

This would be bad news for Franz under any circumstances: more cuts when you’re asking for more jobs is a bitter pill for any union boss. But because he’s under serious fire from within his union’s ranks in the aftermath of  a payola scandal, the prospect of cuts is even more terrifying. The World Socialist Web Site sums up the gist of the problem with a single “coincidence” reported by the Frankfurter Allgemeine:

The monthly allowance for the Opel works council was last increased in the autumn of last year. At that time, the allowance for an “ordinary” works council member was increased from €276 to €300. Shortly before, in August, the council had undersigned a deal for the elimination of the jobs of 20 percent of the workforce in Europe and large wage cuts for those retaining their jobs.

At a time when ordinary Opel workers are expected to accept massive wage reductions, the salaries of their union representatives are hiked. The increase in the subsidy for works council members was a bonus for the successful reduction in wages for the rest of the workforce.

Even with workers being offered $360,000 to leave their positions, headcount reductions at Bochum were painful. With Opel’s works council under investigation, and with Franz losing credibility as a representative of the workers’ interests, the next round of cuts will be twice as painful… especially with the wider European economic drama still unfolding. No wonder Franz recently went as far as to try to goad GM to selling Opel to its Chinese partner, SAIC.

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UAW Group Files Grievance Against Chrysler Contract http://www.thetruthaboutcars.com/2011/11/uaw-group-files-grievance-against-chrysler-contract/ http://www.thetruthaboutcars.com/2011/11/uaw-group-files-grievance-against-chrysler-contract/#comments Sat, 05 Nov 2011 16:39:00 +0000 http://www.thetruthaboutcars.com/?p=416939

Despite UAW President Bob King’s insistence that the UAW is not riven with divisions, Chrysler’s latest union contract is inflaming intra-union conflict, as the Detroit News reports that the Autoworker’s Caravan splinter group is protesting the union’s decision to approve a contract despite being rejected by Chrysler’s skilled trade workers. According to Autoworkers Caravan’s Alex Wassell,

We voted down the tentative agreement. But they used a procedural loophole to ratify it. We think it’s a very bad agreement and a very bad precedent, and we’re going to do everything we can to overturn it.

King claims that the ignored skilled trade workers’ rejection of the new contract because

  It was overwhelmingly clear that the issues were economic issues and not skilled-trades issues,

And the Autoworkers Caravan seems to be wondering why that would matter: after all, the union isn’t allowed to do anything without membership ratification. In any case, the matter will be determined by the UAW’s public review board… which is exactly what Caravan’s Wassell wants. He tells the DetN

We want to go through a discovery phase and find out exactly how Bob King and the other leaders made that decision. We think it will show that it was just a rubber-stamp.

But regardless of how this particular dispute is resolved, labor issues are likely to drag on at Chrysler. With CEO Sergio Marchionne’s revelation that he wanted a single-tier payscale, and with a flat $22/hour rate proposed for all of Chrysler’s UAW workers, the UAW’s Chrysler reps are hunkering down. Kristin Dziczek of the Center for Automotive Research tells the Detroit News

It’s a very unhappy work force now. They got less, and they basically feel like Chrysler wants to continue to give them less. Chrysler workers are already saying, ‘Save your raises (for a future strike),’ and Mr. Marchionne is already throwing down the gauntlet for 2015.

Even King admits that Chrysler is a troubling bellweather for the health of the union. Though GM and Ford were relatively generous this year, that won’t last as long as Marchionne and Chrysler play hardball with the union. Says King,

They saw their sisters and brothers at GM and Ford getting a lot more money. Is everybody on the floor of the factory happy? Absolutely not. I’m not happy, either.

Nor should he be. On the one hand, he’s got to be responsive to the fact that his Chrysler skilled trade workers are up in arms, and on the other, he’s got to manage a Chrysler leadership team that has the motive and opportunity to break the union’s back entirely. As Chrysler’s VP for communications Gualberto Ranieri puts it

It was not because someone here won the lottery, and it was not generated by the automotive business. The recent history of Chrysler is not comparable to any of the other manufacturers, and you don’t need an MBA to understand this. What the company proposed, what the UAW negotiating team unanimously approved and what the majority of its members voted for is consistent with the situation at Chrysler. It will ensure that Chrysler has the means to grow and not put in danger its future.

In the words of one Chrysler employee, “it’s going to be ugly in ’15.” But the way the tension is building already, the ugliness could well boil over before 2015 negotiations begin. Chrysler is taking the most aggressive line with the union yet seen, and the UAW’s most experienced workers are already digging in their heels. Unless King, who is stuck in the middle, can find a way to keep everyone happy, the union could tear itself apart under the pressure.

 

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Bob King Defends UAW Contract Priorities http://www.thetruthaboutcars.com/2011/10/bob-king-defends-uaw-contract-priorities/ http://www.thetruthaboutcars.com/2011/10/bob-king-defends-uaw-contract-priorities/#comments Thu, 27 Oct 2011 14:18:38 +0000 http://www.thetruthaboutcars.com/?p=415939

Watch UAW President Bob King on New Contracts: Top Priority Was Creating Jobs on PBS. See more from PBS NewsHour.

Though UAW boss Bob King has said that organizing transplant factories is a life-or-death struggle for the union, but the real make-or-break issue this year was the contract negotiations with the Detroit Automakers. And though King roundly denies that a rift has been formed in his union over two-tier wages, the facts simply don’t back that position up. In the last contract to be ratified (with Chrysler) for example, only 54.8% of the union approved the deal… hardly the “overwhelming support” that King claims. Moreover, 55.6% of the skilled-trades workers at Chrysler rejected the contract, according to the Detroit Free Press. King’s narrative of experienced workers “demanding” higher wages for the Tier Two brothers “in the greatest spirit of solidarity” just doesn’t hold up to scrutiny.

The divide between skilled-trades and other workers at Chrysler was a particular problem for the union because its contract allows the 5,000 skilled-trades workers to reject their own portions of the contract even if the union as a whole approved it… which is precisely what happened. But, after meeting with skilled-trade representatives, King decided to do what the union has often been loath to do: trample the better-paid workers in favor of newer hires. The Freep reports:

On Wednesday, the UAW held two meetings to resolve the split vote. If the skilled-trades workers had voted against the contract because of changes that specifically affect only their work, then the UAW would have tried to renegotiate a portion of the Chrysler agreement, King told reporters Wednesday.

“It was overwhelmingly clear that the issues were economic issues and not skilled-trades issues,” King said.

King said he doesn’t anticipate a major backlash from skilled-trades workers after the decision. “We did not go against what the skilled trades voted for,” King said. “We went with what the majority of members said — that they thought this agreement should be ratified.”

That was probably the right decision to make, and King should be commended for it, but it exposes his rhetoric of solidarity as pure farce. In recent years the union has already created a backlash by approving the “innovative labor practices” that threaten to push Tier 1 workers at the Orion Assembly plant into the lower wage tier without a union vote. Once again, King is going against the rules of engagement, which say that any union decision must be ratified by members. The only difference: now he’s backing lower-paid workers. Again, it’s a commendable stand and it shows King’s commitment to returning to some form of solidarity, but it also demonstrates and exacerbates the union’s internal divisions.

Meanwhile, at Ford, King admits that negotiations were “very rocky,” which is something of an understatement. Even though Ford offered the most generous contract of all the Detroit OEMs, the contract got off to a bad start, as workers at several of the first plants to vote refused to ratify the contract. Only after Ford said it would hire strike breakers if the contract failed did the UAW leadership threaten that the deal wouldn’t get any sweeter for members, and the contract eventually passed. But at the Ford plants where the contract failed, there are still signs of internal pressure at the union. At Local 900, which represents three Ford Detroit-area plants, workers were most troubled that more Tier Two hires would be brought in in lieu of giving established workers more overtime.

Meanwhile, at GM the Orion Plant’s “innovative labor practices” seem set to spread to the soon-to-be-reopened Spring Hill plant, even though GM and the UAW insisted that Orion would be a one-off deal in order to build subcompact cars in the US. Automotive News [sub] reports

About 40 percent of Orion’s 1,500 workers make an entry level wage. Under the new contract, they’ll be paid $16 to $19 an hour, a little more than half of what traditional UAW workers make.

A 100 percent entry level work force won’t happen. Several hundred former Spring Hill workers who are either still laid off or relocated to other GM plants should get first shot at the new jobs.

But it’s likely that the vast majority of the 1,710 new jobs will be filled by new employees – and there’s no restricton on the use of entry level wage earners.

If that doesn’t inflame divisions between the UAW’s tiers, it’s hard to say what will. The Orion agreement inspired picketing of the UAW’s headquarters, even though it was made as GM was going into its bailout-bankruptcy and was sold as a necessary move for survival. With GM making profits again, it’s proving that the dissidents who said that Orion-style rollbacks would spread across the workforce were right. As details emerge from Spring Hill, expect more protests and further breakdowns in UAW solidarity.

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Sergio Marchionne: International Union-Buster http://www.thetruthaboutcars.com/2011/10/sergio-marchionne-international-union-buster/ http://www.thetruthaboutcars.com/2011/10/sergio-marchionne-international-union-buster/#comments Tue, 04 Oct 2011 16:37:39 +0000 http://www.thetruthaboutcars.com/?p=413462

Considering the United Auto Workers’ VEBA fund is still Chrysler’s second-largest shareholder, CEO Sergio Marchionne is taking an amazingly hard line with the union. With a GM deal long done, and Ford’s deal moving towards approval, Chrysler is the last automaker on the UAW’s to-do list… and Marchionne tells Bloomberg he’s up for a fight if necessary, saying

I sincerely hope that we don’t have to get to arbitration. But if necessary, Chrysler will go there. We and GM are completely different

Marchionne is reportedly pushing the UAW for a number of tough concessions, including a mere $3,500 signing bonus (compared to $5k at GM and a reported $6k at Ford), and the elimination of a planned 2015 cap on entry-level “Tier Two” workers (at 25%). And though both of these are tough asks, he’s using UAW boss Bob King’s concept of union internationalism as a cudgel against the UAW, playing Italian unions off their American counterparts. And as a result, he could earn Chrysler a favored place among America’s unionized autoworkers.

The key to Marchionne’s Italian strategy was to threaten Italian unions with the prospect of Fiat pulling out of its home market and retrenching in lower-cost production centers like Poland and Brazil. That agreement eventually went through, and, as Bloomberg reports

Marchionne reached three labor agreements in less than a year as part of his strategy of raising productivity at Fiat’s domestic plants. The deals at all three factories include measures to limit strikes and curtail absenteeism.

Fiat also won approval to introduce longer shifts and run plants on a six-day workweek. In addition to more hours, workers get shorter breaks and postpone lunch until their shift’s end.

The changes at Mirafiori, Fiat’s oldest plant, in January were won with a 54 percent majority and set a milestone in Italian labor relations.

And to prove how serious he is, Marchionne has even withdrawn Fiat from Confindustria, Italy’s largest business organization, over difficulties in applying those reforms uniformly across its Italian production base. Says Marchionne in his withdrawal letter

Fiat, which is engaged in the creation of a major international group with 181 plants in 30 countries, cannot afford to operate in Italy in an environment of uncertainty that is so incongruous with the conditions that exist elsewhere in the industrialized world

And, having manhandled the Italian unions, Marchionne is not only asking the UAW for tough concessions, but he’s also setting a deadline that could send negotiations into arbitration (since the UAW has a no-strike agreement with Chrysler). Which gives Berkley professor and UAW mouthpiece Harley Shaiken cause to warn Marchionne that

He’s rolling the dice

But with Marchionne approving new products, including a 5-door Alfa-Romeo MiTo, and small Fiat and Jeep SUVs, for the Mirafiori plant, he’s offering carrots as well as sticks. And the longer the UAW waits to get a deal with Chrysler, the more carrots could be distributed around the globe… which means fewer carrots for the UAW. And at this point, the UAW’s Chrysler employees can’t afford to hurt their employer, which has largely funded their benefits with its own stock. Look for Marchionne to come out of this negotiation looking like the smartest guy to ever take on the UAW.

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Is China’s Cheap Labor A Thing Of The Past? http://www.thetruthaboutcars.com/2011/09/is-chinas-cheap-labor-a-thing-of-the-past/ http://www.thetruthaboutcars.com/2011/09/is-chinas-cheap-labor-a-thing-of-the-past/#comments Thu, 29 Sep 2011 17:13:33 +0000 http://www.thetruthaboutcars.com/?p=412966

The prospect of a Chinese auto industry growing at insane speed thanks to a booming market and resiliently low wages has long kept auto industry execs up at night, most notably inspiring Sergio Marchionne’s acquisition of Chrysler. But basic economic principles dictate that you can have a high rate of growth or low wages… but not both. Growth inevitably drives inflation, which drives up wages, which in turn slows growth. And according to a report in the Wall Street Journal [sub], that dynamic is already taking hold.

Jae-Man Noh, head of Hyundai’s joint-venture operations in China, said average manufacturing-worker wages in China—about 27,000 yuan ($4,200) a year per worker in 2009—are likely to double by 2015 from current levels.

Auto makers are expected to be affected as much as other industries by the trend, if not more, Mr. Noh said, adding that wage costs for many foreign auto manufacturers already have doubled in less than a decade. He said that a rival foreign auto maker that Hyundai has researched has seen worker wages in China rise to 49,000 yuan a year per worker in 2010, up from 24,500 yuan a year in 2003.

“We need to let go of our perception that the Chinese market is a low-cost production base,” Mr. Noh told a group of reporters at Hyundai’s office in Beijing. He didn’t offer specifics on Hyundai’s wage costs in China.

 And though the laws of supply and demand made this development inevitable, the story of the decline of China’s low-wage manufacturing base is a lot more interesting than you might think. After all, economic and historical forces may seem mechanical in the abstract, but on the ground level they work in dramatic, disruptive ways.
Anyone who has spent the last decade or so in China will have witnessed incredible economic growth, but along with it has come a creeping inflation. Despite widespread accusations of currency manipulation, certain commodities like food and real estate have driven prices incredibly high in recent years. This selective inflation was already underway when I visited China in 2007, and according to Frau Schmitto-san, grocery shopping in Beijing has become nearly as expensive as it is in Tokyo. And in another sign of how bad inflation for basic consumer goods has become, China recently opened its “strategic pork reserve” in an effort to keep prices affordable. Another dynamic playing into Chinese inflation: the penetration of economic development and infrastructure into the country’s interior has reduced the  wage and opportunity differential between the coast and the interior, reducing supplies of cheap migrant labor.
But the tipping point for the auto industry came last year, when a series of strikes hit Honda and Toyota assembly plants in China as part of a wave labor unrest that has its own Wikipedia entry. Work was halted at Honda and Toyota plants, as well as at key suppliers like Denso and Omron, and production ground to a halt for weeks. Calling the strikes, which were largely triggered by demands for better wages and working conditions, a “wake up call for Japan,” the NY Times reported

Japanese companies see the Chinese as crucial consumers of their goods to make up for a shrinking and aging market at home. Some of the most profitable Japanese companies, like Fast Retailing, which runs the budget clothing line Uniqlo, have relied on production in China since the 1990s to keep prices low.

“Japan is starting to realize that the age of cheap wages in China is coming to an end, and companies that looked to China only for lower costs need to change course,” said Tomoo Marukawa, a specialist on the Chinese economy at Tokyo University.

And make no mistake, foreign firms clearly have more to lose from newly-empowered workers, as the BBC reported
The BBC’s China editor Shirong Chen says the government has tolerated strikes at foreign-owned plants, which are obliged to respect workers’ rights, but maintains strict control at Chinese-owned factories for fear of widespread social unrest.

But for foreign firms, the protest must have seemed like “widespread unrest.” As LaborNotes documents, in an in-depth study of the strike wave

the events at Honda Nanhai triggered a chain reaction among workers in auto supply and electronics factories throughout the Pearl River Delta. According to the Guangzhou Federation of Trade Unions, more than 100 strikes occurred, of which only a small number were reported in the media. Around Toyota’s ultramodern factory in Guangzhou Nansha, eight of 14 core suppliers had labor conflicts. And action spread to other areas: workers in several electronics factories near Shanghai and at a Toyota supplier in Tianjin struck for several days.

The strike movement not only scared multinational corporations in China, it challenged the system of labor control. Typically, tacit coalitions between capitalists and local government rule over conditions inside the factories. Unions play a role in former state-owned enterprises and flagship joint ventures, but not in most private companies. Often, local governments back up violations of labor law by major investors, as has been documented in many cases for suppliers to multinationals such as Wal-Mart, Apple, and Nike.

But under conditions of rapid growth and highly modern production, the methods of control have become ineffective. Hundreds of labor conflicts occurred in the wake of the global economic crisis, affecting millions of Chinese workers in 2008 and 2009. Following the recovery, workers are seeking a voice. Workers’ wages have been falling continuously as a share of China’s national income since the 1990s, when the shift toward capitalism really took off, and the government is now officially calling for higher wages in order to raise domestic demand.

If underlying economic fundamentals have been pushing China towards wage inflation for some time, the dam broke in last summer’s wave of strikes. Now Hyundai is publicly acknowledging the reality that every foreign auto firm must face: low costs alone aren’t reason enough to be in China. But as the WSJ notes, even though the glory days of cheap Chinese labor may be over, Hyundai (and others) still have plenty of incentive to stick with their Chinese market plans.

China still offers other draws, including strong economic growth, an increasingly affluent population and a quickly growing car culture.

Plus, Hyundai’s average factory labor cost in China is still one-fifth of that in South Korea, Mr. Noh said. What concerns him most is the dramatic rate of increase, he said.

This trend is “inevitable” as the Chinese economy grows and society improves, Mr. Noh said.

Despite rising labor costs, China’s auto exports will continue to increase in part because of excess auto-production capacity in the country, he said. China’s central government will also continue to focus on automotive exports, he said.

The growth of the Chinese car market in recent years has been nothing short of freakish, and was overdue for this kind of correction. But even though costs are increasing, China’s continued growth and still-low costs relative to other manufacturing centers continue to make it an attractive target. Foreign firms just have to work a little harder than they used to, and as Chinese wages rise, workers there and around the world will only benefit from a narrowing assembly cost gap.

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With Liabilities Looming, GM And UAW Agree To Pension Buyouts. But What About The Workers? http://www.thetruthaboutcars.com/2011/09/with-liabilities-looming-gm-and-uaw-agree-to-pension-buyouts-but-what-about-the-workers/ http://www.thetruthaboutcars.com/2011/09/with-liabilities-looming-gm-and-uaw-agree-to-pension-buyouts-but-what-about-the-workers/#comments Tue, 27 Sep 2011 19:27:45 +0000 http://www.thetruthaboutcars.com/?p=412732

One of the legacy costs that GM was not able to reduce in the bailout was pension costs, a whopping $128b obligation as of the end of 2010. And though the plan is “only” underfunded by $10.8b at the end of June according to GM, Kenneth Hackel, president of CT Capital LLC (and author of two textbooks on valuing securities) recently told Bloomberg

The financial risk because of [GM's pension liability] is higher than people understand. The cold reality is if you used a conservative discount rate and you wanted to close out the plans, you would have to raise about $35 billion.

With GM’s market cap sagging into the low-$30b range (currently around $34b), the risk of pension liabilities growing larger than GM’s market capitalization is very real. And as lower interest rates and a weak stock market reduce pension fund returns, the obligations grow, in turn putting pressure on GM’s stock price. And it’s not like nobody saw this coming: a GAO report released in April 2010 issued dire warnings about the state of GM and Chrysler’s pension obligations. Now, according to the ace reporters at Reuters, GM and the UAW have hashed out a buyout deal giving workers the option of being bought out of their pensions. Which has us dying to know: what’s a UAW pension worth in cash?

Details like buyout amounts and the size of dent they’ll leave on “Fortress Balance Sheet” are not specified, as Reuters has only a negotiating letter to go on. The quote in question is posted in its entirety at the factoryrat.com forum, and reads

The parties further discussed the possibility of amending the Plan to provide additional options for certain current retirees that would help GM manage its pension risk and
benefit such retirees that voluntarily agree to participate. To this end, the parties agreed that the National Parties may mutually agree during the term of this Agreement to
amend the Plan to add retirement options for some or all existing retirees that help GM reduce the volatility and risk related to the Plan and benefit existing retirees by providing
an additional voluntary option.

But the union dissidents who leaked the letter seem to be as angry about the possibility of a voluntary buyout offer as mistrustful of any agreement that could be reached without a vote by the union membership. In the words of Greg Shotwell,

the UAW colluded with the company to amend the plan after ratification to reduce the cost for GM… GM not only underfunded the pension, GM took lump sum bonuses and retirement incentives from the pension fund. Now GM and the UAW conspire to further drain the pension by offering retirees buyouts from the pension. Assuming that buyouts would come from the pension, a mass exodus for the buyout door would further erode the pension plan’s feasibility.

LaborNotes puts the paranoia into perspective

Gary Walkowicz, a bargaining committeeperson at Ford, said workers need to look for hidden concessions or loopholes not explained in the union’s “Highlights” handout.

At GM in 2009, for example, a seemingly harmless clause said the parties “will work together…to arrive at innovative ways to staff [small car] operations.” That language was used to justify slashing wages at a Michigan small-car plant, where 40 percent of the workforce was placed on permanent second-tier wages—without a vote.

Though a voluntary buyout seems like the most innocuous option, there are clearly downsides… and by not publicizing the agreement, the UAW is fanning the flames of dissent. In response to the union’s ubiquitous “Contract Highlights” pamphlets, the factoryrat.com forum has created its own Contract Lowlights pamphlet [PDF], detailing the major grievances of mainstream UAW dissent. It can be easy to only look at a business from 40,000 feet, especially on the internet, so reading about the view from the ground level is definitely worth a few minutes of your time. Meanwhile, bailout-strengthened “Fortress Balance Sheet” and vague agreement notwithstanding, GM’s pension situation still looks to be stuck between a rock and a hard place.

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UAW Authorizes Strike At Plant That Is Hiring http://www.thetruthaboutcars.com/2011/09/uaw-authorizes-strike-at-plant-that-is-hiring/ http://www.thetruthaboutcars.com/2011/09/uaw-authorizes-strike-at-plant-that-is-hiring/#comments Mon, 19 Sep 2011 16:25:53 +0000 http://www.thetruthaboutcars.com/?p=411601

Chrysler's GEMA Dundee plant -Photo: Toledo Blade

UAW Local #273 members working at Chrysler’s Global Engine Manufacturing Alliance factory in Dundee, Michigan voted to authorize a strike [Ed: despite a no-strike agreement that was agreed to inexchange for Chrysler's bailout] in advance of negotiations over local issues, particularly a recently announced rotating shift schedule that has created unrest at another Chrysler plant in the Detroit area. The proposed schedule is so unpopular that almost 99% of local #273 members voted to authorize a strike if negotiations break down. The shifts, which rotate 12 hr day and night shifts week to week, are intended, Chrysler says, to maximize productivity. The UAW says it is to reduce overtime pay. The normal 3 shift model increases straight-time production by 20% to 120 hours per week.

 

Pentastar engine production at Trenton Engine Plant

 

Chrysler has been using that schedule at the Trenton South Engine Plant for almost a year. Workers were already unhappy about the schedule disrupting their lives and increasing child care costs but when mandatory overtime on Sundays was added last month UAW Local #372 started raising safety and health issues related to the schedule.

Sergio Marchionne announcing $179 million investment to build 1.4L Fiat Multiair engines at the Dundee plant

This labor unrest takes place when both facilities are doing very well, or perhaps precisely because they are doing well. Chrysler has recently invested money in both facilities and demand is high for their products, making overtime costs an issue. The Dundee plant, in fact, is currently hiring and Trenton soon will be hiring more workers. Trenton South produces Chrysler’s new 3.6 liter Pentastar V6 engine, already available in 10 Chrysler Group cars and trucks with more being adding next year, so demand is growing. It’s the foundation of Chrysler’s powertrain strategy. Chrysler has invested $114 million to reopen the site’s Trenton North facility for production of the Pentastar and the plant will be adding 268 jobs. At the Dundee facility, originally a joint venture with Hyundai and Mitsubishi, already produced variants of Chrysler’s “world engine“. Chrysler has invested $179 million to add production of Fiat’s 1.4-liter, 16-valve “MultiAir” FIRE (Fully Integrated Robotized Engine) motor. So far, a additional 100 people have been hired at Dundee. The currently produce about 400 engines a day that get shipped to Mexico, where Fiat 500s for the North American market are assembled. Production is being increased, and hiring for a second shift is open until early October.

Sergio-Marchionne 4_cylinder_fire 9705564-small 2007 Dodge Caliber World Engine Chrysler Pentastar Engine-low C GEMA5709-300 phoenix-engines Pentastar engine production at Trenton Engine Plant Colin-Reaume-Dundee-Chrysler Larry-Patterson-Dundee-Chrysler

 

 

 

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GM, UAW Reach New Contract, Spring Hill Plant To Re-Open http://www.thetruthaboutcars.com/2011/09/gm-uaw-reach-new-contract/ http://www.thetruthaboutcars.com/2011/09/gm-uaw-reach-new-contract/#comments Sat, 17 Sep 2011 16:24:05 +0000 http://www.thetruthaboutcars.com/?p=411510

As predicted, the hand-wringing over Sergio Marchionne’s letter to Bob King was not enough to derail the basic motivations for the UAW to reach new deals with the automakers. Last night the union agreed to a tentative agreement with GM, its pattern target for this, the first round of negotiations since the bailout. That agreement must be approved by the union rank-and-file, but if ratified, Reuters reports that it includes

  • The re-opening of the idled Spring Hill, TN plant to build an unspecified “new product”
  • $5,000 signing bonuses (at a cost to GM of $245m)
  • According to the NYT, “significant improvements to health care benefits” are also part of the deal
  • According to AN [sub], the union “successfully fought back efforts to make major changes — and weaken — our retirement plan.”

What’s not yet clear is whether entry-level “Tier Two” workers, who make half what their “Tier One” brothers make, got a raise. Though it’s clear that GM and the UAW worked to avoid major increases to fixed costs by concentrating on jobs and profit-sharing bonus checks, the NYT confirms that the union was asking for some kind of entry-level raise. Given that no outlet is confirming any such Tier Two raise, though, it seems as though the UAW’s culture of seniority-over-solidarity has won out. We’ll report on details as they emerge, which is likely to happen as locals ratify the contract over the next ten days.

And though the UAW still faces battles with a feisty Marchionne and a wary Ford negotiating team, union President Bob King still has an eye on the big picture. Telling Bloomberg that he’s “re-committed” to the goal of organizing non-union transplant factories, he argues

As long as unionized workers are being forced to compete with nonunion workers who in most cases receive lower pay and benefits — many in temporary jobs — there will continue to be a downward pressure on the wages and benefits of all autoworkers.

In a recent conversation with Bloomberg, CAW President Buzz Hargrove essentially argued that the automakers would give up little in this round of negotiations. The key then, was finding things the union wanted that didn’t really cost GM that much. In that light, the re-opening of Spring Hill makes a lot of sense. It’s considered one of GM’s better, more modern plants, and it gives the UAW a bastion in Tennessee, where Nissan and Volkswagen both have new, non-union plants. The problem: unless the union was able to negotiate an entry-level wage hike, new hires at Spring Hill will make less than many of their non-union counterparts [sub] at VW Chattanooga and Nissan Smyrna. At that point, having a UAW plant in the South doesn’t especially help the union’s cause.

Caught between bailed-out automakers that it can’t be too aggressive with and non-union workers who show no signs of wanting or needing representation, this agreement doesn’t change the UAW’s basic predicament. We’ll see what the final details look like when the locals approve the deal, but it might not be too early to say that Detroit’s automakers will have four relatively easy years on this contract.

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The Sound And The Fury: Marchionne Letter Stirs Up Tensions, But Talks Continue http://www.thetruthaboutcars.com/2011/09/the-sound-and-the-fury-marchionne-letter-stirs-up-tensions-but-talks-continue/ http://www.thetruthaboutcars.com/2011/09/the-sound-and-the-fury-marchionne-letter-stirs-up-tensions-but-talks-continue/#comments Fri, 16 Sep 2011 15:53:49 +0000 http://www.thetruthaboutcars.com/?p=411443

Chrysler CEO Sergio Marchionne’s petulant letter to UAW President Bob King sounded to me like a man angry with being kept waiting after a long flight, but according to the Detroit News, it has “derailed” the “carefully crafted timeline” for contract negotiations. To wit:

Sources close to the negotiations told The Detroit News that a deal was imminent with General Motors Co. when Chrysler CEO Sergio Marchionne sat down at his Mac computer and fired off a sharply worded letter to UAW President Bob King at 10 p.m. Wednesday, accusing the union leader of violating their gentlemen’s agreement to sign off on a deal by the 11:59 p.m. deadline.

Shortly after the letter was sent, talks stopped at both companies.

Chrysler and the UAW agreed to extend their current contract for one week. Talks resumed Thursday between the two sides, but nothing of substance is being discussed at the bargaining table, according to people familiar with the talks.

Actually, that’s not exactly what everyone is reporting…

For example, the latest word from the aces at Reuters‘ Detroit Bureau has it that

General Motors Co and the United Auto Workers union have made “good progress” toward an agreement, a person familiar with the talks said on Friday as negotiations resumed.

Talks also continued at Chrysler Group LLC on Friday morning.

The UAW has chosen to attempt an agreement with No. 1 U.S. automaker GM first, before then reaching a deal with Chrysler and finally with Ford Motor Co, those close to the talks have said.

Bloomberg seems to agree, quoting the UAW’s favorite labor expert, Berkeley’s Harley Shaiken, saying

What we’re looking at right now isn’t a breakdown in the process, it’s the process working it’s way through to an agreement. Going over the deadline has become more routine than not.

But while the big wire services emphasize business-as-usual in the UAW negotiations, the Detroit papers are losing their heads over Marchionne’s provocative letter. The Freep reports that the UAW could skip past Chrysler and go straight to Ford after securing a deal with GM… or, not.

The letter, while dramatic and emotional, probably won’t trump the logic of completing talks with Chrysler before Ford, said Joel Cutcher-Gershenfeld, dean of labor studies at the University of Illinois.

Meanwhile, the Freep also spoke to Chrysler workers who blame Marchionne for an inability to compromise and King for standing up the CEO and failing to communicate with the union rank-and-file. And once again, the lesson is the same: the letter stirred up tensions, but…

“I would not fixate on the letter,” said Joel Cutcher-Gershenfeld, dean of the University of Illinois school of labor and employment relations. “The UAW will be judged on the agreements that it reaches.”

U mad, Freep? Because this is starting to look a little like what we in the “online journalism” business call “trolling.” Luckily the Detroit-area media, the DetN has Dan Howes on hand to provide a more measured analysis of events.

Could both sides — namely, those directly bailed out by taxpayers — cut a deal by the deadline of midnight Wednesday without public rancor?

That was the plan, but the answer to the last question is no: An existential crisis, the harsh glare of national attention and the specter of presidential politics apparently are not enough for bargainers to hit a date that has loomed for four years. Meaning some things in this town never change.

Incidentally, I hear editors at the Detroit papers enforce strict rations on the phrase “some things in this town never change”… and Howes picked a good opportunity to cash in his chit. He concludes

For the UAW, a successful conclusion to these talks — and a coming showdown with Ford, whose members are not barred from striking by terms of a federal bailout — represents a down payment of sorts on King’s vision for an extreme makeover of the union of Walter Reuther, the Sit-down Strikes and the Battle of the Overpass.

Binding arbitration at GM or Chrysler or a strike by Ford’s cranky members would fatally undercut King’s long-shot strategy to rebuild the union’s dues base with new members working down south for foreign-owned competitors. Either development also could ding the re-election prospects of the president whose intervention in Detroit effectively saved the UAW.

Better for union members slowly coming to terms with Detroit’s predicament today would be deals that promise richer profit-sharing, fresh investment and more jobs in existing plants, starting with GM’s idled assembly plant in Spring Hill, Tenn., and Ford’s Auto Alliance International operation on Flat Rock, to name two.

The challenge in the hours and days ahead will be for the union and company bargainers — particularly at post-bankruptcy Chrysler and GM — to close the deal, to demonstrate to politicians and investors, customers and themselves, that there really is a New Detroit.

Or they’ll take the blame.

True that. Which is why Marchionne’s little outburst doesn’t matter nearly as much as some think. Just as Bob King has taken Sergio’s rebuke on the chin, the UAW rank-and-file will accept whatever’s on the table. Even the appearance of confrontation with the only automakers willing to do business with the UAW will shatter King’s vision of transplant factory organizing and global alliances backed by friends in the White House. And he and everyone else who has believed his “21st Century UAW” rhetoric will be stuck in the nightmare of “Old Detroit”… forever.

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UAW Contract Negotiations Blow Past Deadline, Marchionne Lashes Out http://www.thetruthaboutcars.com/2011/09/uaw-contract-negotiations/ http://www.thetruthaboutcars.com/2011/09/uaw-contract-negotiations/#comments Thu, 15 Sep 2011 16:11:48 +0000 http://www.thetruthaboutcars.com/?p=411325

The United Auto Workers and the Detroit automakers have been locked in negotiations for months now, as both sides seek to redefine their relationship in the post-bailout era. And though all sides have stressed the importance of avoiding intractable disputes in an alleged new spirit of cooperation, it seems that the prospects of a quick, painless conclusion to negotiations remains elusive. The UAW’s contracts with Chrysler and GM both blew past their deadlines at midnight last night, and Ford, the only manufacturer at theoretical risk of a strike, extended negotiations earlier this week. TTAC has not covered these negotiations in much depth for the simple reason that little information leaks out of them. But with contracts expiring and optimistic rhetoric crashing on the rocks of reality, the frustration is clearly starting to boil over. And who is surprised that Fiat-Chrysler CEO Sergio Marchionne is the first to let his frustration show?

Though Marchionne is probably the most blunt and candid of Detroit’s CEOs, he’s also had the most union-related headaches of late. Wearing his Fiat CEO hat, Marchionne has been battling Italy’s fractious unions for years, as he’s fought to rationalize a deeply broken Italian production base. Whether that experience has given him insight into union negotiating tactics or simply raised his baseline frustration level isn’t clear, but he has broken ranks to publicize a letter [PDF, tip of the hat to the Detroit News] sharply rebuking UAW President Bob King for allowing the negotiating deadline to expire. Marchionne writes

I flew back from the Frankfurt Motor Show late last night to be here today to finalize the dialogue that has been started by our teams but that required your presence and mine to conclude. You, unfortunately, could not be here, I am told, due to competing engagements.

We have known about this expiration for a long time.

It was discussed at length during an incredibly painful period in 2009 when we argued and pleaded, together, to be given a second chance to put Chrysler right. And we even agreed that were we still around in 2011, we would not go back to the old adversarial and confrontational ways of the past to resolve unsettled matters: that we would have someone else arbitrate our differences.

And so as I sit at my desk now, I am thinking of our 26,000 employees who tomorrow will be working without a new contract, without even an understanding between Chrysler and the UAW that the old one is extended. We have not even agreed on the procedures for arbitration.

Until now, there have been encouraging signs of a new paradigm governing the relationship between us.

After reminding King of his various commitments to a kinder, gentler UAW, his professions of shared interests, and the progress already made through Fiat’s “World Class Manufacturing” program, Marchionne concludes

These are the reasons why we have continued our investment programs in the US, committing more than 4 billion dollars without knowing the outcome of these labor negotiations.

You and I failed them today.

We did not accomplish what leaders who have been tasked with the turning of a new page for this industry should have done.

We did not manage to agree to a set of simple conditions that would have given certainty and peace of mind to the lives of more than 110,000 actives and retirees.

I know that we are the smallest of the three automakers here in Detroit, but that does not make us less relevant. Our people are no less relevant.

The Freep’s Tom Walsh figures that this last line is the most indicative of the trouble brewing. Though he admits Marchionne is prone to outbursts and public theater, Walsh reckons

For example, if the UAW strikes a deal first with GM on key economic issues such as wages and benefits, that could hurt Chrysler’s leverage if it were to threaten taking a key economic issue such as health care co-pays to arbitration.

Another known issue in the UAW-Chrysler breakdown: Shift policies at the Pentastar V6 plant in Trenton South [via DetN]. But it seems that health care is the big issue, and one where thre appears to be daylight between GM and Chrysler. The DetN reported a week ago

A sort of shuttle diplomacy developed between the two automakers and the UAW. As agreements were reached on key issues, union negotiators would take the tentative language over to Auburn Hills. In some cases, Chrysler simply signed off on it; in others, it would negotiate changes that then went back to GM for approval.

GM CEO Dan Akerson met with UAW President Bob King Tuesday, a source close to the talks said, and negotiations are proceeding smoothly between the company and the union. But talks appear to have hit a snag at Chrysler.

“We are nowhere near an agreement,” one person familiar with the situation in Auburn Hills told The News Wednesday.

Nonetheless, all sides remain optimistic that an agreement can be reached between the union, GM and Chrysler by the time the contract expires Sept. 14.

The insider said Chrysler and the union disagree about an approach King is proposing on certain issues.

The UAW president has said he wants to look at creative ways to cut health care costs without reducing workers’ benefits. Chrysler believes workers should shoulder more of the cost of their own health insurance.

Chrysler’s hourly employees are responsible for about 7 percent of their own heath care costs, compared to 33 percent by salaried workers. The average American worker pays about 30 percent. The gap is narrower at GM.

Meanwhile, though Ford has the most to lose as the only automaker without a no-strike clause from the union and the highest recent profits, it “almost has to go last” according to labor analyst Kristin Dziczek. Ford’s union rank-and-file has been considerably more aggressive in recent years, as the firm has not been humbled by bankruptcy and bailout, and they appear to be waiting for GM and Chrysler deals in order to know where to open the bidding. Another possible snag: an arbitration hearing scheduled for today to resolve a UAW complaint over Ford’s reinstatement of white collar bonuses.

Ultimately, the move to extra innings, the public outbursts, and the obvious tensions put all of the last several years of bailout-inspired union-management Kumbaya rhetoric into some serious context. Though the UAW has the most to prove in the eyes of the public, all sides have indulged in the fantasy that “a new era” in Detroit’s labor relations is dawning and all sides are now locked in the same old gamesmanship. As in any negotiation, it’s unfair to blame any one side completely, but in terms of public perception, the UAW clearly has the most to lose. Having utterly failed to make progress in its attempts to organize transplant automakers, the UAW simply can’t afford for these negotiations to get any uglier than they already have. Standing up Sergio was pretty clearly a horrible PR move.

But the great irony of all this is, as Automotive News’s James Treece puts it [via AW], that the negotiations don’t even “matter” all that much. With labor making up only about 15% of the cost of each car, the low-hanging fruit for the OEMs is, he argues, is in rationalizing product development spending,and  improving speed to market and supplier relations. In fact, the importance of this negotiating session, argues Treece, is almost entirely symbolic. Which is why the developments of the last 24 hours show that Sergio Marchionne is absolutely correct. Both sides have absolutely failed to reinforce their message that things are different in Detroit.

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Saab Unions: Bankruptcy Two Weeks Away If Pay Is Delayed (And It Will Be) http://www.thetruthaboutcars.com/2011/08/saab-unions-threaten-bankruptcy/ http://www.thetruthaboutcars.com/2011/08/saab-unions-threaten-bankruptcy/#comments Wed, 24 Aug 2011 15:38:36 +0000 http://www.thetruthaboutcars.com/?p=408551

Saab has already warned its workers that paychecks due tomorrow could be delayed until “committed” funds from investors arrive, but Bloomberg reports that the warning may not be enough. According to the report

Any delay in the August payments will prompt the unions immediately to start a process aimed at ensuring state coverage of wages in the event of the carmaker’s failure, officials from the IF Metall and Unionen labor groups said. The unions, after gaining employees’ backing, would first file payment requests with Saab. If salaries remain unpaid in seven days, the unions may then ask a district court to declare Saab bankrupt.

That could put Saab into bankruptcy in as little as two weeks. Saab’s long nightmare seems to be drawing to a close.

Though Saabsunited is predictably highlighting a supportive comment from an ostensible worker, the unions are not happy. A Unionen rep tells thelocal.se

If salaries are delayed for the third time this summer, it’s obviously completely unacceptable. We know there’s a strong sense of loyalty among employees, but the question is if the boundary for this loyalty hasn’t been reached

IF Metall is equally at the end of its rope, telling Bloomberg

We must start the process, as there’s no alternative to our moving to protect our members’ wages. Later, if we don’t see a solution, we’ll likely be forced to act.

Saab meanwhile, insists that it is

doing everything we can to prevent salaries being paid late this time, but there’s still a risk that will happen. Paying the salaries is our No. 1 priority, and our second priority is to restart production.

But, having audited at least one of Saab’s bank accounts, the Swedish Debt Enforcement Office (Kronofogden) questions whether the money is there to both pay off suppliers and pay workers. The Kronofogden’s Hans Ryberg tells SVD.se that the first two suppliers in line, Kongsberg and Infotiv, need to be paid in about a week… and that they’ll take any money intended for Saab’s employees if they can find it. Per thelocal’s report

But the Enforcement Agency’s search for Saab’s money is also ongoing. Their goal is to find and collect the 163 million kronor that various creditors have asked for.

If they find the account containing employees’ wages, which according to Saab’s intentions ought to contain roughly 100 million kronor within the next couple of days, the money will be levied.

“Saab’s suppliers also have employees waiting for salaries,” explained Hans Ryberg, manager of Uddevalla’s enforcement division

So, in order to pay workers, Saab has to sneak money to them before the Kronofogden finds it and gives it to suppliers. If workers don’t get paid, Saab goes bankrupt. But if the suppliers, who are supposed to be paid first, don’t get their money, you get the same outcome. In other words, hang tight: we’re looking at about two more weeks of this sad tale, and then we’ll all be able to get on with life.

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Saab Board Pay Bump Sparks Union Anger http://www.thetruthaboutcars.com/2011/08/saab-board-pay-bump-sparks-union-anger/ http://www.thetruthaboutcars.com/2011/08/saab-board-pay-bump-sparks-union-anger/#comments Thu, 18 Aug 2011 17:37:21 +0000 http://www.thetruthaboutcars.com/?p=407759
With debt collectors closing in on all sides, Saab’s shaky PR took another hit today as the Swedish media repotred that members of the board of Swedish Automobile (SWAN), Saab’s parent company, received pay increases of some 633 percent over 2010. Thelocal.se reports that

New chairman of the board, Hans Hugenholtz, received a raise of 633 percent, from 147,150 kronor (about $23k) to 611,163 kronor (about $950k). Others also had their pay increased significantly.

Though the amounts are relatively small, and the dwindling ranks of unquestioning Saab supporters argue that the compensation is low compared to the Dutch average (SWAN is incorporated in The Netherlands), this is just the latest PR disaster to hit the struggling automaker. One Saab employee sums up the mood:

It feels like everyone is out to grab what they can get.

And no wonder they feel that way. Not only did worker paychecks arrive late, but Sweden’s national debt office has begun foreclosing on the first of its outstanding claims… and the initial amount (about $58k) could have been covered by the chairman’s pay increase alone. Sending the message that board compensation is more important than staying out of insolvency has to be some of the worst PR imaginable. Still, some will defend Saab no matter what…

Under fire from Swedish labor unions and media outlets, the Saab faithful are circling the wagons. The die-hards at Saabsunited are “sick and tired of the media in Sweden acting like teenaged girls spreading rumors etc.” and have posted “the facts” about SWAN’s board compensation (following the gameplan, as usual, of Saab’s own PR man):

1. By acquiring Saab, Spyker became almost 100 times bigger. With that follows responsibilities of the board members.
2. To be able to keep competent people on the board a company needs to pay them a certain amount when the company is at a certain size, this is very well known in the cases of Ericsson and Vattenfall in Sweden where even the swedish government has allowed compensations that were through the roof in the eyes of most people in order to be able to keep people and competence within the company. So now news there…
3. The compensations were raised retro-actively because of Spyker acquiring Saab on Feb 23, 2010 so the board had not been payed with the “right” amount when the job was actually done.
4. The board fees are paid by Spyker NV (Swedish Automobile NV) and NOT by SAAB…

To which I would respond:

1. Regardless of how big you are or have become, if you aren’t making money (or are having a hard time paying suppliers and workers), you shouldn’t be increasing board compensation.
2. It doesn’t matter how good Saab’s board is if there’s no money to pay workers and suppliers. A strong board ranks a distant third compared to the importance of these two groups which aren’t getting what they’re owed, let alone a pay raise.
3. Who cares? PR is all about timing, and the timing of this stinks.
4. This is a semantical distinction.

Please Lord, show some mercy: let this trainwreck be over soon!

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Marchionne: Don’t Hold Your Breath For UAW Board Seats http://www.thetruthaboutcars.com/2011/08/marchionne-dont-hold-your-breath-for-uaw-board-seats/ http://www.thetruthaboutcars.com/2011/08/marchionne-dont-hold-your-breath-for-uaw-board-seats/#comments Thu, 04 Aug 2011 22:48:48 +0000 http://www.thetruthaboutcars.com/?p=405883

From the “sidelines” of the MBS conference in Traverse City Michigan, Wards Auto reports that Fiat-Chrysler CEO Sergio Marchionne is not keen on giving the UAW a board seat. UAW President Bob King has been pushing for VW Works Council-style representation on the Chrysler board, but as Marchionne explains

The best intervention that the unions or labor or organized labor can bring to the party is a support for the choice of the right leader to lead the organization… I understand Bob. I understand what he’s saying (but) we have to be very careful that we don’t exaggerate the value of co-determination

Co-determination gives rise to two decision-making bodies. The executive board makes decisions. And the unions sit on supervisory boards, one of which is the choice of the CEO. The most fundamental and difficult decision that a board makes is the choice of a CEO. If you make the right choice, issues with labor unions will not arise

Considering the UAW VEBA trust fund is the single minority shareholder in his company, Marchionne is admirably and typically frank in dismissing his union boss’s ambition. And since Marchionne doesn’t intend on retiring before 2015, his answer might as well have been “why do you need a board seat, when you have me?” But there’s another aspect to his argument that reveals that Bob King might have already doomed the union’s chances at a board seat.

Ever since Bob King took over from Ron Gettelfinger, the new UAW president has sought to revive his union’s sense of purpose in hopes of combatting declining membership and the reputational hit caused by the bankruptcy of two of its biggest “partners.”  That general effort has taken three forms:

  1. Declaring a “21st Century UAW,” in “partnership” with the Detroit automakers
  2. Aggressively pursuing organizing drives among the foreign owned “transplant” factories
  3. Building international union solidarity by creating linkages with foreign unions

While working on part three, King even went to Italy to meet with the restive unions that have plagued Marchionne… and this seems to have left a lingering suspicion in the back of Marchionne’s mind. He tells Wards

For multinational companies, it becomes almost impossible to find the right mix of labor representation to effectively stand in for the labor force across the group.

Fiat apparently thinks that the UAW, under an internationalist crusader like King, would try to organize its low-cost workforce in Mexico, Brazil, Poland and Turkey. What’s particularly interesting about this is that Volkswagen, which King seeks to emulate, suffers from no such problem: the boys from IG Metall have hardly come out in support of UAW organizing efforts in Chattanooga, and seem to have no problems with low-cost Chinese manufacturing. One can only assume King’s international exploits, threats of human rights violation accusations, and ruthless hypocrisy have convinced Marchionne that he can’t be trusted.

Too bad. Now King will have to use all of his political capital securing benefits for his workers instead of chasing ego-gratifying distraction.

 

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UAW In Top Secret Talks With “Vast Majority” Of Transplants http://www.thetruthaboutcars.com/2011/08/uaw-in-top-secret-talks-with-vast-majority-of-transplants/ http://www.thetruthaboutcars.com/2011/08/uaw-in-top-secret-talks-with-vast-majority-of-transplants/#comments Wed, 03 Aug 2011 17:10:13 +0000 http://www.thetruthaboutcars.com/?p=405477

Despite the fact that no transplant automaker has admitted to being in direct talks with the UAW, union boss Bob King told the Center for Automotive Research’s Management Briefing Seminar [via Reuters]

The vast majority of the assemblers here in the United States have at least agreed to confidential discussions. We’ve had productive discussions. The last thing we want is confrontation.

So, the issue isn’t that the transplants are all responding to the UAW’s overtures like Honda, which has said

Honda has had no dialogue with the UAW and has no interest in a discussion with them.

No, talks are happening with the “vast majority” of transplants… they just happen to be secret talks (which, at least in the case of VW, appear to be going nowhere). That in itself is strange, considering the UAW’s previous, highly-public approach to naming and shaming non-union transplant manufacturers. More likely: secret talks keep the union from losing face and the transplants from looking like “human rights abusers.” My how things change fast…

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The Case Against UAW Representation On Automaker Boards http://www.thetruthaboutcars.com/2011/07/the-case-against-uaw-representation-on-automaker-boards/ http://www.thetruthaboutcars.com/2011/07/the-case-against-uaw-representation-on-automaker-boards/#comments Thu, 28 Jul 2011 17:57:52 +0000 http://www.thetruthaboutcars.com/?p=404641

One of the many defining differences between this year’s contract negotiations between the Detroit automakers and the UAW is a new possible concession on the table: boardroom representation for the union. Inspired by the German system of works councils and union representation on supervisory boards, UAW President Bob King told Bloomberg that

If I had a magic wand, I’d take the German law and put it in the U.S… Workers should have representation on the board

But, in a thoughtful editorial, the Detroit News’s Daniel Howes warns that board representation may be more of a challenge to the union than a benefit. Howes notes

The UAW’s pursuit of board-room seats, to the extent it becomes a key demand in this post-implosion bargaining season, is fraught with potential complications. Among them is the cultural misperception that what is deeply embedded in Germany’s corporate reality is easily transferrable to 21st-century industrial America.

Don’t bet on it. Thanks to federal bailouts, the union’s health care trust funds have representatives on the boards of GM — Vice Chairman Stephen Girsky — and Chrysler Group LLC in former Michigan Gov. Jim Blanchard. But neither the Wall Street veteran nor the professional politician carry the kind of labor pedigree typically found on the labor side of, say, Daimler AG or Volkswagen AG.

Yes, retired UAW President Ron Gettelfinger occupied a labor seat on the defunct DaimlerChrysler AG supervisory board, a reflection of the German concept of Mitbestimmung, or co-determination, that has governed corporate Germany since the early 1950s.

And, yes, two UAW presidents — Doug Fraser and then Owen Bieber — sat on the Chrysler Corp. board following the No. 3 automaker’s near-miss with bankruptcy, its federal loan guarantees and the concessionary contracts that followed.

But the experiences, which culminated each time in the union relinquishing its board seats, offer a valuable lesson: being inside the room confers responsibility, meaning you can’t credibly denounce decisions made there that adversely impact hourly employees or product allocations.

A board seat also means you don’t always get your way. Just ask Gettelfinger, whose fellow board members green-lighted the plan to sell Chrysler to the sharpies at Cerberus Capital Management LP, accelerating a downward spiral at Chrysler culminating in bankruptcy.

Howes brings up a incisive point: ever since the bailout, the union has struggled to convince its membership that its VEBA stakes in the automakers don’t fundamentally align its interests more closely with management than workers. This challenge and the resulting worker backlash has defined the union since the bailout, with anger erupting into scenes at NUMMIOrion Township and the Detroit Auto Show. And if UAW leadership gives up concessions that might benefit workers in exchange for a seat on the board, the rank-and-file will feel (with good reason) that their representatives have taken the new kumbaya tone too far, and are selling them out to cozy up ever closer to management. With its credibility with its own workers already hurting, the union should shelve its dreams of a board seat and focus on benefiting the workers it’s supposed to represent.

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Profits, Pattern Bargaining, Performance Pay On The Docket As UAW Negotiations Begin http://www.thetruthaboutcars.com/2011/07/profits-pattern-bargaining-performance-pay-on-the-docket-as-uaw-negotiations-begin/ http://www.thetruthaboutcars.com/2011/07/profits-pattern-bargaining-performance-pay-on-the-docket-as-uaw-negotiations-begin/#comments Mon, 25 Jul 2011 20:16:18 +0000 http://www.thetruthaboutcars.com/?p=404217

Withe the Detroit Free Press reporting that combined Q2 profits for the Detroit automakers could hit $4b, the quadrennial negotiations with the UAW which opened today with a meeting between Chrysler and the union could be a tough slog. And because the profit outlook is mixed, with GM and Chrysler likely to improve profitability and Ford likely to see a drop in net takings, the long-standing tradition of “pattern bargaining” could come to an end. Ford currently pays about a dollar more per hour than GM and about $2 per hour more than Chrysler (which is partially owned by the UAW’s VEBA trust fund), and Ford also shoulders more of workers’ health care costs than its cross-town rivals. And UAW president Bob King admits

Being really blunt about it, when you don’t represent the overwhelming majority of an industry, which we don’t any more, then you can’t do pattern bargaining

Already unfairly disadvantaged by the UAW (Ford is the only Detroit-based automaker without a no-strike contract) and facing falling profitability, Ford is telling the union not to expect wage increases. But does that mean the union’s only choice is to bring GM and Chrysler up to Ford’s pay and benefit levels?

Ford’s certainly got plenty of arguments for not increasing its pay. Even though main-line Ford-UAW workers haven’t seen a base pay increase since 2003, Ford had to hold a lottery for 1,800 new second-tier jobs (earning about half the Tier One base wage, at $15.50 per hour) at its Louisville plant, to select from the 16,837 applicants for the positions. In short, plenty of workers are happy to earn half what the union used to guarantee new hires, meaning Ford has every incentive to deny increases to Tier One workers and simply replace them with the abundant Tier Two job applicants. Ford is even signaling hesitation at the idea of UAW representation on its board, conceding only that salaried workers deserve more incentive pay bonuses, tied to the firm’s profitability.

But if Ford’s only concession is increased incentive pay, which would deliver nothing if the company doesn’t turn a profit, the UAW may be painted into a corner in its negotiations with GM and Chrysler. King tells Bloomberg that

We’re not going to advantage or disadvantage one company versus another. We want them to be competing on the basis of product and design and quality

Which means that if Ford holds strong, the union can seek only about $1 per hour from GM and $2 per hour from Chrysler. But Chrysler won’t concede even that for the sake of the withering “pattern bargaining” system, as Bloomberg reports

Chrysler doesn’t want to see an increase in its hourly labor costs and is interested in creating a better profit- sharing equation for hourly workers, according to a person familiar with the company’s thinking.

Chrysler’s current profit-sharing system is complex and not aligned with the company’s goals, according to this person, who was not authorized to speak about the issue publicly. Some new metrics may include attendance, quality, productivity and a more transparent measure of profit, the person said.

The automaker sees active health-care costs as a way to find savings, possibly to pay for increases in variable pay, the person said.

The union sees complex healthcare systems, which cost the automakers over $1.5b per year, as one of the few opportunities to reduce costs by improving efficiency, creating a win-win for the manufacturers and workers. But the OEMs are looking for even more relief from healthcare costs than are likely to be won with mere efficiency reforms, as Reuters reports

Union members pay far less of their healthcare costs than most Americans or even their salaried counterparts.

Ford’s UAW workers cover 5 percent of their healthcare costs. At GM, they pay between 5 percent and 7 percent, while at Chrysler it is between 7 percent and 8 percent.

Salaried employees at the companies pay in the range of 30 percent to 35 percent of those costs. At companies with 500 or more employees, the average American worker with a family covered 31 percent, according to consulting firm Mercer.

The automakers want relief from carrying the majority of the costs. Last year GM spent $665 million, Ford about $533 million and Chrysler about $339 million for their UAW-represented workers and families.

“Who picks up what percentage of that cost pool? That’s where the negotiation starts. That is always the motherload issue,” said former GM executive Bible, who helped GM negotiate healthcare deals with the UAW in the past. He is now head of accounting firm EisnerAmper’s public companies practice.

He said given the UAW’s desire for jobs, one possibility would be a deal whereby the union accepts higher healthcare costs in return for a guarantee by the automakers for increased production and new products in the United States.

Jobs for healthcare could be one avenue for compromise, although King’s “no concessions” stance indicates that even this opportunity may not be easy. But one thing is certain: everyone wants to come to an agreement. Because GM and Chrysler have “no strike’ policies, any failure to reach an agreement would see an arbitrator entering the talks to forge a compromise. And, reports Reuters, that’s an outcome that nobody wants to see, least of all King who says

If arbitration happens, if anything like that happens, then I’d say we haven’t done our job. We don’t want some third-party outsider who doesn’t know the industry as well as we know the industry making decisions that impact our long-term viability.

Besides, at least in the case of Chrysler, the UAW has a strong incentive to not push to hard, as King admits

Our goal is to help Chrysler be as successful as possible so we can get the maximum value for the stock we hold

But can King accomplish that while still winning concessions from the profitable Ford and treating all three manufacturers equitably? It seems that something in that list of promises will have to give… and we’ll be keeping a close eye on negotiations to see where the union’s various promises end up.

 

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Audi: On Second Thought, We’d Prefer A Plant In Mexico http://www.thetruthaboutcars.com/2011/07/audi-on-second-thought-wed-prefer-a-plant-in-mexico/ http://www.thetruthaboutcars.com/2011/07/audi-on-second-thought-wed-prefer-a-plant-in-mexico/#comments Thu, 21 Jul 2011 14:22:29 +0000 http://www.thetruthaboutcars.com/?p=403762

It was quite a coincidence when, just last week, Audi restated its interest in US production facilities on the same day that the UAW announced it was in talks to possibly organize VW’s new Chattanooga plant. At the time we noted that

With Audi execs insisting on the need for more US production capacity, a UAW win in a Volkswagen vote could have serious implications for the firm’s future expansion.

Turns out, it didn’t even have to come to a vote. Just over a week after CEO Rupert Stadler insisted that “It is totally clear that we need new production capacity in the U.S,” Audi has suddenly decided that things look nicer in union-free Mexico. Automotive News [sub] reports that Stadler wants a new Mexican plant to build the Q5 SUV, but notes that

it was still unclear if Stadler would have his way in the face of opposition from some of Volkswagen’s top managers, who wanted Audi to make use of the new VW plant in Chattanooga, Tennessee.

Did the UAW’s sudden announcement that it was in talks with VW’s global works council about organizing Chattanooga have anything to do with the decision? AN [sub] won’t say, but the timing can’t be ignored. Audi’s US production may just have been the first victim of the UAW’s transplant organization campaign.

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