The United Auto Workers, Ford, GM and Chryslerberus Ante Up

Frank Williams
by Frank Williams
the united auto workers ford gm and chryslerberus ante up

The poker game known as the United Auto Workers' (UAW) contract negotiations officially begins on July 23rd. To hear the main participants, the cards have already been dealt. Ford and GM claim they're bust, or about to go bust. They say there's only way they can get back in the game: the UAW has to share some of the chips they stole won from their tablemates. The UAW is saying yeah right sure. Shut up and play. And Chryslerberus just sits at the table, wearing dark shades, saying nothing.

The stakes couldn't be higher. While much of the media conjecture leading up to the negotiations has centered on health care costs that make the word stratospheric seem pedestrian, there are other points that'll require agreement: plant closures, the infamous (and still unspecified) jobs bank, temporary hires and more.

Setting the tone for the upcoming negotiations, UAW President Ron Gettelfinger "strongly disagrees that we are part of the problem in the auto industry." He also declared that he considers reports that American auto companies "need" a $30 reduction in hourly wages and benefits as "nothing more than posturing." The UAW boss pooh-poohs this "supposed" gap between Detroit's union and the transplants' labor costs.

Meanwhile, The Detroit News reports that "sources inside Ford" state that unless the UAW agrees to lower their workers' $71 per hour wages and benefits down to $50 per hour, The Glass House Gang will go out of business. And the Wall Street Journal quoted "an unnamed Detroit executive" saying the domestics will move production overseas if the UAW doesn't help them compete with their ascendant competition.

Again, the battle lines are drawn, even before the game begins. Once they start, interested parties (and who isn't?) will have eight weeks to hammer out a new agreement before the old contract expires. And if they can't?

During a Q&A session with UAW members, a worker asked his president if a strike is an "option in the national negotiation." Gettelfinger responded with a simple "yes." In his address to the UAW Bargaining Convention in March, Gettelfinger stated the union would fight at the bargaining table and "if need be on the picket line" to protect their standard of living. In January, the union reported that their strike fund totaled $900m.

Would the UAW be stupid determined enough to launch a strike against GM or Ford? As noted in our Deathwatch series, both automakers' finances are in a precarious position (i.e. mortgaged up to their eyeballs). The UAW's 47-day strike against GM in 1998 reportedly cost the automaker $1.6b– roughly $34m a day. Given The General's and Ford's current cash reserves, a drain of that size or duration would have disastrous financial consequences.

If a strike stretched into months, it would force either– or both– automakers into Chapter 11. While bankruptcy doesn't automatically void the UAW's contracts, it certainly wouldn't help their bargaining position.

Back when Detroit owned the domestic auto market, the UAW called the shots. Now, the automakers are saddled with expenses they can't afford: high wages, the job bank, "cradle to grave" health care benefits and restrictive working practices. The golden days of huge union membership, enormous dues and unbridled power are gone.

In spite of the posturing, Gettelfinger knows someone has to give. He's already stated that the union's now willing to give Chrysler the same "concessions" they allowed Ford and GM in 2005. But will the UAW really be willing to surrender anything substantive?

That depends entirely on how you define the word "substantive." There's a high likelihood there will be some kind of deal on retiree health care provision. The most likely scenario: The Big 2.8 will divest themselves of retiree health care liabilities through a UAW-run VEBA similar to the health care deal and the recent agreement with Goodyear (i.e. they'll pay them now so they don't have to play them quite as much later).

You can also bank on the jobs bank cashing out– slowly. The automakers will want to kill it dead. But the UAW will negotiate a grandfather clause for current employees. In other words, old employees will live out their lives of leisure while new employees will not enjoy the protection of having a non-job job waiting for them when if their services be excess to requirements.

Temporary employees will be another hot topic. The Big 2.8 will want to use temps whenever and wherever they see fit, even in traditionally unionized jobs. The UAW will demand restrictions on their use or, at the least, require union dues. The union will concede on many job classifications. In return, they'll get their money.

Should the UAW and their employers reach an agreement, it's important to remember that there are– and always have been– suckers at the table. Truth be told, both the union and management are playing with someone else's money. Once upon a time, it was the American consumer's cash. Now it's the automakers' shareholders and union workers funding the game. No matter what happens, they're both bound to lose their shirts.

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  • BostonTeaParty BostonTeaParty on Jun 28, 2007
    Sid Better late than never!! We have had that here too, unbelievable that some guy can think that scrapping the floor or doing other noisy jobs such as priming milling machines or attaching wheels to a vehicle can be more important than engineering/design or executive meetings that affect the future of the company. The fact that you have to get their supervisor aswell just gets beyond me, wheres the sanity gone in this industry. They just don't get it. And to me that is where the UAW will always fail and that theres little chance for change, they will never change and herein lies the problem. Bigger things go on than them. Good luck for the future Sid. Mikey yep we're both insiders, i know not everyone can be tarred with the same brush but its about time we all started paddling the same way out of s#!t creek, we lost one paddle, we've found some more lets get the crew working together for once, i can see the shore.
  • Geeber Geeber on Jun 28, 2007
    Pch101:This gives me hope that Ford may be in the best position for a recovery. But then I look across the lot at the Five Hundred Taurus (the zodiac sign for the rental car industry) and assume that my hopes were unfounded. Actually, I like the new Taurus. Ford did the right thing with the Five Hundred - used a solid Volvo platform to produce a car with excellent room, good safety ratings, and a very good combination of ride-and-handling. Now, it is addressing the car's faults while keeping the good points with a thorough mid-model-cycle makeover...just like Honda and Toyota would do. And with the new drivetrain and other improvements, the Taurus X (formerly Freestyle) offers an excellent combination of safety, room, ride, handling and economy, especially for those of us who need room but don't want the "handling" and "economy" of a lumbering SUV.
  • Ollicat I have a Spyder. The belt will last for many years or 60,000-80,000 miles. Not really a worry.
  • Redapple2 Cadillac and racing. Boy those 2 go together dont they? What a joke. Up there with opening a coffee shop in NYC. EvilGM be clowning. Again.
  • Jbltg Rear bench seat does not match the front buckets. What's up?
  • Theflyersfan The two Louisville truck plants are still operating, but not sure for how much longer. I have a couple of friends who work at a manufacturing company in town that makes cooling systems for the trucks built here. And they are on pins and needles wondering if or when they get the call to not go back to work because there are no trucks being made. That's what drives me up the wall with these strikes. The auto workers still get a minimum amount of pay even while striking, but the massive support staff that builds components, staffs temp workers, runs the logistics, etc, ends up with nothing except the bare hope that the state's crippled unemployment system can help them keep afloat. In a city where shipping (UPS central hub and they almost went on strike on August 1) and heavy manufacturing (GE Appliance Park and the Ford plants) keeps tens of thousands of people employed, plus the support companies, any prolonged shutdown is a total disaster for the city as well. UAW members - you're not getting a 38% raise right away. That just doesn't happen. Start a little lower and end this. And then you can fight the good fight against the corner office staff who make millions for being in meetings all day.
  • Dusterdude The "fire them all" is looking a little less unreasonable the longer the union sticks to the totally ridiculous demands ( or maybe the members should fire theit leadership ! )