Your e-mail pal,
Tom L.
Doug Henwood wrote:
> BUSINESSWEEK ONLINE : OCTOBER 25, 1999 ISSUE
>
> THE WORKPLACE
> Commentary: The Auto Talks: Who Really Won
>
> It looked like a clear case of highway robbery. The United Auto
> Workers reached into the pockets of Detroit's Big Three carmakers
> during recently completed national contract talks and drove off with
> the richest terms in two decades. By the time the new pacts expire
> four years from now, the 370,000 UAW members at the Big Three will be
> raking in $25 an hour, up 25% from today--plus a nice bonus and
> richer benefits. The union even forced auto makers to cough up
> expensive wage and benefit guarantees for workers affected by their
> parts units' spin-offs. Overall, the average worker will receive some
> $30,000 in added wages and benefits.
>
> But nobody blinked an eye, not even Big Three shareholders or
> inflation-wary Wall Street economists. For while Detroit might appear
> to be a holdup victim, in fact the UAW's winnings--of 3% annual pay
> hikes--are less than the 4% that union workers have won at Boeing
> (BA), AT&T (T), and elsewhere. Auto makers also grabbed some goodies
> of their own that will more than pay for all the dollars they are
> doling out. Chief among them: the freedom to restructure their
> workforces and boost efficiency. This is particularly important for
> General Motors Corp. (GM), which trails other carmakers in
> productivity. And new job-security language, which for the first time
> prescribes the formula for replacing retirees, has enough wiggle room
> to allow GM to cut its still-bloated workforce by about 20%--a huge
> accomplishment for the No. 1 U.S. auto maker.
>
> SHAKY PROGRESS. Equally important, Detroit was able to buy labor
> peace at a time when it couldn't afford a confrontation.
> DaimlerChrysler (DCX), which the union targeted first, didn't want a
> strike to disrupt its already shaky merger progress, especially since
> 60% of its profits come from its U.S. factories. GM was desperate to
> turn over a new leaf with labor--following a devastating 54-day
> strike in 1998 and the divisive spin-off of its Delphi Automotive
> Systems (DPH) auto-parts unit earlier this year. Even Ford Motor Co.
> (F), which in recent weeks faced the biggest risk of a strike over
> plans to sell its Visteon Automotive Systems parts unit, managed to
> keep the peace. It agreed to guarantee jobs and pay levels of Visteon
> workers for life.
>
> The relative ease of the auto industry's national labor talks this
> year reflects a pragmatism on both sides. When negotiations began in
> June, the union had two major objectives: It intended to grab a
> larger share of Big Three profits. And union leaders were eager to
> expand the UAW's share of auto industry employment by getting the
> manufacturers to demand that suppliers not resist efforts to sign up
> their workers. As part of this strategy, the UAW hoped to prod
> DaimlerChrysler to let in the union at its Mercedes plant in Alabama.
>
> Yet when it came time to deal, UAW President Stephen P. Yokich
> swapped the future strength of the union for fatter paychecks for
> current members. With U.S. auto sales on track to exceed a record 17
> million units this year, the UAW's leverage was at a peak. Yokich
> decided to take the money and run, says Michigan State University
> labor professor Dale G. Brickner. He says union members ''felt they
> better claim some of this now or they might not see it again.''
>
> In exchange, though, Yokich largely gave up on demands for help on
> union organizing. Instead, he settled for weaker language that
> encourages auto makers to tell their suppliers not to threaten job
> cuts during UAW recruitment drives. Yokich also backed off a threat
> to strike DaimlerChrysler over Mercedes' resistance to unionization
> at its Alabama plant. The UAW did win the right to have recruiters
> meet with employees inside the facility during nonwork hours. But it
> failed to get its key demand: that Mercedes voluntarily recognize the
> union without an election if more than 50% of workers signed cards
> saying they wanted the union.
>
> DIGGING DEEP. Auto makers, too, faced facts as they wrapped up the
> smoothest round of national bargaining in years. The industry is
> awash in record profits, thanks to boffo truck sales and improvements
> in manufacturing methods. So the Big Three were prepared to pay
> through the nose this time around. GM and Ford, in particular, knew
> that they would have to dig deep to assuage the union's fears over
> the spin-offs of their parts units.
>
> And they did. GM agreed to give Delphi workers until Jan. 1 to retire
> with a GM pension. And employees won the right to apply for GM
> openings when they occur. GM also guaranteed many benefits for Delphi
> workers if its ex-parts unit encounters ''financial distress'' in the
> next eight years. Meanwhile, Delphi matched GM's contract terms for
> the new pact plus four more years.
>
> Ford went even further to avoid a showdown over its planned Visteon
> spin-off or sale. It guaranteed that current Visteon employees would
> receive Ford paychecks and other Ford-paid benefits until they
> retire, even after Visteon becomes independent. In effect, Ford
> agreed to lease its employees to Visteon. That was vital to Visteon
> workers, who didn't want to give up their lucrative Ford benefits.
> Ford also agreed that after the spin-off, all Visteon employees hired
> in the next three contract periods, up to 12 years, would earn the
> same pay as Ford workers for life. (For more on the Ford agreement,
> see BW Online, 10/14/96, "The UAW's New Deal with Ford Could Hardly
> Be Sweeter.")
>
> The auto makers agreed to such seemingly rich promises because they
> have learned that most of the job-security measures they agree to in
> the national contract can be bent--or even ignored--in plant-level
> negotiations, analysts say. Under the 1996 national contract
> agreement, GM was nominally required to hire one new worker for every
> two who left. But many local union leaders agreed not to enforce the
> language in order to keep their plant competitive or attract new
> investment.
>
> DUTY TO HIRE. True, the new job-security provisions in this year's
> contracts are tougher than previous pacts. The new contracts for the
> first time prescribe the rates at which auto makers must hire new
> workers if employment sinks below certain levels, no matter what the
> reason. There is one important exception: If jobs are lost because of
> market-driven reductions in sales volumes, the new-hire obligations
> don't apply. That could be crucial for GM, whose market share has
> been shrinking steadily. ''Closing facilities will be difficult, but
> not impossible,'' says Morgan Stanley Dean Witter analyst Stephen J.
> Girsky. Overall, GM officials say they can cut the union's ranks by
> 20%, to about 115,000. The contract ''requires us to be more
> creative, but I'm happy as punch,'' says GM CEO John F. Smith Jr.
>
> The biggest win for GM may be a new era in labor peace. And after
> potential flare-ups, DaimlerChrysler and Ford, too, have preserved a
> delicate balance with labor. With the industry chugging along at
> record levels, no one wants the party to end.
>
> By Joann Muller
>
> ----
>
> Detroit Poker: How They Split Up the Pot
>
> UAW
> Won a 25% hike in pay and benefits over four years, to $25 an hour,
> but failed to stem the erosion of union jobs in the auto industry.
>
> GM
> Paid through the nose to achieve labor peace but retained the
> flexibility to slash its workforce by 20% through attrition.
>
> DAIMLER CHRYSLER
> Agreed to give the UAW easier access to nonunion plants but refused
> to forgo a contentious election at its Mercedes plant in Alabama.
>
> FORD
> Guaranteed that workers at its Visteon parts unit will be paid
> Ford-level wages and benefits until retirement, even after it is spun
> off.
>
> DELPHI
> GM's former parts unit got its own UAW contract but agreed to match
> GM's expensive wage and benefits scale for eight years.