Auto Workers See Coming Talks as Fight for Survival
John Penrod can barely control his rage as he spits out the words. “The layoffs, the closings, they’ve got to stop,” insists Penrod, the president of a United Auto Workers local here that just lost 3,500 members to a plant closing. “If we don’t get job security provisions in the contract, then there is not going to be an auto industry left in this country.”
The surviving 3,500 GM workers in his local have not been bowed by the layoffs; instead, they are mad as hell at GM, Penrod warns, and are ready to fight management, and fight hard.
They want to keep their jobs and they want to stem the swelling tide of plant shutdowns that now threaten to decimate the UAW’s ranks at the world’s largest auto maker. Unless GM agrees to strong job security provisions in its contract talks with the UAW, which open Monday in Detroit, a strike will be inevitable, he cautions.
“The easiest way to say how the union membership feels is to say they are disgusted with General Motors in general, and (GM Chairman) Roger Smith in particular,” Penrod adds. “And right now, the membership is more than willing to strike--they are ready to strike--if we don’t get job security.”
This week in Detroit, the UAW and the world’s two biggest auto makers will kick off what many observers now believe could prove to be the most critical set of national labor negotiations in the modern history of the American auto industry.
For John Penrod, and hundreds of thousands of other auto workers, the future could be hanging in the balance.
Indeed, when bargainers for management and labor meet for the first time at GM on Monday and Ford on Tuesday, they will not only be embarking on the long and arduous process of trying to fashion labor agreements covering nearly 500,000 UAW members in time to beat a Sept. 14 deadline when the contracts expire. (Chrysler isn’t scheduled to negotiate with the UAW until next year.)
They also may find themselves shaping the future of a deeply troubled industry, one that is rapidly moving away from its traditional reliance on domestic manufacturing in favor of cheaper overseas production in order to cope with unrelenting competition from imports.
This summer’s talks may thus help determine the future level of employment in the auto industry.
“I think these will be the most crucial negotiations we have ever had,” declares Alfred Warren Jr., vice president for industrial relations and GM’s chief negotiator. “The outcome of this summer’s contract talks will be a major factor in our ability to meet the challenge of our competitors and retain General Motors jobs,” adds GM Chairman Smith.
For union members in beleaguered auto towns such as Flint, where worker hostility towards management seems to be running at an all-time high in the wake of a wave of GM plant closings, this set of contract talks may be their last chance to staunch the flow of auto jobs to Japan and the Third World; the next round of bargaining at GM and Ford, which will probably take place in 1990, could be too late.
So now, as Penrod makes clear, UAW workers are ready to strike this fall if they don’t succeed at the bargaining table this summer.
“What we do will affect the next generation of auto workers,” adds Jack Brown, a local union president from Flint who will be this year’s chairman of the UAW’s national bargaining committee at GM. “Job security is very critical right now.”
GM, the only American auto maker that still produces most of its own parts, is in the midst of one of its worst sales slumps in modern times and is threatening to close more and more of its vast parts operations over the next few years.
Ford, which has already moved much of its parts production to outside suppliers, is also following a strategy that will allow it to shift more and more of its small car production to Asia and Mexico throughout the remainder of the decade.
“The 1987 talks take place against a backdrop of rapidly expanding auto investment in plants and facilities outside the United States by both GM and Ford,” notes UAW President Owen Bieber. “All of this activity translates into one simple thing for our members--job insecurity,” Bieber adds.
As a result, the rank-and-file’s mandate to the union’s leadership is now clear and unyielding--job security is by far the UAW’s No. 1 priority. Here in Flint, for example, a depressed company town that has been hit with the loss of 7,000 of its 55,000 GM jobs this year, local union leaders like Penrod now say that union members will vote against any contract that doesn’t include tough and meaningful new provisions limiting GM’s ability to move more work overseas.
By contrast, workers here and elsewhere in the GM system seem less intent on winning big wage gains; UAW leaders have pledged to demand a return to the industry’s traditional annual base wage raise of 3%, but union executives have made it clear that objective is not the top priority.
Pressure From Canada
There is one way the wage issue could gain prominence in the talks, however--through Canada. The Canadian Auto Workers Union broke away from the UAW in late 1984 after rebelling against the parent union’s willingness to sacrifice wage gains in return for job security in the 1984 auto negotiations.
The Canadian union has just opened its first round of Big Three contract talks as an independent union. With the Canadian auto industry booming, thanks to the low value of the Canadian dollar compared to the U.S. currency, negotiators have the luxury of pressing for more traditional wage and benefit improvements; some GM and Ford officials worry that the American UAW may feel pressured to match whatever economic gains the Canadians obtain from the Big Three.
But, barring a Canadian wild card, wage gains are likely to remain secondary demands for the UAW; instead, there is a deep sense now that the union is in the midst of a permanent crisis, and that the UAW must find a way to shield its members from the ravages of competition with 60-cent-an-hour labor in places such as South Korea.
“I see a different mood among the workers than I’ve ever seen in the past, and I think the change has come mainly from necessity,” observes Stan Marshall, the UAW’s regional director for the Flint area.
“I don’t see people looking at wages, but they are looking at job security,” he adds. “They are waking up to the fact that the shutdowns and layoffs are going to happen to all of us if we don’t get something in the contract. And if management doesn’t agree to some real clear language on job security, it is going to be a very tough sell to the membership when it comes time to get the contract ratified.”
Crucial for Auto Makers
For GM and Ford, the negotiations are no less crucial than they are for the UAW; but not for what they hope to gain from the union, only for what they hope to avoid giving up. Both firms know they have virtually no chance of obtaining reductions in wages or benefits this year.
GM’s only hope on the wage front may be to offer annual lump sum cash payments to workers in lieu of percentage raises; the advantage to GM would be that the lump sum payments wouldn’t permanently increase base wage rates, which now total $12.82 per hour for the average GM assembly line worker.
The UAW agreed to such cash payments in the 1984 talks in return for enhanced job security provisions, but it is unclear whether they would accept them again. At Ford, meanwhile, which is flush with cash, there may be less resistance on the part of management to a base wage increase.
But more importantly, GM and Ford feel they must find a way to avoid any new contractual prohibitions on their ability to move work from one country to another if they hope to remain competitive with the Japanese and the rising Third World producers.
Yet, they must do so in a way that allows them to avoid worsening their relations with their American workers at a time when they need employee cooperation in order to streamline their local, plant-level contracts to gain Japanese-style flexibility on the shop floor.
And, above all else, they must avert costly strikes this fall.
“We feel we have to protect our vital sourcing flexibility, and we must reach a peaceful settlement,” says Stan Surma, executive director of labor relations and chief negotiator for Ford. “A strike is an indication that the two sides have failed to understand each other.”
As soon as the negotiations get under way, all eyes are likely to quickly focus on the talks at GM.
Although Ford is in much better financial shape than its bigger cross-town rival--Ford reported record second-quarter earnings Thursday, while GM posted yet another decline--UAW leaders have made it clear that they believe the job security issue must be settled at GM.
For the UAW, the U.S. jobs that need the most protection from foreign competition are those in auto parts production, and GM is simply the only Big Three auto maker where there are still a lot of those jobs left to protect.
Despite heavy layoffs over the past few months, GM still employs 379,000 hourly workers in the United States, compared to just 109,000 at Ford. In fact, top UAW officials note that GM employs about 180,000 U.S. workers in its parts plants alone, more than the total U.S. hourly employment of both Ford and Chrysler combined.
At the same time, the rapid erosion of GM’s U.S. market share, coupled with the ongoing free fall in its domestic car sales, has also given much greater urgency to the UAW’s efforts to salvage jobs at GM.
The basic thrust of the UAW’s bargaining strategy on job security this year, union leaders privately acknowledge, will be to demand that financial penalties be imposed on GM every time it lays off American workers in order to move production offshore. The objective: to make GM think twice about moving production out of the United States.
Such penalties could come in the form of expanded income guarantees for laid-off workers, or perhaps even through more specific job programs that would require the auto maker to find new work for employees affected by plant closings.
UAW officials add that they are likely to start off by trying to expand upon the job and income guarantee programs the union won in the last round of negotiations at GM and Ford in 1984, which some top union officials credit--despite management assertions to the contrary--for slowing down the pace of foreign sourcing by GM over the past three years.
The union may also push for a job-guarantee program similar to one it negotiated earlier this year at Case-IH, a Wisconsin-based farm equipment manufacturer. That plan calls for lifetime job guarantees for 100% of Case’s hourly work force, in exchange for more flexible work rules and a drastic reduction in job classifications.
Ironically, many industry observers believe that the best strategy for the UAW if it hopes to obtain a strong job security program at GM may be to make Ford its 1987 strike target.
“If the settlement occurs at Ford, GM is looking at a very serious problem,” says Martin Anderson, a widely respected auto industry consultant.
This year, the union plans to follow tradition by practicing what it calls “pattern bargaining.” Using a pattern approach, the union will select one of the two companies as its strike target in late August, suspend talks at the other company, and then focus all of its energies on hammering out a new contract at the targeted firm before the Sept. 14 strike deadline.
Once a settlement has been reached, the union will then take its new contract to the other company as a pattern for negotiations and demand that the firm match it. Over the decades, pattern bargaining has allowed the UAW to whipsaw the auto makers on wage-related issues, leading to the standardized pay rates that now exist throughout the Big Three.
This time, however, the UAW may be able to use pattern bargaining in order to whipsaw GM on job security.
Under this admittedly complex scenario, the UAW would pick Ford as the strike target, and then extract from Ford strong job security language--possibly including a ban on plant closings. Ford could accept such strictures more easily, the thinking goes, since it has, unlike GM, already subcontracted much of its parts production to outside sources.
At the same time, Ford might seize upon the opportunity to agree to contract language its bargainers felt certain would be unacceptable to GM, thereby increasing the chances of a costly strike at its competitor when the UAW attempts to force GM to accept the Ford pattern.
Already, GM officials have privately acknowledged that they hope Ford is not the UAW’s official strike target, and union and company officials both concede that a GM strike is more likely if the UAW goes to Ford first. GM would almost certainly take a strike before it would agree to tough job security contract language hammered out at Ford.
“Even if Ford is the target, that won’t necessarily set the pattern,” admits the UAW’s Marshall, a member of the union’s executive board, which will choose the strike target based on the recommendations of Bieber and the top union negotiators at GM and Ford. “We could still have a strike at GM over different issues than at Ford, because they are not going to have the battle over job security at Ford that we will at GM.”
For the rank-and-file in Flint, meanwhile, there is a growing sense anxiety as the talks approach and the uncertain future closes in.
“The auto industry is going through some radical changes, and there is a lot of confusion among the membership right now,” says Janet Dowell, a 32-year-old assembly line worker at a GM truck plant in Flint. “We’re at the point now where nobody’s job is secure. Nobody knows whether they can maintain their current level of pay, or even where they will be two years from now. The only thing we can do now is back our union.”
