Triennial Event Gets Tense: Carmakers, UAW Bargain
Costly Dayton brake-plant strike shows risks for the Big Three
For 15 years, the United Autoworkers union has watched its rolls steadily shrink. This week, as it heads back to the bargaining table with the Big Three US automakers, the UAW hopes to halt the erosion.
One of America's most powerful labor organizations, the UAW has seen its membership fall from 1.5 million in 1979 to barely 750,000 today. With domestic manufacturers under increasing pressure to cut costs and improve productivity, the union may be able to do little more than slow the decline, some observers believe. But others warn that, with its back against the wall, the UAW may be willing to fight for its principles, even if that means a devastating strike.
The two sides had a taste of what that might mean in March, when 2,700 workers walked off the job at a General Motors Corp. brake plant in Dayton, Ohio. Before it was over, 17 days later, GM had racked up losses of $900 million. A walkout this fall could be even more devastating. Both sides are well aware of the stakes in talks with a deadline of midnight, Sept. 15.
"It's going to be very contentious," cautions Harley Shaiken, a professor of labor studies at the University of California, Berkeley, "which isn't to say there's going to be a strike. Both sides got a measure of each other in Dayton and realize a strike could be a very long one."
The next three-year contract will have to deal with a variety of knotty issues, including health-care costs. The Big Three now spend more per car on medical insurance - an average $559 at Ford Motor Company, for example - than they do on steel. The UAW will also press for a pay hike.
But the real issues are productivity and job security. A new study by Detroit manufacturing consultant James Harbour, considered the expert on efficiency, suggests that after a decade of gains, productivity at Big Three assembly plants has been leveling off. That's bad news at a time when the Japanese are regaining their competitive edge - and when consumers are showing strong resistance to rising new-car prices.
"They have to get more productive," stresses Mr. Harbour. "There's a point at which the consumer won't pay any more."
But productivity has its price. Big Three assembly plants that might have employed 5,000 in the late 1970s now need as few as 2,000 workers. But it's not the assembly line that manufacturers are targeting these days.
The main focus is component plants, especially those producing labor-intensive goods such as brakes or wiring harnesses. At $43 an hour in wages and benefits, UAW workers earn far more than employees of outside, often non-union, suppliers. So the Big Three have been steadily increasing their outsourcing - the transfer of work from company-owned plants to companies such as ITT Automotive, Bosch, or Allied-Signal.
Outsourcing was the underlying cause of the Dayton strike, and though GM had to offer workers there several hundred new jobs to entice them back to work, it maintained the right to outsource production in the future. Indeed, since the strike was settled, GM's Delphi component group has warned it might close five more parts plants if they can't be made more competitive.
"We need to be competitive, and if we're not, we're doing everyone a disservice," GM Chairman Jack Smith told members of the Detroit Economic Club last month.
Meanwhile, UAW President Stephen Yokich spoke at a union gathering this spring of the Big Three chairmen as "preachers of corporate irresponsibility and profit at any cost."
In recent weeks, the two sides have been toning down the rhetoric, insisting that there's more to be gained by finding common ground. But insiders admit the talks are likely to be tough.
Though each of the Big Three negotiates its own contract with the union, they bargain simultaneously until the final weeks before the deadline. Then the union picks a "strike target," the company most likely to give it a pattern-setting settlement that can be pedaled across town to the other automakers. Each of the Big Three would like to be first to get an agreement, so as to best meet its particular needs and economic realities. But the speculation this year is that Chrysler will be the target. Since the No. 3 automaker actually has brought some work back from suppliers, analysts suggest it might be willing to accept contractual limits on outsourcing.
That would put GM in a tough bind. It is the carmaker with the greatest vertical integration, or in-house production, and the one making the most cutbacks through outsourcing. Harbour says GM may be forced to risk another strike.