With a revitalized American auto industry again raking in profits, all eyes are on contract negotiations going on between the United Auto Workers and executives of Fiat Chrysler Automobiles, General Motors, and Ford. We may safely assume the UAW is working strenuously to claw back some of what it gave away in the structured bankruptcies of GM and Chrysler, and in its last contract with Ford, entered into under considerably grimmer circumstances than the industry faces today.
To get a handle on the labor situation with America’s biggest manufacturing enterprise — both unionized and the growing portion that is not — we visited Professor Harley Shaiken at the University of California, Berkeley. A longtime student of America’s largest industry and its labor relations, and frequent consultant to carmakers and labor groups, Shaiken comes to the subject, as a Detroit native, naturally enough. His grandfather, he recalls, “came to make $5 a day at [the city’s] Highland Park for Henry Ford, then worked at the [River] Rouge plant” into the 1950s. A Wayne State University alum and proud onetime owner of a Dodge Coronet convertible and Corvette Stingray, Shaiken is waiting — as befits a resident of the People’s Republic of Berkeley – to take delivery of a 2016 Chevy Volt.
Automobile Magazine: Why did the FCA workers recently reject the pact that the UAW leadership had agreed? Conversely, how did the union leadership gauge so wrong the mood of its workers?
Harley Shaiken: A number of factors fueled the rejection. High on the list was two-tiered wages. The UAW leadership felt that major gains were won — 30-percent wage increases over four years in some cases — that “bridged the gap” over this contract and could close it in the next one.
Many workers viewed the failure to cap the “entry level” at 25 percent of the workforce would lead to these workers — now 45 percent of the workforce — to become a majority over the life of the contract and perhaps “senior-level” wages would be phased out.
Other issues involved misunderstandings or poor communication. The failure to have a “product plan” in writing of what vehicles would be in which plant made many apprehensive, as did the new idea of a “co-op” for health care where there were few details spelled out. A key issue for the leadership was not only meeting the needs of the members right now but also protecting jobs for the future, always a tricky balancing act.
AM: It is widely assumed the UAW and FCA will table their negotiation while the UAW negotiates with Ford and GM. What is the thinking here, and do you agree with it? Will FCA be more comfortable improving the position of its second-tier workers if Ford and GM do so first? Is it safe to assume the Ford and GM negotiations — whenever they are complete – would end differently if FCA workers had ratified the tentative agreement reached by UAW leadership?
HS: At this point it’s impossible to predict the direction the union will go. The Chrysler Council — the local union presidents from around the country — is meeting with UAW officers near Detroit right now.
One leading alternative would be to go to Ford or GM now, and return to Chrysler later. Alternatively, a second possibility would be to return to Chrysler and [go on] strike if necessary to address some of the core membership concerns. A strike would be damaging to Chrysler — the weakest of the Detroit automakers financially — and [UAW] president Dennis Williams has said earlier that it would be his last alternative but this could be revisited.
AM: How do you respond to people who say unions made American industry uncompetitive?
HS: [Look at] all of the money that the industry made as a unionized industry. “Yeah, but we were isolated from the rest of the world post-World War II.” Well, we were hardly isolated in the late 1990s. Ford, I think, the last three years of the [’90s] made something like $6 [billion] or $7 billion. And they were paying top salaries with very generous benefit packages. How’d that happen? They were making product consumers wanted, largely pickups and SUVs, and they had high productivity, good quality, and a desirable product.
When the price of gas went up, when you had the U.S. economy go down, you had much less demand for the product they were most successful at. They had not built flexibility into the system. It took them far too long to make the changeover, and that’s what drove the industry down.
Here’s where the grain of truth lies, but it’s not the explanation: Of course, when the industry stopped selling the SUVs and the pickups, and when they didn’t have desirable fuel-efficient vehicles, of course, then the high wages started to look really bad.
Part of the very different nature of the UAW today is it fully understands that it needs to work with the industry to ensure that it is competitive to create jobs and to bargain effectively to ensure that workers share those gains. I think that’s what we’re seeing. … Both sides know they’ve built a constructive relationship, and they both benefited from that.
AM: The UAW has been pretty much shut out of the “transplant” factories in the South and Midwest. What is your prescription for how it might deal with transplants more effectively?
HS: It’s very tough, but the UAW has embraced this as a central challenge. I think we are going to see a union at Volkswagen. The timeline is difficult to predict, but I think that’s going to happen. There is a very active campaign [to unionize] at Nissan in Canton, Mississippi, that has involved the civil rights movement, the churches, political leaders, and social movements more generally, as well as the UAW. If Volkswagen is unionized, then I think you will see movement at Mercedes, and you might see movement elsewhere.
AM: Some people say, “It’s fine if you want to join the union, but I don’t.” If a plant votes to go union, you’re paying union dues whether you like it or not. How do you respond to this complaint?
HS: We have [elected officials including] a Congress and a president. I’ve got to pay taxes whether I want to or not. And if we go to war in a place that I think is wildly the wrong direction, they don’t give me a discount.
AM: How soon do you think another vote will happen at Volkswagen? Could VW be more aggressive with, for example, public officials mouthing off against the union and say, “We want workers to know beforehand that the vote will have no bearing on whether or not we stay in Chattanooga?”
HS: I think the UAW is appropriately being cautious principally because of the level of virulence and hardball that came out the last time. … I think when you have the governor, when you have a United States senator, when you have the leadership of the assembly [speaking against the UAW and promising lost work for the plant], I mean all of that, this was not a free choice by any stretch of the imagination, and as it is [the union] lost very narrowly.
AM: Any reason to feel hopeful about the state of the union and its partners, the car companies?
HS: When GM had the fiasco with the ignition recalls, that was a lot of money. [GM could have] deducted it [from the company’s profit], and workers get their profit-sharing checks cut. … The union, in extensive conversations with [CEO] Mary Barra, made it very clear if you [choose that route], it’s going to cost you in goodwill. She got it. So the fact that she did that was very important.
You’ve got deep divides on the two-tier [wage scales, for new and old employees]. I think you’re going to see a strong move to bridge that gap. It may not be done in a single contract, but you will be able to see a path forward. And I bet you will see some commitments about new products being built in the U.S.
So, tough? You bet, but the genius of collective bargaining is that it resolves differences.