The noises you might here if you drop in at Solidarity House – the headquarters of the UAW – this week are the sounds of union leaders scrambling to prevent what could be a catastrophic confrontation that is beginning to look increasingly inevitable.
In the weeks leading up to the mid-summer launch of contract talks with Detroit's Big Three, United Auto Workers Union President Bob King stressed that he was pushing for "creative problem solving." The best way to read that statement was that he was looking for a way to keep the automakers competitive in return for more jobs – while also seeking a way to sell new contracts to workers who were damned and determined to win back the concessions they'd made in recent years.
And those givebacks have been substantial. Leading into the last round of talks in 2007, total wages and benefits added up to nearly $75 per hour for the typical UAW member at General Motors, Ford and Chrysler. After agreeing to cuts in the '07 contract and then significantly more givebacks when two of those makers went bankrupt in 2009, the figure fell to just over $50 per hour.
The good news for the domestic makers is that effectively put them on a par with their transplant rivals, particularly the North American factories run by Japan's Big Three, Toyota, Nissan and Honda. That was enough for the Detroit manufacturers to justify adding thousands of jobs and to look into the possibility of bringing back still more by "insourcing" work that had, over the years, been outsourced to factories in Japan, Korea and China, as well as non-union parts plants in the U.S.
While one has to be wary of the numbers – since promises previously made were repeated in the new contracts – the domestic makers have agreed to add perhaps 10,000 jobs and invest billions into domestic operations as a result of the new four-year contracts hammered out with the UAW.
The settlement at GM was quickly ratified – though by what was a historically low, two-thirds margin. And that sent a signal that trouble might be in the offing. Indeed, trouble appears to be the case as the voting proceeds on Ford's tentative contract.
That settlement is the most lucrative of them all, with an up-front "signing bonus" that's $1,000 more than what GM workers got and $2,500 more than the deal at Chrysler. Other features also favor Ford workers. But the contract does not come close to restoring those concessions and, if anything, opens the door to putting even more new workers in the lower second-tier wage and benefit category.
And that's not sitting very well. As Autoblog and my own site, TheDetroitBureau.com, have been reporting, a number of key Ford plants have turned thumbs down on the contract. It very well could be rejected, even as frantic union leaders pull out all the stops hoping to lobby the rank-and-file at the plants yet to vote to give their approval.
Should the contract be rejected, it could lead to all sorts of issues, especially for the UAW, and particularly for the leadership of Bob King, who took the helm just last year.
Ford is the only one of the Detroit makers where the union would be able to strike. A walkout at GM and Chrysler is prohibited – at least for economic reasons – under the terms of their 2009 federal bailouts. As the only Detroit maker to struggle through the automotive depression Ford has no such protection.
That would be ironic as Ford has traditionally had the best relations with the UAW of all the domestics – though that didn't help it get all the same concessions its cross-town rivals got when they went bankrupt. Workers narrowly rejected additional givebacks for Ford to match those given GM and Chrysler.
The rank-and-file mindset appears to be focused on the fact that Ford is the healthiest of the Detroit makers, reporting billions in profits in 2010 and lining up still more during the first half of this year.
It also didn't help that CEO Alan Mulally took the curiously ill-timed step of accepting tens of millions of dollars in salary, bonus and stock options just before the latest round of contract talks began. That doesn't make it easy to sell the concept of "shared sacrifice," even if Ford's enhanced profit-sharing formula would ostensibly yield shared gains if Ford continues to post big earnings.
If the contract does go down to a "no" vote, it's not certain that a strike would immediately follow. Union leaders would still have the option to extend the old agreement as they returned to the bargaining table. But whether Ford negotiators would be willing to offer anything to sweeten the pot is anything but certain. Clearly, Ford doesn't want to be put back in a disadvantaged position versus the Japanese – and even more so to resurgent rival General Motors.
Meanwhile, a rejection of the Ford contract could see Chrysler employees emboldened to turn down their tentative contract, as well.
Why wouldn't the union welcome the opportunity to go back for a bigger pot? For one thing, there's no certainty it would get much – if anything – more, at least not without a bruising battle. And King and his senior leadership recognize all too well that Ford would likely respond by cutting back on future investments in the U.S., transferring more production – read jobs – out of the country.
Considering the UAW now has barely a quarter of the dues-paying membership it could count at its 1.5 million peak in 1979, that's a serious concern. Insiders tell TheDetroitBureau.com that there's a clear recognition that at its current size the union is not sustainable – certainly not as the political powerhouse it had long been.
No one expects the UAW to regain its body count in Detroit alone. So, it has been clear that King's next goal had been to ramp up organizing efforts at the transplants, a score of which now dot the U.S. landscape – most in non-union Southern states.
Only two are currently represented by the union – and then only because they began life as Detroit-Japanese joint ventures. Indeed, a third union plant, the NUMMI factory near San Francisco, was closed after the breakup of a GM-Toyota partnership.
Transplant workers have so far been cool to the UAW's advances. They've seen the union as confrontational and unable to deliver anything they didn't already get. So, the challenge for King was to come up with Detroit contracts that delivered a reasonable level of gains while also showing the UAW could cooperate, rather than confront, at the bargaining table.
If the Ford and/or Chrysler contracts go down to defeat, that image of a "new" UAW that can also work for transplant workers vanishes in a puff of smoke. And so, even if bargainers eventually score a more lucrative contract, they might wind up winning the battle and losing the war.