July 2011, Week 1


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Portside Labor <[log in to unmask]>
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Portside Labor <[log in to unmask]>
Tue, 5 Jul 2011 01:34:49 -0400
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Detroit's Dilemma: How to Share Gains with UAW
By Bernie Woodall
July 4, 2011


DETROIT (Reuters) - Over the past two years, Ford Motor
Co has roared back from the brink of failure, won
accolades for its gains in quality, posted its highest
profits in a decade and rewarded patient investors with
a 14-fold increase in its share price.

But Mike LeBeau, 23, who works at a Ford assembly plant
in Chicago making around $15 per hour and lives at a
bedroom in his parent's house, is not feeling the good
times yet.

Like thousands of newly hired unionized auto workers
brought in at half the wages of existing hires, he and
others like him are looking for new contracts between
the United Auto Workers and the Detroit automakers to
share the wealth.

"I can make a car payment, and my student loan," said
LeBeau, a recent graduate of Purdue University. But he
doesn't have enough for a place of his own, he said.

UAW officials meet next week in Detroit to map out a
final bargaining strategy for the first round of
contract negotiations with Ford, General Motors Co, and
Chrysler Group LLC since 2007.

They will square off against bargaining teams from GM,
Ford and Fiat-controlled Chrysler who want to use this
contract to break away from the industry's long-
criticized practice of coming out of a boom with the
kinds of higher fixed costs that contribute to the next
crushing bust.

"The biggest question for me is will the UAW and the
companies fall back into their old ways," said Tom
Saybolt, a former Ford lawyer who now teaches at the
University of Detroit-Mercy.

In the four years since the two sides last negotiated a
labor contract, the Detroit automakers were pushed into
crisis by collapsing vehicle demand and the financial
convulsion of 2008. Both GM and Chrysler, now managed
by Italy's Fiat SpA, were bailed out by the Obama

The controversial federal bailout helped the UAW secure
funding for retiree healthcare by giving a union trust
fund an ownership stake in both GM and Chrysler at the
same time that it barred the union from striking at
those automakers.

It also set the stage for a different kind of labor
negotiations that will play out in Detroit over the
next several months for some 112,000 autoworkers.

The outcome of the talks will be watched as a key
indicator of how much of the wrenching change intended
to make the U.S. auto industry more competitive in
recent years will stick as the crisis fades.

The U.S. automakers are ready to offer bonuses,
including one-time signing bonuses, to UAW workers at
the same time that they look to bring down overall
payroll costs by pushing union workers to pay more for
healthcare and bring them in line with workers in other
industries, according to executives and analysts
interviewed by Reuters.

UAW President Bob King, 64, now in his second year at
the helm of the union, has promised a collaborative
"UAW for the 21st Century" approach to negotiation
aimed at making the U.S. automakers competitive and
suggested he is open to bonus-type payments.


For the UAW, whose membership has dropped 42 percent
since 2004, the contract talks also represent a crucial
opportunity to score commitments to keep factories open
or to reopen shut assembly lines with new products like
the Spring Hill, Tennessee plant, where GM launched the
Saturn brand in 1985.

"For the UAW I think it will be jobs, jobs, jobs with a
little bit in the background of 'We need a reward for
what we did.' And for the companies, it's going to be
'We're not out of the woods yet. We need to be
competitive,'" said Art Schwartz, a former GM labor
negotiator and consultant.

The 2007 talks reworked retiree healthcare, created a
controversial two-tier pay scale for workers and put
UAW representatives that manage the retiree healthcare
trust on the boards of directors of GM and Chrysler.

Now King and UAW leadership also face a grass-roots
clamor from workers who say the union went too far in
allowing the Detroit automakers to hire thousands of
workers at a "second-tier" wage of about $30,000,
compared with about $58,000 for established workers,
before overtime.

For perspective, that means that LeBeau, who makes the
Ford Explorer, a hot-selling SUV, cannot afford to buy
the vehicle that he is making. The top-of-the-line
Explorer prices out at almost $40,000.


Union dissidents say the second-tier wages have upended
a basic tenet of the industry that dates to Henry
Ford's decision to double the pay for his workers to $5
a day in 1914. Part of Ford's justification was to
create a market for the Model T by paying workers
enough to buy a new model on about four months of pay.

But hiring new workers at $15 per hour, the UAW has
allowed GM, Ford and Chrysler to close the gap with
Japanese competitors operating factories in the United
States. That was a point that Republican critics of the
bailout had insisted on early in the 2008 bailout
debate. The Detroit automakers now have an average all-
in labor cost of about $49 an hour for Chrysler, $58
per hour for Ford and a reported $60 for GM, compared
with between $50 and $55 per hour for Toyota's U.S.

Driving fixed labor costs down was probably the biggest
gain made by the automakers in 2007. After those talks
and the establishment of the retiree healthcare trust,
hourly labor costs including benefits fell from around
$75 per hour in 2007.

When President Barack Obama championed the success of
the $80 billion bailout of the auto industry in 2009,
he chose to do so at the Chrysler plant that makes the
Jeep Grand Cherokee. That plant, known as Jefferson
North, has the largest contingent of workers at the
lower wage of any Chrysler plant.

But the two-tier system of wages is a continued
sticking point with many UAW workers, who will be asked
to ratify new contracts. Some say they doubt that the
union leadership has their best interests in view, an
unusual degree of rancor in a union that has prided
itself on "solidarity" since its founding in 1935.

"We're not seeing eye-to-eye," said Rondo Turner, a 37-
year-old GM worker who lost his job last month when GM
closed its Indianapolis stamping plant. "The UAW will
come out and say we will get your rights back. But from
the way I see, they are setting up our negotiations so
it's OK to have more second-tier workers."

UAW leader King wants permanent union representation on
all of the company boards of directors, as is the case
with many unions in Europe.

King, who earned a law degree from the University of
Detroit-Mercy while working as an electrician's
apprentice at Ford, says the "UAW for the 21st Century"
is less adversarial with the companies while also
protecting worker rights, work rules, wages and

King, who lives in the university town of Ann Arbor,
Michigan, has refocused the UAW's view on wider social
issues and human rights, and speaks without hint of
irony about working for world peace.


The cerebral King and his lieutenants at UAW have said
that given the choice between higher wages and securing
and creating jobs, they would take the jobs.

Analysts expect King and the UAW to remain pragmatic
because the union has little choice. Ford is the
strongest of the Detroit automakers and it would be the
target for bargaining in a typical negotiating round.
But this time, "a Ford strike would be messy," and the
UAW has no way to force GM and Chrysler to accept the
same terms without the ability to strike those
companies, said Logan Robinson, a former auto executive
who teaches at University of Detroit-Mercy.

"It's like showing up without your battleship," he

Harley Shaiken, a professor at the University of
California-Berkeley who has been a confidant of King,
said the UAW leadership understood that the new
contract would have to keep Detroit's recovery on
track, meaning any pay increase would probably be in
the form of a bonus.

"Nobody is blind to the realities that are out there,"
he said.

(Editing by Kevin Krolicki)


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