Final Inspection

Labor Talks: No Game-Changer, Still Great Theater

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United Auto Workers President Bob King doesn’t believe labor talks that kicked off this week – billed by some as the next watershed moment for the industry – will wind up being the “big event” observers are suggesting.

He’s right.

Most of the heavy lifting by management and labor occurred during the run-up to bankruptcy for General Motors and Chrysler, when the union agreed to second-tier hourly wages, defined-contribution retirement plans for new hires, higher insurance co-pays and the VEBA to fund retiree health care.

This time around is more about tweaking than massive overhaul, with both sides looking to concoct a formula that rewards line workers when the going really gets good, but won’t trigger another dunk in the tank during the next down cycle.

But that doesn’t mean this year’s negotiations won’t be intriguing. Among points of interest:

• Profit-sharing is likely, but the form it will it take is far from a certainty. Company insiders admit payout formulas will need to be easily understandable, so this time workers won’t feel cheated once the checks arrive. There’s also talk of using the same framework for both blue- and white-collar employees, a move that would bring the two groups just a little closer together.

Adding provisions to the formula that further rewards workers for achieving quality and productivity goals – and possibly meeting attendance bogeys – also would be a positive step, but whether and exactly how that would be accomplished remains up for debate.

Will formulas differ at GM, Ford and Chrysler, and if so, how will the union make sure none of its members believe they got the worst deal?

• Under provisions of their bankruptcy reorganizations, Chrysler and GM will be bargaining without the threat of a strike, and either the UAW or the auto makers can call for an arbitrator to decide on a new contract if a deal can’t be reached.

Neither side will want to initiate arbitration. For the UAW, it would put a new contract into effect without a vote from the rank-and-file. For the auto makers, win or lose, arbitration would have a chilling effect on management-worker relations. A short-term gain on a few sticking points might prove a long-term headache on the assembly line.

• Which company will the UAW target first, if any? Ford makes the most sense, because the ability to strike gives the union more leverage.

But Ford workers have been the most militant over the past couple of years, and that could drive the UAW toward a deal the other two auto makers won’t accept. Can the UAW risk setting a pattern with Ford that drives GM and Chrysler toward arbitration?

• The UAW has a new president in King, and Ford CEO Alan Mulally is a national-negotiations newbie. But most interesting may be how Chrysler/Fiat CEO Sergio Marchionne emerges from his first big powwow with the union.

Seen as a hard bargainer for Fiat in Italy, Marchionne has played the hero to blue-collar workers in the U.S., where he rescued Chrysler from the clutches of Cerberus and potential liquidation, revamped a moribund product lineup and saved a plant or two once ticketed for closure.

Will line workers still embrace their CEO post-Sept. 14?

• Shadowing the whole scene is the UAW’s pledge to organize at least one of the foreign transplants in the U.S. by year’s end.

Detroit would like to see that happen almost as much as the union, which may be why GM is open to giving labor a board seat as a way to prove the UAW has morphed from a thorn in its side to full-fledged partner.

But just how much are the two sides willing to bend in order to open the door for the union at likes of Toyota, Volkswagen and Hyundai and get a shot at leveling that playing field once and for all?

• Finally, this is the first time in a long time negotiations won’t be centered on near-term survival. With no big fires to extinguish, the two sides can concentrate on forging a deal aimed at long-term prosperity for both camps.

Will they get it mostly right? And, equally important, will they be able to convince a skeptical and often adversarial America they did?

What's Final Inspection?

WardsAuto editors share insights and observations on the global auto industry.

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Dave Zoia

As Editorial Director, I oversee much of what goes into WardsAuto.com, enjoying a ringside seat that lets me observe up close just about every facet of the industry worldwide. I have covered the...

James M. Amend

James Amend is an associate editor at WardsAuto.com, covering day-to-day business and product news at General Motors. He also leads coverage of regulatory and environmental issues, as well as the...
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