The battle simmered throughout 1936 and hit a crescendo during the Christmas holidays. The United Auto Workers union tried desperately to organize workers at General Motors Corp. GM wanted no part of the union, and created its own spy ring to infiltrate UAW meetings and keep tabs on union strategy.

The UAW routinely found the spies and kicked them out, often too late. Between Jan. 1, 1934, and July 1, 1936, GM spent $994,855 on these clandestine operations. In two-and-a-half years, the Pinkerton detective agency alone cleared $419,000.

But even the spies couldn't keep the union at bay. Many workers, tired of being overworked and not protected, hungered to be organized. By early January 1937, they laid it all on the line and the now famous sitdown strikes began.

Dozens of dirty, hungry, cold men occupied plants, such as GM's Chevrolet complex in Flint, MI, which was the heart of the strikes, refusing to leave until the company recognized the union. After dozens of injuries, government intervention and behind-the-scenes negotiating, GM and the UAW finally reached an agreement. After 44 days, tired, battered but jubilant strikers filed out of the Flint plant two-by-two, carrying the American flag and singing the UAW's anthem Solidarity Forever.

It took awhile for things to calm down because the hatred and distrust continued to simmer. GM reports show 379 wildcat strikes in 1937, a total of 37 in 1938 and only 15 in 1939.

That's more than half a century ago; things must be better. Not necessarily.

For years, relations between the UAW and the Big Three were much the same - adversarial and mean-spirited. Ford Motor Co. also fought bloody battles with the union over organization, as did Chrysler Corp. However, in recent years, Chrysler and Ford have changed their relationships with the union. There are still differences, but labor and management seem to have a shared vision where disputes often are settled without work stoppages. Chrysler had a 12-day-strike in 1985, but has recently had some local walkouts over outsourcing. Ford hasn't had any national strikes in the last 15 years and only rare local walkouts.

But at GM, many view labor relations as little different than 60 years ago. Failed negotiations led to disruptive local strikes for much of the 1990s.

Some think it has much to do with the personalities and philosophies of various union and corporate leaders, who have a dramatically different vision of the globalization of the auto industry.

GM firmly believes it must cut its U.S. workforce, grow in other nations and have more flexibility in its North American Operations (NAO) plants to compete globally. Its global sourcing strategy - to buy low-cost, quality components from anywhere in the world - alone puts the union's back against the wall. About one-fifth of the UAW's GM members work for the automaker's component arm, Delphi Automotive Systems.

The threat of job cuts at Delphi is constant because as an international supplier, it has plants that can do work cheaper. Even so, Delphi and the UAW together reduced costs in North America by about $4 billion over the last two years, Delphi says.

For its part, the union wants to add more jobs and keep work in the U.S. It is cautious about granting more flexibility because it doesn't trust the company. Some also say UAW GM Dept. head Stephen P. Yokich's attitude toward labor relations may make the future more difficult. His approach doesn't include co-managing the corporation, although he does believe in working together for mutual benefit. And things could get dicier: He's a shoo-in to replace Owen F. Bieber as UAW president next month.

Critics believe he thinks labor and management should have an adversarial relationship to maximize the gains for his membership. "That's a short-term approach," says one UAW official. "I think that management is an important discipline that we have got to participate in. It's not an enemy, nor a position of power and authority. I don't know that the American management system has learned that very well, particularly at General Motors."

Over the last year, six UAW locals have struck GM. There'll be more unless the giant automaker and its union find some common ground, which may take the wisdom of Solomon. But unless they find it, many believe GM and the UAW will slowly but surely go down together as the industry goes global.

"The last 15 years of change that we've experienced have been extensive," says one UAW leader, "but I'm convinced that in the next 10 or 15 years we'll witness even more change in the globalization of this industry, and the competitiveness will probably increase two- or three-fold."

Wonderful, say GM execs. Although the company makes money overseas, without a healthy NAO its future as the world's largest automaker is bleak.

Both UAW and NAO officials declined to be interviewed for this story, but in a recent speech NAO President G. Richard Wagoner Jr. summed up the problem this way: "On one hand you have an enormous, struggling corporation - its back to the wall - finally seeking to change and adapt to the future. On the other hand, you have a strong union with a proud and accomplished heritage, also faced with a changing future."

Today, industrial workers account for less than one-fifth of the workforce - about the same as they did in 1900, proving that organizing new members is tough. The UAW has seen its membership drop from 1.5 million in 1979 to 800,000 today, almost a third of whom work for GM.

That shrinkage is the driving force behind the union's battle to keep the remaining jobs - and workers - on its rolls. And the friction is palpable. In his talk, Mr. Wagoner said the two sides must work together to solve the problem. "If we don't, it could be a high cost for both of us ... We are like two huge bears. We can give each other a bear hug and take each other down."

From 1990 to 1992 GM suffered real losses on the order of $9 billion, and NAO lost almost $15 billion from 1991-'94. The mighty, sometimes arrogant automaker hasn't really recovered from that shock, and its current leadership has vowed to the board of directors it'll never happen again. Unfortunately, however, GM until very recently (see Editorial p. 7) has not been able to take as much advantage of the current uptick in the market as other automakers. That has many, including the UAW, worrried.

Some experts predict the giant automaker's domestic market share will fall from today's 32% to below 30%, perhaps as low as 28%, by the end of the decade. GM's share has dropped steadily since the first half of the '95 model year, says Ward's Automotive Reports. The UAW believes GM's plan is to sacrifice market share and union jobs for profit. But that would be a poor long-term strategy, Wall Street says, and the union agrees.

They point out that rivals Ford and Chrysler are making money and gaining share. "It would appear to me that Ford and Chrysler are eating us (GM) alive," says Ruben Burks, UAW director of Region IC, representing workers in the Hint area. "Why wouldn't (GM) try and capture that market?"

He also alludes to a truck and bus assembly plant in Flint that went unused for six months, even after a $34 million investment, because GM didn't want to hire new people. It was supposed to build a C/K crew-cab truck. "Now Ford has got one out; they've beat us to the punch," Mr. Burks says.

The growing number of local strikes doesn't help either. The UAW is angry over heavy overtime, subcontracting and what it calls "not living up to the agreements." GM insiders say there's difficulty in reaching consensus on interpretations.

For example, the union says the company still insists laid-off workers must "follow the job," even though the current contract guarantees that idled UAW workers only have to move to new jobs within a 50-mile (80 km) radius. That position led to a strike at a truck plant in Pontiac, MI, in April. After a six-day walkout, GM promised not to insist laid-off workers move to other locations. That means about 1,700 people who lost their jobs when GM closed another plant in Pontiac will get new positions at the truck plant.

It also means GM will have to hire new people to fill the jobs at other plants, swelling the automakers' 240,000-member workforce.

And, after a six-day walkout at a Delphi Automotive Systems operation in Flint last January, GM agreed to hire 907 new people.

GM insiders say the new hires aren't as significant as many think because the annual attrition rate is 10%. But adding even a small number of workers does little to improve Gm's productivity scores, which still are far behind Ford and Chrysler.

On the flip side, adding people cuts into profit-sharing checks for GMIUAW workers. They already are dramatically lower - an average of $550 this year compared with $4,000 at Ford and $8,000 at Chrysler. That huge discrepancy between the union's brothers and sisters is a political problem for both the union and the company.

Why are Ford and Chrysler doing so well? To suggest that buyers like their products better is an obvious answer, but the foundation lies in history. "It's elegantly simple," says one GM executive. Those automakers reduced their workforces, closed plants and tightened their belts in the early 1980s when Chrysler had a very public bout with bankruptcy and Ford a more private one.

Ford also came to believe that empowerment was the future, and in the early 1980s began educating its executives to embrace a joint relationship with the union. Donald F. Ephlin, then head of the UAW's Ford Dept., was even invited to speak to the board of directors. That went a long way toward cementing union/management relations.

Management at Chrysler has gone from cop and dictator to facilitator and enabler, says Shamel T. Rushwin, vice president international manufacturing and minivan assembly operations. That's a huge transition. "Are we through it? Hell no," he says. "We have a long way to go to re-earn that trust after 75 years of distrust and contempt in a lot of cases."

Although it had plenty of opportunities, GM didn't bite the bullet and downsize back when times were tough for everybody. Nor did it foster any corporate strategy to work jointly with the UAW. Programs came and went but were never applied the same way across the corporation.

"We found there was more than one GM," says one union official. He believes the problem stems back to the days of Alfred P. Sloan, chairman of GM in the 1940s and 50s. He set up Gm's divisions as separate entities that competed against each other. They held everything close to the vest and often sniped at one another.

That was fine when GM had 60% of the U.S. market, but it doesn't work today. The problem is, for all the lip service of a cohesive relationship between its divisions and plants, GM has no common labor strategy. "There is only one union, and as far as we're concerned, only one GM," says a former UAW official. "But there is such a lack of consistency, the labor relations guys can't be effective."

Now, more than 10 years later, Gm's trying to cut back during the good times while creating a joint relationship. The two don't blend very well.

When there is little trust, and some say no real labor-relations strategy, the obvious outcome is unrest and strikes.

Compounding the problem, Wall Street and many in the UAW believe GM has "lost every one of the six walkouts. That destroys the confidence of the economic community and encourages other locals to strike.

In fact, the union maintains in many cases it got more than it asked for before striking. For its part, GM wouldn't even publicly detail win-win achievements like getting the Delphi plant in Flint to agree to make productivity changes that would help the operation win QS-9000 certification. QS-9000 is the new quality standard every components plant must have to keep GM business (see article, p.44).

Common corporate wisdom has been to stay clear while the union is trying to "sell" a new contract because a slip of the company tongue can nix the pact. But now many question why, after ratification, the two sides don't agree to speak about cooperative portions of an agreement. Just seeing officials from GM and the UAW together might convince Wall Street there is some hope for a consensus down the road.

Some things lend themselves to that.

The GM/UAW agreement at Saturn Corp. is a prime example. One of the most innovative pacts ever, it creates jointness on all levels. And there are plants with traditional labor agreements where labor and management are able to work together.

In addition, GM will invest $250 million in its Detroit/Hamtramck assembly complex to build more vehicles based on the Oldsmobile Aurora and Buick Riviera (G-body) chassis. Scheduled for completion in the fall of 1996, the expansion only means 60 new jobs, but current employment holds steady at 4,300.

GM also says the Wilmington, DE, Chevy Corsica and Beretta plant, which was headed for mothballs, will get a new lease on life thanks to an innovative labor pact that assures the plant an interim product. The next-generation Chevrolet Malibu/Oldsmobile Ciera compact sedan will be built there from December 1996 through June 1998. After that, Wilmington has a good chance of winning a new Saturn model, which will be jointly developed by Gm's Adam Opel AG subsidiary in Germany.

UAW Local 435 President Jack Cordell says the new agreement cuts job classifications and pushes the team concept. The new pact "shows the corporation and the intenational that we are serious about doing everything we can to get cost-effective to build a quality product," he says. It also could save 2,500 jobs.

But the union has a long memory. In the 1980s, a plant in Pontiac ratified just such an agreement so it could build the Pontiac Fiero sports car. The car was underpowered, suffered from poor quality and consequently didn't do well in the market. The plant closed, putting a huge dent in the trust factor with the union.

Juan Diaz, a Local 599 member at Buick City in Flint and a former foundry worker, remembers GM saying in 1978 workers had to improve quality at the foundry to save their jobs. He claims they did, but the plant closed anyway. "There've been a thousand and one different programs," he says. "They sell us these programs, and before you know it, it's right back to doing things the old way. They play these games with people. They promise people this and they promise people that to get more out of them, and in the end run people lose trust."

Then there is some question about current management's ability to understand the union and its politics.

Some GM executives are certain Mr. Yokich okays the local strikes to win political favor and secure his ascension to the presidency at the union's Constitutional Convention next month. The truth is, Mr. Yokich is endorsed by the union's executive board and union politics assure he'll get the job.

There also are GM bosses who feel that Mr. Yokich's brush with the FBI and the Department of Labor - they're investigating the possibility that he took kickbacks for awarding Uaw/company eye-care contracts to a longtime friend - may hurt his presidential chances. That's unlikely because it will take months to sift through the mounds of records the agencies have subpoenaed. Mr. Yokich assumes office in June.

When he does, he'll be leading a union that is in trouble because it is more difficult to organize new people these days, and big companies like GM are cutting back. One GM executive maintains that the only way to make certain history treats Mr. Yokich's presidency positively is to get more people on the UAW rolls while keeping those he has. So, "fighting back is natural," the GM source says, especially when GM leaders don't give Mr. Yokich a "way out."

Here's one example. Last year, NAO's Mr. Wagoner flatly stated GM had a hiring freeze on hourly workers. It would, however, hire more engineers. Hackles were raised at Solidarity House. "Never say never," points out one longtime GM bargainer. "The company has to leave the union a way out ... say, `We'll see what the market will bear.'" But, Mr. Wagoner, who has not done much bargaining, appeared to be unaware of that touchy political aspect.

To GM's credit, President John F. (Jack) Smith has worked hard to get close to Mr. Yokich. In order to earn the union's trust and stroke egos, the best move is to make certain a company's top people have a strong relationship with the union's leaders. But, there has to be more.

Union officials say plant managers, local bargainers and daily supervisors have not been empowered to make the decisions governing their sites. "The management people on our site could not settle our problems because of 14th Floor (the GM executive suite in Detroit) politics," says Dale Lebeau, president UAW Local 651, which represents workers at Gm's Delphi Automotive Systems operation in Flint.

"You would think there's great disharmony between me and the plant managers, but in actuality we're cordial with each other. We understand what has to be done. But there's such corporate restraints on them, we have very little choice but to go out there and strike," says Dave Yettaw, president of Local 599, Flint's Buick City.

The source of the continuing labor discord within GM may lay with the people who are in charge of the company - the board of directors - several sources charge. The board quietly created a committee on labor relations that's demanding answers from GM's executives.

"The officers of General Motors want to be in a position of saying to the board of directors, `I'm being forced to hire these people. Or, here's the choice, we either hire 600 or 700 people at Buick City or you lose $10 million a day as a result of a work stoppage'," confides one union official. "That sort of dance between the union and the company in order to alleviate the problem with the board of directors is probably going on with some tongue-and-cheek."

One source also points out there's also a political benefit at the union's local level. The union leadership gets to look tough by taking the membership out on strike and bending the company to its demands.

That doesn't make some union members feel closer to Solidarity House. They maintain the union's executives are too far removed from the plants.

Charges Local 599's Mr. Diaz: "It's like trying to pinpoint the problem in government. You've got so many steps within that ladder, some people don't actually know what's going on."

Consequently, many people on the plant floor see two problems. One: The corporation wants to do more work with less people. The other: The intenational union may be unintentionally helping the company. "A lot of times the people who are negotiating - because they're so far away from what's going on the floor - think they're doing right, but they've got too many ands, ifs and buts in the contract," says one UAW member.

Unless these problems can be ironed out, the future of both sides is in jeopardy. As one long-time labor leader points out: "The UAW can't exist without GM, and GM can't exist unless the UAW changes."