Word leaked last month, , and the United Auto Workers union are exploring a profit-sharing deal. It’s a fantastic idea. For auto makers, it could greatly simplify labor relations. For the union, it could mean survival.
One of the burdens that caused the collapse of the Detroit Three was their sky-high labor costs. Decade after decade, strike after strike, contract after contract, the UAW steadily piled on higher wages, better benefits, more holidays and stricter work rules.
Remember, it’s a political organization. You don’t get appointed to positions in the union; you get elected. And you get elected by promising to force more concessions out of management.
This year, and for several years to come, the Detroit Three are going to make big profits. So how will they deny hourly workers better pay if they are raking in the dough and decide to pay big bonuses to management in the future?
If the UAW agrees to profit-sharing, and workers get their piece of the pie, paying generous management bonuses when times are good should not be a problem.
Auto makers have done this successfully in the past. When the popularity of SUVs caused revenue to soar in the1990s, hourly workers atand earned up to $8,000 a year in profit sharing. (GM was not as profitable during those lucrative years, so its workers did not fare as well.)
This time, the arrangement could be even sweeter.
New UAW hires will earn a paltry $14.50 an hour in wages. That may help GM, Ford and Chrysler become competitive with non-union U.S. transplants. But let’s face it; you can’t support a family on that kind of pay. In the U.S., we like to brag the auto industry built the middle class, but $14.50 an hour is going to destroy it.
With profit-sharing, workers could earn significantly better wages. In good years, it’s possible they could nearly double their base wages. That would put them close to where they were before the Big Collapse.
In bad years, there would be little or no payouts and everyone would have to tighten their belts. But at least auto makers would not get killed financially like they do when high labor costs are baked in.
Of course, it shouldn’t be an automatic bonus. Profit-sharing needs to be a reward based on meeting objectives the union can control, such as quality, productivity and reducing absenteeism. And it should apply only to plants represented by the UAW. In other words, union members don’t have a right to profits rolling in from Brazil, China or elsewhere.
But agreeing to profit-sharing could save the union. It would show auto makers the UAW can be a competitive partner. And it would show non-union workers the UAW still knows how to deliver a better standard of living.
John McElroy is editorial director of Blue Sky Productions and producer of “Autoline” for WTVS-Channel 56, Detroit, and “Autoline Daily,” the online video newscast.