Beyond the sabre-rattling

It won't be pretty and there likely will be more flare-ups like last month's wildcat walkout at General Motors Corp.'s Lordstown, OH, assembly plant, and UAW VP Richard Shoemaker's outburst at a feel-good media rally for GM's Olympic sponsorship, but don't rule out a compromise after union settles with Chrysler Corp. and Ford Motor Co. this fall.

Both sides know GM can't continue paying its Delphi Automotive Systems parts plants workers $43 an hour in wages and benefits, while most outside suppliers pay between $12 and $20.

"There's a limited amount of new work available to people making $43 an hour," GM's chief labor negotiator Gerald A. Knechtel tells Wall Street analysts.

But the union has a legitimate question: In what core businesses will Delphi adequately invest for the future?

The UAW knows it can't sell its members on a lower "second-tier" wage scale for Delphi, but the alternative is to watch Delphi President J.T. Battenberg III close or sell those that fall short of profit targets.

"We'd go to war over that," Mr. Shoemaker says of two-tier wages.

Rhetoric aside, the groundwork for a compromise already exists. In 1993 the UAW agreed to let each of the Big Three hire new hourly workers at 70% of the starting scale. Their pay increases by 5% every six months until after three years the new hires are paid the same as their veteran co-workers.

Ironically, that provision now benefits Chrysler and Ford more than GM because they are hiring more.

Look for GM to seek a lower starting wage for new parts plant hires and a longer grow-in period until they reach full scale. Doing that without giving Ford and Chrysler the same break will be politically tricky, but perhaps not impossible. Remember, Ford and Chrysler already outsource more of their components than GM.

What may seem unacceptable to Solidarity House in May could look a lot more attractive in October, especially if management agrees to hire new workers in truck assembly plants still working heavy overtime schedules.

Meanwhile, GM Vice Chairman Harry J. Pearce continues to project a get-tough image to Wall Street, seeking a court order to end last month's wildcat strike at Lordstown. In addition, the company goes public that its firing of UAW Local 1112 shop chairman A1 Alli relates to an alleged two-year-old incident when he went to Las Vegas while having someone clock him in at the plant.

"This is fraud, and it will not be tolerated," says James R. Wiemels, vice president in charge of GM's Small Car Group.

Separately, other GM executives try to cool the escalating tensions.

One concedes that labor costs were not the major issue in the 17-day strike at Delphi Chassis' Dayton plant.

"It was a technology problem, not a cost problem," says a GM official familiar with the dispute. Robert Bosch Corp. will supply the antilock brakes for the 1998 Chevrolet Camaro and Pontiac Firebird because their engineering technology has been ahead of Delphi's, he says.