Hurdles Face UAW Despite New Detroit Three Contracts

The UAW negotiate new labor contracts in 2015 that are paying off for union members, who came away with big wage increases and profit-sharing checks as automakers pile up record profits.

“The outcome of the negotiations shows there has to be balance and (workers) have to a have an opportunity to gain wages and prosperity as they work,” Union President Dennis Williams notes during a recent session with reporters in Detroit.

But the union  faces more challenges in 2016 such as bolstering its organizing campaigns among nonunion workers in the Southern U.S. and the growing exodus of car production from the U.S. to Mexico at a time when General Motors, FCA and other automakers increasingly are looking abroad to fill out their product portfolios.

The politically active union also must rally its scattered forces behind Democratic candidates in the upcoming national election to counter a political environment openly hostile to organized labor even as it attempts to satisfy its diverse and restless membership.

Arthur Wheaton, director of the Worker Institute at Cornell University, describes the UAW’s contracts with General Motors, Ford and FCA US as productive overall but also leaving union leaders with some major unresolved issues. The decision to accept more car production out of the U.S. is a mixed bag, Wheaton says in an e-mail.

“The truck, SUV and CUV sales are increasing and passenger-car sales are tanking with cheap gasoline,” Wheaton says. “There have been problems with profitability of small-car production in the U.S. for decades. Cars were viewed as a means to bring people into the showroom and try to upsell them to more profitable vehicles now or in the future,” he says.

2-Tier Concession Coming Off Books

The UAW in the past has tried to bridge the gap, Wheaton says, citing the unique contract the union negotiated in 2009 to keep open GM’s assembly plant in Orion Township, MI, as part of its effort to protect car production in the U.S. The UAW attempted “to bridge the gap in profitability” by giving jobs to more lower-paid second-tier workers in an underutilized plant.

But the 2-tier system was widely disliked by the union’s members, who last fall rejected FCA’s initial contract offer largely because it would have kept the system in place indefinitely. The revised contract eventually ratified by the UAW will phase out the 2-tier system.

“The UAW decision to allow more truck and SUV production in the U.S. is good for the short and medium term,” Wheaton says. “Long-term, my guess is that the UAW will renegotiate the products being made in existing plants should they need to be retooled for slower sales.”

Consumers enjoying sustained low gasoline prices are making the rational decision to buy more space and spend a bit more on less-fuel-efficient vehicles. “I am not sure gas prices will rebound to the $4.00 level anytime soon, sparking a move back to cars,” Wheaton notes. “It is the volatility of the price swings that change consumer behavior.

“The UAW made the best decision for short-term/medium-term product cycles. Long-term they need to focus on raising union wages and solidarity in the competing countries and not allow the (Detroit) Three to whipsaw their wages, benefits and production with lower-cost labor,” he says.

The industry landscape is changing rapidly, not only with more cars being built in Mexico but also with GM’s decision to import the China-made Buick Envision CUV to the U.S.

In addition, with FCA CEO Sergio Marchionne talking about finding a partner to fill out the Italian-American automaker’s car lineup, the union in the not-too-distant future could do so with vehicles built in China or Eastern Europe, Wheaton says.

“The scary decisions are going to come about if the Buick Envision becomes a runaway hit. Do they crank up (production of) the Chinese imports to fill the gaps?” he says. “Mexico has long been a competitive problem for the UAW, and the Chinese, Polish, Italian and other international production facilities would love to export to the U.S., as Europe and China face a more uncertain economy.”

The UAW’s Williams acknowledges the steady growth of the Mexican auto industry very much remains a threat to the union’s future and is an issue it will address in ongoing discussions with GM, Ford and FCA.

“Mexico is a threat, no doubt,” he says. “We all know what a corrupt system they have down there; we want free unions down there. Why are we not arguing about (troubles with auto production in) Canada?”

Southern Push Eclipsed by New Wave of Imports

Harley Shaiken, a labor expert at the University of California-Berkeley, says one challenge facing the UAW executive board, now that deals have been struck, is to ensure some car production remains in the U.S.

“It’s important they keep passenger-car production in the U.S. and not let all go to Mexico,” he says, suggesting the union can’t afford to let the skilled personnel required for building cars move out of the U.S.

Shaiken says the UAW has no choice but to press ahead with its expensive organizing campaigns in the South. UAW officials were angry that Volkswagen of America, facing enormous problems elsewhere, elected to take the union to court after the union won a representation election among skilled-trades workers at the VW plant in Chattanooga, TN.

The union hopes to work out a settlement with VW, which is under intense pressure from conservative business and political figures not to open the door any wider for the UAW.

A win at VW, however, would be critical to energizing active campaigns the union has launched in Alabama, where it has moved to organize low-paid workers at several supplier plants, and at the Nissan plant in Canton, MS, where the fight is even more contentious than the one in Chattanooga.

Closer to its traditional Midwestern home, the UAW also must find ways to rebuild rank-and-file confidence in the union leadership, which was surprised by the narrow ratification results not only at FCA but also at GM and Ford, if it wants to make some headway on the political front.

“These are tough times for labor,” Shaiken says, adding the union needs help in Washington and at the state level if it wants to reverse some of the setbacks it’s suffered in recent years.

Union leaders from Williams on down insist the UAW is fighting to defend middle-class wages and a middle-class standard of living. But union members have grown more skeptical of the UAW’s ability to have an impact, which makes political organizing more difficult.

Williams concedes the union must do a better job communicating with its members, noting social media has reinforced the need for transparency and speed in distributing accurate information.

“Social media plays a big role today,” Williams says. “We saw we need to do a better job in rolling out contracts. We were not prepared for the outside forces that attacked us on social media.”

Shaiken says winning wage gains at the bargaining table was a good first step in rebuilding faith among UAW members.