Bob King’s Quest to Organize Transplants ‘Unhurt’ by GM Contract

DETROIT – United Auto Workers union chief Bob King may find his path to organizing so-called transplant auto makers in the U.S. smoother after reaching a tentative labor contract with General Motors with relative ease, experts tell WardsAuto.

“It doesn’t hurt him,” says Kristin Dziczek, director-Labor and Industry Group at the Center for Automotive Research, an Ann Arbor, MI-based think tank.

King has made it a priority to organize hourly workers at foreign auto makers building vehicles in the U.S., such as Volkswagen in Tennessee and Hyundai in Alabama. He claims a UAW-backed workforce can out-compete those in the auto industry without representation.

“Winning always helps you get momentum,” King tells WardsAuto after running down details of the new GM contract with journalists yesterday.

Both sides have said labor negotiations went relatively smoothly and featured never-before-witnessed levels of transparency.

In the end, the union gained hard-fought wins such as raises for new hires earning less than veteran workers; thousands of dollars in lump-sum payments for ratifying the agreement; monetary awards for meeting quality and productivity targets; and richer medical benefits.

The new contract also moves some $2.5 billion worth of planned product investment from Mexico to the U.S., creating or retaining 6,400 union jobs.

Much of GM’s concessions are offset by items such as a 37.5% cut in retirement contributions and the elimination of costly odds and ends such as legal services for UAW members.

King claims organized labor makes auto makers more profitable.

The contract goes to the UAW’s GM membership this week for a ratification vote.

“When (transplant) workers see how we play such a key role in the success of the company, it will definitely have a big impact,” King says.

But as attractive as the gains King won for his 48,500 GM members might appear to transplant workers, foreign management’s persistence against organized labor still stands in the way, Dziczek says.

For example, today’s weak market keeps the U.S. industry from seeing the labor-cost gains the Detroit Three won during their bleaker days.

“Until we see a bigger market, it’s going to be difficult to say (the Detroit Three) can outperform,” Dziczek tells WardsAuto, after addressing a meeting of the Automotive Press Assn. here today. “It’s coming, but it’s not there yet.”

Transplant auto makers also keep their workers happy, she says, noting Toyota and Honda pulled pages from the UAW’s playbook to maintain employee optimism when the Japanese tsunami and earthquake slowed production earlier this year.

“It’s not core economics that people get upset about and stick their neck out on the line to organize,” she says. ‘They do it when they are being treated (badly).”

Gary Chaison, a professor of Industrial Relations at the Graduate School of Management at Clark University, says the new agreement does fail to reverse key items, such as the 2-tier pay scale UAW workers dislike and the raises for new hires were modest.

New hires will earn $19.28 an hour, according to the tentative agreement, compared with $15.78 under a deal reached in 2007 to help make the Detroit Three become more profitable.

“The UAW’s problem is that it cannot entirely reverse all of the concessions granted during the past decade,” Chaison says in a telephone interview from Worcester, MA.

“But the union can point to the agreement in general, and they can argue that they showed moderation in their demands and that they traded off wage increases for jobs,” he adds.

The UAW also can argue that by agreeing to profit sharing, it’s willing to shape the collective agreement to fit the financial conditions of the company and industry.

King would argue that an organized workforce raises productivity, a key measure of profitability for auto makers. “Nobody has a more long-term interest in the success of the companies than our memberships,” he says.

“Every day, they are on the shop floor making sure we’ve got the best quality, making sure we come up with new ideas that are more productive. I think when you have a membership that feels like they have been treated fairly that helps productivity too.”

The labor agreement calls for minimum profit-sharing of $3,500 in 2012 and a payment in 2011 based on GM’s impressive first-half results, as well as items such as a $250 yearly award for meeting quality metrics.

“The gap between the domestics and transplants has definitely narrowed over the years. And the trend is continuing which is positive,” says Michelle Hill, vice president of consultant Oliver Wyman’s global auto practice.

Oliver Wyman took over the much-watched Harbor Report on productivity in 2009 and no longer releases the annual ranking publicly.

“With UAW and management more aligned in terms of this newest contract, it gives extra motivation for the two to work tougher to make overall improvements,” Hill says.

–with Byron Pope

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