Suppliers are the target: UAW drive to focus on outside parts workers

When Stephen P. Yokich opened United Auto Workers contract talks in June, he said his goal was to improve pay and conditions--not just for Big Three workers themselves, but also for workers in outside parts factories.

In fact, in private meetings with auto executives, he lists the treatment of parts workers as one of the union's three top bargaining priorities for 1996, right up there with secure jobs and restricted overtime.

This is not a new issue at General Motors Corp., Ford Motor Co. and Chrysler Corp. Indeed, the Big Three have made contractual promises to the UAW that they, along with their suppliers, "will respect the UAW as an institution," and that suppliers will not be allowed to violate labor laws. The UAW says companies have reneged on these promises. But up to now the union has never been angry enough to make the issue a top priority.

Mr. Yokich is not specific about what he will ask automakers to do.

Other union officials say privately that the UAW will press each of the Big Three to:

* Require suppliers to make it easier for parts workers to organize, by promising neutrality during union drives or by accepting "card checks." In this procedure, unions are recognized after a simple showing that a majority of workers have signed union cards, rather than after a lengthy campaign and voting process in which employers often use harsh anti-union tactics.

* Adopt a "prevailing wage" rule for work that's shipped to an outside company. Under such a rule, work couldn't be "outsourced" to a company where workers receive lower pay and benefits than UAW workers.

"If we can make a huge movement on this issue in 1996, we can bring hundreds of thousands of new members into the UAW," says one UAW official.

But the increasing globalization of the supply base and the deepening roots of the Japanese transplants will make achieving that goal extremely difficult.

Thomas Brown, executive director of union affairs at Ford, says the No. 2 automaker simply can't interfere with the labor relations of another company. But Robert O. Kramer, vice president of human resources, acknowledges that Ford does "point out to suppliers the advantages we've had over the years" of maintaining collaborative relations with the UAW. "We make the assumption that that relationship will help them (suppliers), too."

For example, Johnson Controls Inc., a seat supplier to a number of Ford assembly plants, is choosing to recognize the UAW at its plants in Plymouth, MI, and Oberlin, OH, after a majority of workers signed cards requesting UAW representation. Last year, Ford's decision to shift seat production on its Econoline vans from its Lorain, OH, assembly plant to Johnson Controls nearly triggered a strike in Lorain.

"The UAW is not going to take a hard line on outsourcing if the work is going to a UAW plant," says Sean P. McAlinden, a labor analyst at the University of Michigan.

Outside suppliers are the invisible parties at this year's contract talks because they are gaining the jobs the UAW is losing.

UAW representation among independent (non-Big Three) suppliers has plummeted to 100,000 from 400,000 two decades ago. Less than 20% of independent parts workers belong to the union today, down from 67% in the mid-1970s. Several trends contributed to that drop, including a pro-management policy shift in U.S. labor law, an overall shift in investment from manufacturing to telecommunications and other high-tech industries, and the arrival in the United States of hundreds of non-union German and Japanese supplier plants.

These forces have radically widened the wage gap between UAW and non-union plants.

Big Three hourly workers represented by the UAW receive $20.69 in base wages, while the average U.S. manufacturing worker is making just 60% of that, or $12.45. This gap is twice as big as it needs to be to create a real incentive for Detroit executives to shift investment to lower-wage plants, says Mr. McAlinden.

That's part of the reason why investment in GM's Delphi partsmaking plants has withered, and why 12 Delphi plants are now on an official "endangered species" list. If the UAW loses those plants, plus additional jobs that will disappear through continuing productivity gains, it could lose 35,000 jobs at GM alone in the next six years, Mr. McAlinden predicts. That's on top of 150,000 jobs GM has eliminated since 1985.

During 1996 talks, the UAW will attempt to save jobs by negotiating contract language that permits strikes when UAW plants are more competitive than outside shops, but the company moves work out anyway. It will try to restrict overtime, thereby forcing the hiring of more new workers. In addition, Mr. Yokich will seek tighter contractual limits on how much employment rolls can shrink.

The automakers, particularly GM, will fight hard to preserve control of investment decisions. They also will press for more flexible work rules and more round-the-clock manufacturing without overtime pay.

An interesting subplot will be bargaining at American Axle & Manufacturing Inc., which still honors its UAW pay scales and most major contract provisions since being spun off from GM two years ago. UAW officials are delighted with their budding relationship with American Axle management, led by former Chrysler manufacturing chief Richard E. Dauch.

They don't expect any showdown during American Axle talks this fall. In fact, the American Axle agreement could serve as a template if, as expected, GM spins off its Delphi parts operations at some point in the future.

The main problem for the UAW in 1996 is that the wage gap between its members and the rest of American manufacturing workers is now so great that no changes in traditional contracts may be enough to save jobs.

As one GM official puts it, "they made a decision they're not going to trade jobs for wage concessions, and now the damn jobs are gone." But on the other side of the table, in the words of a Canadian Auto Workers official: "I don't think the difference between $20 and $17 an hour is going to make much difference. If they're talking about going from $20 to $10 an hour, I don't think the union can accommodate that."

That's why analysts like Mr. McAlinden are saying flatly that the UAW is dead if it doesn't boost its organizing efforts, thereby creating upward pressure on parts-plant wages. He credits the UAW with recognizing this and tripling its organizing budget in the last year to $10 million annually. More resources are coming as the union opens a half-dozen organizing centers in places like Tennessee, Texas and Pennsylvania. Big UAW locals soon will be asked to match the international UAW's organizing expenditures on a dollar-for-dollar basis. And the proposed merger between the UAW, the International Association of Machinists and the United Steelworkers of America should provide much needed leverage.

"Our organizing has changed tremendously," says UAW Vice President Carolyn Forrest, who runs the union's parts plant department. "Now we've got everyone involved, from Steve (Yokich) to the regional directors to the locals. That's making us much more aggressive."

Union efforts are beginning to bear some fruit:

* Workers at United Globe Nippon, which makes sound-deadening panels for Japanese transplants, voted to join the UAW on May 14 by a margin of 212-148. Leaders from nearby UAW locals in and around Chicago contributed people and money to the effort.

* The UAW is now surveying workers at four Dana Corp. plants to see if they're interested in signing union cards. Ms. Forrest says she's encouraged by the early results. The plants are in Gastonia, NC; Gordonsville, TN; Morganton, NC, and Cape Girardeau, MO.

In many independent parts plants, UAW wage scales aren't much different than in non-union plants, although health benefits tend to be better. The union is betting that some companies may drop their opposition just to avoid protracted battles with UAW lawyers.

Still, many companies resist with a vengeance. Recent UAW campaigns at Donnelly Corp. in Holland, MI, and at Mexican Industries in Detroit were defeated soundly. The accelerating shakeout among suppliers, including the recent merger of Lucas Industries plc and Varity Corp., could cut the number of organizing targets for the union, but it also could make each one much more formidable.

On May 24, UAW activists marched through a Riverview, MI, factory belonging to Material Processing Inc., then blocked the driveway for 90 minutes. The plant's 220 workers voted in April to join the UAW. But 40 union supporters were fired prior to the vote and the company has thrown up procedural roadblocks that continue to keep the union out.

The workers, mostly African-Americans, earn between $7 and $11 an hour. Workers say they're often required to work seven days a week, 12 hours a day. The plant's roof leaks and workers say the heat is inadequate.

William Klingel, the company's owner, declines to comment. No contract talks are scheduled.