clock menu more-arrow no yes

Filed under:

Automakers, UAW to negotiate new contracts amid strong sales, profits

DETROIT (AP) -- National labor talks between Detroit's automakers and the United Auto Workers begin this week in the midst of record-breaking sales that have left General Motors Corp., Ford Motor Co. and DaimlerChrysler AG flush with cash.

The triennial negotiations kicked off Monday with ceremonial handshakes over the main bargaining table at Ford headquarters. UAW president Stephen P. Yokich and Peter J. Pestillo, vice chairman and chief of staff at Ford, shook hands first, followed by their chief negotiators Ron Gettelfinger and Robert H. Marcin.The UAW negotiators presented Ford negotiators with a large banner with the words "Bargaining for Families," signed by each of the UAW negotiators. Gettelfinger said that was the theme the UAW-Ford negotiators picked for these negotiations.

Similar ceremonies are set for Tuesday at DaimlerChrysler and Wednesday at GM.

The health of the U.S. auto industry and the costly lessons learned from last year's devastating UAW strikes against GM decrease the chance for a walkout after this year's contracts expire Sept. 14, some industry analysts say.

"They've got tough issues, but nobody wants to put the moneymaking on hold to sort it out," said labor professor Harley Shaiken at the University of California-Berkeley.

This year's talks will cover about 407,000 UAW members at assembly and parts plants nationwide, down 15,000 from 1996. More than half work for GM.

Job security, health-care costs, overtime demands and the assignment of work to outside suppliers are among the top issues in this year's talks, as they were during the last round in 1996. But since then, the industry has been through a tumultuous series of reorganizations, cost-cutting programs, acquisitions and mergers. Each of Detroit's automakers is financially stronger.

"It's important to note that for all the changes this is a very healthy industry, one that has enjoyed record profits and sales on a sustained basis," UAW spokesman Frank Joyce said. "It's a good environment for negotiations."

Though times are good, Detroit executives note that they remain under extreme pressure to keep costs down, invest heavily in new models and technology, and simplify the way they build and sell vehicles. With production capacity worldwide far exceeding demand, automakers can no longer simply pass on higher labor costs to consumers, as they did for decades.

Many of their Asian and European competitors, meanwhile, compete directly on American soil with a growing number of modern, efficient, nonunion plants -- a sore point for Detroit and the UAW.

Against this backdrop, the union is faced with the same problems that have challenged its leaders for the past 20 years: How do they slow the steady decline of high-paying assembly jobs as the industry becomes more efficient and needs fewer workers? And as suppliers take on a larger role in the design and assembly of cars and trucks, how can the union expand its influence?

The UAW only recently has begun to reverse its membership slide, largely by signing up more workers in non-automotive industries. More than half of its active membership is still employed by the Detroit automakers.

In the last round of auto talks, the union won a conditional guarantee that at least 95 percent of UAW jobs at each plant would be maintained during the life of the contracts.

Much of focus this year will be on GM, which abandoned its combative stance toward the UAW after last year's strikes cost it about $2 billion and some of its U.S. market share. But GM has managed to continue offending UAW leaders as it seeks ways to cut costs.

Until recently, GM had been publicly promoting ambitious plans to assemble small cars using "modular" assembly techniques. GM says it needs to make the change because its current small cars built in North America don't make money.

In GM's modular plants, most of the subassembly work would be done by lower-cost suppliers who would deliver preassembled parts clusters, such as an entire dashboard or interior module, to the assembly plant. Far fewer UAW workers would be needed.

Yokich has declared modular assembly a dead issue, but to some extent all three automakers have already adopted or are planning to use more modular techniques.

GM and the union also will have to resolve the future of the 42,640 UAW members at Delphi Automotive Systems Corp., the big parts unit that automaker divested last month. The union is expecting that those workers will remain under the next GM contract.

The future of parts workers will be an issue at Ford, too, which is preparing plans to spin off its Visteon parts unit. At Ford and GM, management is likely to seek a lower wage for new hires at the parts concerns so they can more effectively compete against nonunion suppliers.

At DaimlerChrysler, the company that resulted from last year's acquisition of Chrysler Corp. by Germany's Daimler-Benz AG, the UAW is seeking stronger assurances that the automaker won't hinder its attempt to organize the Mercedes-Benz plant in Alabama and three Freightliner commercial truck plants in the Carolinas.

Though DaimlerChrysler's official position is that it's neutral in the organizing drives, executives realize it's a sensitive issue that could cause problems in this year's talks. And there is likely to be some concern among UAW negotiators about who's calling the shots at the Chrysler unit.

"Daimler is a company used to dealing with a union and negotiation, but it's not going to be the same as Chrysler," said John Revitte, a labor professor at Michigan State University. "The fact that it's now a German company is going to change things."

The UAW, meanwhile, has sent signals that it will consider a longer-term contract, most likely a four-year deal. That would make the next contract expire in 2003, a year after the union's leadership is scheduled to change.