uaw - lean times

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Lean Times: The UAW Contract and the Crisis of Industrial Unionism in the Auto IndustryAuthor(s): Jeffrey S. Rothstein

Source: New Labor Forum, Vol. 17, No. 2 (Summer, 2008), pp. 60-69Published by: Joseph S. Murphy Institute, City University of New YorkStable URL: http://www.jstor.org/stable/40342999.

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UAWmembersicket hrysler'sterling eights,Michigan ssembly lant,October0,2007.

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ByJeffrey.Rothstein

LEANTIMESTheUAWContractndtheCrisis fndustrialnionismin theAutondustryFor generations ofAmericans,the auto industry has been associated with stable,high-wagemploymenthat rovideslue-collar orkers ith middle-classstandardf ivingnd a secure etirement.ithinabor ircles,heUnitedAutoWorkersUAW)was thearchetypalndustrial nion,negotiatingindustry-widegreementsith heBigThreeU.S. automakersGeneralMotors, ord, ndChrysler)hat rotectedorkersy akinga-bor ut f ompetition.ertainly,hesemageshavebeenfadingince he arly 980s, s thegradual eclinen themarkethare f heBigThreend he pread fnon-unionuto lantsoperated yso-called foreign utomakerschipped way tuniondensityndweakenedtheunions argainingosition. he extent fthat eclinewas aid bare nthemost ecentcollectiveargaininggreement,n which heUAWconceded eybenefitsnd corework-

place ights,ermanentlyeshapingabor ela-tions n the ndustry.So what appeneduringhemost ecentround fpatternargainingetweenheUAWand the ver-shrinkingigThree?Whatdidthe ompanies in?Whatguaranteesid theworkerset nreturn? hy re henewcon-tractsontroversial?ndwhat oes tmean orthe uturef abor elationsntheU.S. uto n-dustry?

Oddly nough,hedrama nfolded iththe UAWdeclaring ictoryfter two-daystrikeoward he nd ofSeptember007and

NewLabor orum 7(2):61-69, ummer 008Copyright Joseph.Murphynstitute,UNYISSN: 1095-7960/08rintDOI: 1 .1 80/ 957960802026770



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urging heirmembers oratifynew collectivebargaining greementwithGeneral Motors.Two weeks later,Chryslersworkerswalkedpicket ines for ess thansixhours before heunion announcedthe ompanyhad met tsde-mands a claim underminedbya minorityreport ssuedbythe chair of thebargainingcommittee haturgedworkers o rejectthe deal.1 Afterheavy obbyingby theUAWleadership, hryslerworkers ar-rowly oted to ratifyhe agreement.nNovember2007,without ny ndustrialaction, ord workers lsoaccepted heirnew contract.In lobbyingfor ratification f theagreements,UAW leaders emphasizedhistoric commitmentsby the auto-makers o domestic factories nd a freeze noutsourcing. or thefirst ime, nd purport-edly as a direct result of the strikes, theautomakers romised omakeparticular rod-ucts at specificplants.However,most of theguarantees nlycall for hecontinuedmanu-facturing fproductsalready n productionthroughheir urrent roductife ycles,whichgenerally ivesthe factories fewmoreyears.Given he osts ssociatedwithsettingpa pro-duction run, moving a product line mid-lifecycles unlikely nyway,nd nothingpre-vents hecompaniesfrom nding productionrunearlydue toslow sales.So,while tmaybethefirst ime uchproduct ommitments avebeen ncluded nthe aboragreements,hey onotprovidemuchmore han n airof ncreasedjob security.nfact, he nkon the greementswas barely dry before the automakers an-nounced newworkforceeductions.

Instead,whatreally istinguisheshenewpattern greement re twoprovisions hatre-cast the relationshipsbetween and among

hourly employees,the automakers, nd theunion. The first fthese s thewidely eportedcreation fa voluntary mployeebenefit sso-ciation VEBA) to administer etirees' ealthinsurance.The second,andperhapsmore ig-nificant,hange stablishes two-tier age sys-tem underwhich new workersearn half as

Productommitmentsbythe utomanufacturers]. . . do not rovidemuchmore han n airofincreasedobsecurity.

much s current nes. Unlike he ontroversialVEBA, which, tmaybe argued, hields retir-ees from he automakers' inancialwoes,thereis no wayfor heUAW to positively pin thetwo-tierwagesystem.

In fact, hismost recent ound of collec-tivebargainingn the uto ndustryeflects otonlythedesperate tateoftheBigThree,butalso thegraveconcernthe UAW nowhas forthe obs of theirmembers nd the benefits fretirees, ho nowoutnumber ctivemembersthree o one.The contract s a furtherapitula-tionbythe UAWto the forces f eanproduc-tion; t s a reluctantenouncement fyetmorebenefits nd workplacerightshard-wondur-ing heFordistmassproduction ra- all inthename ofcompetitivenessnd thehope forobsecurity.

THE VEBANEGOTIATIONS, THE CREATION OF A

VEBA waswidely eenas theautomakers'

62 New Labor Forum J.S. Rothstein



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number neobjective.or one-time ost fapproximately52 billion GM, Ford, ndChryslerill ontributeoughly30, 1 .2, nd$8.8billion,espectively),he utomakersilloffload he esponsibilityfprovidingetireeswith ealthnsuranceo (presumablyingle)union-run trustfund. This relievestheautomakersfwhatheyomplains a burden-some legacyost hat oyotandother om-petingutomakerso nothave obear.Whatthat egacys long ostmarket ominance,profitability,ordism, r UAWbargainingpower hasnever eenmade lear.) heVEBAwill not stem hedecline ftheBigThreesmarkethare,ut iddinghemselvesf espon-sibilityor etireeealth nsurance ill educethe utomakers'peratingxpensesnd nsu-late hem romhe scalatingost fhealthare.Ofcourse, or heUAW,tsretired em-bers ndcurrent orkers ho will omedayretire,hecreationfa VEBA means he s-sumptionf hose osts nd ssociatedisks.ftheVEBA ssufficientlyunded,ndthosen-vestmentsremanaged oprovide ngoinghealth are tcurrenttandardso theunionsretireemembers,heVEBA willhavebeen asuccess.However,houldthe cost ofhealth are scalate asterhan heUAWpredicts,r he eturnn nvestmentsotheVEBAbe ess han rojected,hetherdue topoor managementr an overalldownturnnthemarkets,heUAWmayfind tselfn theposition fcuttingtsownmembers' enefits.he worst-casece-nario earedy pponentsf heVEBA s thatthe rustund ill ventuallyobankrupt,eav-ingretireeswithouthealth care benefits.Though inyncomparison,he 004 ollapseof he 32million EBAthat heUAW etupwith aterpillarnly ixyearsarliers seen s

a cautionaryale.Escalatingealth are ostsquicklyepletedhe und,eavingetirees hothoughthey ere rotectedayingnexpectedout-of-pocketxpenses.In spiteoftheserisks, greeing o theVEBAmay e a tacticallystutemaneuverytheUAW. heyhope twillprotectheir etir-ees'healthnsurancenthe vent f potentialbankruptcyyone ofthe utomakers.t alsoreduceshe ikelihoodhat nautomakerouldbe drivennto,rdecide odeclare,ankruptcyfor he urpose f heddingtshealth are b-ligations.

There sconcern, owever,hatheVEBAdoesnot dequatelyrotect orkersromucha bankruptcycenario ecause ts olvencyspartiallyiedto the financial uccess ftheautomakers.portionf heVEBA's ssets illbe intheform f convertibleotes, inancialinstruments,hatink he alue f heVEBA othe tock rices fthe utomakers.2n addi-tion, he greementsllow he utomakersocontributeomefunds otheVEBAover pe-riodoftime xtendings far s 2027,ratherthan equiringhatheyullyund he rustp-front.3herefore,bankruptcyyone ofthe

Theres noway or heUAW opositivelypin hetwo-tierage ystem.automakersouldnegativelympacthe alueofthe onvertibleotes nd stem heflow ffunds nto heVEBA, eavingt underfundedandretireesnthe ame ositionsthey ouldhave eenwithoutheVEBA.

Only imewill ell.f heVEBAproveso-bust and an automaker oesbankrupt,he

Lean Times New Labor Forum 63



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UAWeadershipill e auded orts oresight.If the VEBA goes bankrupteven as theautomakersecover,he nion egotiatorsillbe eft ithgg n their ace.fboth heVEBAandautomakershrive,obody etshurt ndTheUAWmay ind tselfin the osition f uttingits wnmembersenefits.the nionwill laim ohave ided hendustry'srecovery.egardless,he reationf heVEBArepresentsdecisive reakwith key enefitof he uto ndustry'sordistra employer-providedealth are orife.

TWO TIERS OF WORKERSTHE VEBA REPRESENTSA POTENTIALLY RISKY

breakwith astpractice,he stablishmentof two-tierage ystems a seismichift.heUAWnot nly ompromisedhe rinciplehatallworkersexcepthose nthe killedrades)in he lantst epresentshould epaid qually.Inthe rocess,he nion as greedoturn hecareerath f utoworkerstGMandChrysleron tshead nd abandon neof hekey erksassociated itheniorityeasier ndmore t-tractiveork.

For ecades,utoworkersave nderstoodand xpectedhathe eniorityystemhroughwhichheyelectheirobswould llow hemtogradually ove ntomoredesirable ork.Newhireswere tuckwith hemost rduoustasks.Before obotics nd automation,hismeant ithstandinghenoise,parks,ndfilthof hebody hop.Now, he ow-seniorityobsare hose nfinalssemblyhat equireexter-

ity,gility,nd he ccasionalontortingf nebody o affixarts o cars s theymove ownthe ine.Overtime,ineoperators raduallymove o easierwork ndeventuallyraduateto obsoff-line,hereheyrefreed romhestandardizedoutinesndwork acedic-tatedbytheassemblyine. nstead f

chasinghain, hey etobs nmaterialhandling, eliveringarts o the ine.Eventually,orkers ith he ongeste-niorityssumeobsnotdirectlyelatedto theproductionrocess,weepingpandperformingther spects f un-

skilledmaintenance.Under henew ontract,ll those ff-linejobsthat avebeen worker'seward or earsof servicewill becomeentry-level,oncorepositions aying alf hewage f hose ntheline.Rather han eginningcareerwith hehardest ork, ewhireswill ssumenoncorejobsat ower ay ndeventuallye offeredheopportunityomove o hehigher-payingorejobs.Olderworkers,ho ften ind heir od-ies cannotwithstandhenevernding aceofassemblyinework hatnrecentears asbeenchoreographedokeep hemnnear erpetualmotion, illhave he tark hoice fbearingtheworkload rretiring.Infact,t s not ntirelylear hat workercanwithstandnentireareer nthe ssemblyline, rwhatwillhappenf hey annot. hetraditionaleniorityystemmayhave beenviewed yworkerss a perk f ge,but t lsoensured heautomakers hat lderworkerswould egueoff hemost trenuousobsandthe ssemblyine ltogether.ith owhereoputthem,utomakers ayfind henewar-rangement ompromises roductivityndproductuality. learly,his s a risk heyrewillingo take norder o shortenareers y




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removinghedisincentivehat eepsworkerswith asierobsfrometiringven fterccru-ing he hirtyears f ervicehey eed o col-lect full ension.

Besides,he ptionsoruttingabor ostswereimited.heUAW nd tsmembers ouldnothave greed opay uts or urrent ork-ers.Theonly ther lternativeould e topaynewhires t a lower ate or ome greed e-riodof ime, utplacethem n the ssemblyline. or he utomakers,uch formula ouldnotprovide he amesavings uaranteedypermanentlyeclassifyingwhole eries fobsas lower aid, nd non-core. ortheUAW,twouldmean iolatinghe rinciplef qualpayfor qualwork y llowing ewhires oworkside-by-siden the ssemblyinewith urrentworkers,utearning alf s much. ven hecompromise,hich nly ffectshepay ffu-tureworkerserforminglearlyefinableff-lineobs,faced erious pposition.That ppositiontems rom hos-tilityowage uts ndtheweakeningftraditionaleniorityystems.owever,the dvent fthe wo-tier age ystemalsocomplicatesutureegotiationstboth henationalnd ocal evels. nionleaders ownplayhe oncernsf riticsarticulatedntheChryslerargainingcommittees inorityeporthat twotiers fworkersreateivision ithinheunion, ressureo reduce he op iernthedirectionf he econd ier,nd ef-fortsodrive he econd ier ven ower. 4utthe isksclear.

Contractegotiationsre series f om-promises.he reationf two-tierage truc-ture acrificeshewages ndbenefitsaidtoworkerstcertainobsforhepurpose fpro-tectinghe nterestsf hoseworkersho on-

stitutehe ore.Whose nterests ill ake ri-orityn thefuture? ight heunionbe con-vinced ofurtheracrificehenon-core or hecore? s there nyreason obelieve hat heUAWmight nedayurge hemajorityoreworkersomake acrificesor heminoritynon-core?Would hey alla strike oprotectthewages ndbenefitsf non-core orkers?Would hemajorityupportuch n action?Thesequestionsre unavoidable.nfact,even under hepreviousystemhereweregrumblings mongthememberships towhetherheunionbargained qually or ineoperatorsndthosen the killedrades. headditionf large,hirdategoryfesser-paidworkersecessarilyomplicatesegotiations,and adds a newdimensiono thefuture ar-gaining strategiesof the UAW and theautomakerslike.Havinggained two-tierwage tructure,ontthe utomakerse ex-pected oexploitt?

VEBArepresentsdecisivereakwith keybenefitf he utoindustry'sordistraemployer-providedealthcare or ife.Due to theunique tructuref ollectivebargainingnthe uto ndustry,his uestionisequally elevantt the ocal evel.While heindustry-widegreementsetthenationalpress, mploymentelationst ny actoryreactually overnedy wo ollectiveargainingagreements.he nationalgreementsegulate




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pay nd benefits crosstheBigThree.Buteachfactorylsooperates nder collective argain-ing greement egotiatedy ocalmanagementand union eadersthatdetails heway hat ac-torywill be run, ncluding hift ours, ob de-scriptions, eniority ystems, nd other ocalworkrules.

The recentlynegotiatednational agree-mentsonlyestablishthe two-tiered mploy-ment ystemnprinciple.Details areyet obefully odified. The basic framework alls forthose obs in which worker irectly erformssome task oward he constructionf an auto-mobileto be considered ore.Jobs hatmerelysupport hoseworkers,uch asdeliveringarts,willbe non-core.mplementationf hismodelmaybe intuitive t a final ssembly lantwherethe end product s a car thatrolls off he ine,butwhat twillmeanfor tamping,ower rain,and othernon-final ssemblyfacilitiess un-clear. n fact, heChrysler greementnamesfour uchplantsat which theUAW agreedto

Theunion asagreedoturn he areerathofautoworkersn tsheadandabandon neof hekey erksssociated ithseniorityeasier ndmorettractiveork.classify ll jobs as non-core, ffectivelylash-ing payat thosefactories n halfonce currentworkers etire.

But evenat final ssembly lants, he de-

tails fwhichobswillbe labeledcoreandnon-corewill likelybe hashed out in local agree-ments.This raisesthepossibilityhat lassify-ing obs willbecome a sourceofwhipsawing,just ikeso manyworkrules, s theBigThreehave shrunk.Fordecades,thebifurcatedys-tem ofcollective argainingnthe auto ndus-try ffordedocal union eadersa modicumofpowerto tailorworking onditions o suit o-cal concerns.As long as thecompaniesweregrowingndprofitable,ocal unionscouldne-gotiategreater ontrolover theshop floor nexchange or heir ommitmentokeepthe s-semblyinesmoving.However, s theBigThrees market haredroppedand theybegan consolidating atherthanexpanding, hisdynamicreversed.Theautomakersrealized theycould force ocalunionstocompete gainst neanother okeeptheirplants open and theirobs in place. Un-der the pressureof such whipsawing, ocalunions havesteadily elinquishedmanyof the

work rulesgoverning heshop floor oallow the automakers oreorganize ro-duction.Though many factors contributeto decisions over whichplantsto keepand which to shutter, he impression

among ocal unions that refusal o re-linquish control over the shop floormightcost jobs, while an embrace oflabor-managementcooperationmightsave them,has been widelycultivated.But those who acquiesce often ee thecompaniescome back formore, nd anincreasing number of factories haveabandonedfixed-termgreementsndadoptedwhat reknown s living greementshatmaybe augmented tanytime.Might ocal unionsbe similarly ressured o shiftmore obs from




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the ore nto henon-corenthename fplantefficiency?These concerns verplant eniorityndwhipsawing,ndthe ank-and-fileppositionto the contracthey rovoked, ayhave n-spiredhe lternativepproachaken yUAWnegotiatorsith ord.They lsoagreedo lower age ate or ewhires,butnot he core nd non-core esig-nations.nstead,ewhireswill edesig-nated entry-levelndplaced n avail-able obs,presumablyn theassemblyline. Once 20% of the workforcecompanywides entry-level,heseworkers ill hen eginmovingpto thefullwagerate s new entry-level orkers rehired.While his ystemreserveshe enior-ity ightsradedway tGMandChrysler,tcompromisesheprinciplefequal payforequalworkbyallowing mployees arningdrasticallyifferentages oworkide-by-sideon the ssemblyine.

HOW DID WE GET HERE?VEBA ANDTHE TWO-TIERWAGE YSTEMARE

bestunderstoods the atestn a long ineofdemandsowhichheUAWhas cquiescedas theBigThreehave oughtoreverse heirdecliningortunesy heddinghevestigesfmassproductionn favor f eanproductionsystems.t he oot f his radual nwindingof utoworkers'ages,enefits,ndworkplacerightssthe nabilityf heUAW oorganizeany f he utoplants hatJapanese,erman,andKorean utomakersaveopened n theUnitedtatesver he ast uarterentury.hir-teen utomakersow ssembleehiclesn theU.S.,but heUAWonly argainsn behalf ftheworkerst three f hem,eaving oughly

one hundred housandutoworkersnorga-nized.5Over he ameperiod,heBigThree aveshednearly alf millionobsasthey epeat-

edly ownsized,estructured,ndreorganized

Having ained two-tierwage tructure,ont heautomakerseexpectedoexploitt?inan effortoregainheirraction,ompeti-tiveness,ndprofitability.etween 978 nd2003, mploymenty heBigThree roppedfrom 67,000 o275,000.6 ecent uyoutstGM and Ford eavetheUAWwith n activeauto ndustry embershipf bout 72,000with urtherownsizinglreadynnounced.In turn,the UAW has found itselfbackpedaling.one re hedayswhenndus-try-wideatterngreementsook abor ostsout ofcompetitionndallowed heunion obargain ith ndifferenceothe ate f he n-dividual utomakers.nstead,he nabilityftheUAW oorganizeny f he oreignrans-plant actorieseaves hem ootingor he os-ing eams. he survivalftheunion ndthejobsof tsmembersredependentn the erysame ompanieshat espondothedecliningpopularityf their ehicles y seeking elieffrom heirabor osts.

Previousoncessions ere rguably orebenignhanhemost ecentound. ven s eanproduction intensified the pace androutinizationfwork, laimsweremade hatthereorganizationfworkersnto eamshu-manizedheirabor,ndnewfoundespector




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their deas andinputprovidedworkerswith nintellectual utletwhere once therewas onlymind-numbing rudgery.7However, he adventof a two-tierwagesystems the atest nd most starkmanifesta-tion offears haredby those who have longwarned that therhetoric urrounding eam-

The nabilityf heUAW oorganizeny f he oreigntransplantactorieseavesthemootingor heosingteams.work and humanizedlabor masked a perni-ciousdrive ocut abor costs hat s nherent othe lean productionsystem.8 reviously,wehave seen factory mployment ecline due toimprovementsnproductivityndefficiencysthe automakers earn to do more withfewerworkers.naddition, ens f housands fhigh-wageunionizedobshavedisappeared hroughoutsourcingnd thespinning ff fGM's andFord'sparts divisions into the independentcompanies Delphi and Visteon.Shortly ftertheirfounding, he new companies (predict-ably)declaredthemselves ncompetitive n-der he erms f he ollective argaininggree-ments they inherited and, much as theautomakers avereframed heir wn commit-ment to theirretirees, oughtto shed them-selves of these burdensome legacy coststhrough ankruptcyndreorganization.And so theUAW finds tselfn a stateofperpetual retreat- first on work rules,outsourcing,nd downsizing, nd nowon therear ine ofwages and benefits hatprevious

givebackswere intended to fortify.nstead,those too are nowbeingcompromised n ex-change forcommitments,ome firmer hanothers,for new investments nd freezes onoutsourcingo stemthetideof ob loss.Ultimately,hesepromisesmay lso cometo be seen as an illegitimate legacy iftheautomakers o not turn heir ortunes

around, tabilize,ndpossibly egintogrow gain.Evenif hisweretooccur,the UAW would have greatdifficultyreversinghe concessionsof thismostrecentround ofnegotiations.Havingunburdened themselves, the auto-makerswillnotreassumeresponsibil-ity or etirees' ealth are.Undoing hetwo-tiermploymentnd wagestruc-turewould take tremendous howofforce ytheunion.

Of course,suchpowerwould likely nlycome from he eventualand highlyunlikelyunionizationf heworkforcesttheBigThree'sdomestic ompetition. hetransplantactorieshave dopted ophisticatedntiuniontrategiesfrom heirnception, ndprevious ttemptsoorganize hemhaveprovedfutile.While thereare stirrings f increased discontent mongToyota'sgingworkforcenGeorgetown, en-tucky,heprospects or successful rganizingcampaignstill seem bleak. The odds maybelonger n thewake ofthe mostrecent oundofauto ndustryollective argaining ecause thenewpattern greement eaves the UAW withthatmuch ess tooffer rospectivemembers.Intheend, he atest oundofnegotiationsdemonstrates how far the fortunes of U.S.autoworkers ave fallen. n 1970,the ast timetheUAW called a national strike gainstanautomaker,ourhundred housandGM work-erswalked off he ob for ixty-seven aysbe-




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fore he utomaker greedtothepension planthey ought. eptembernational trikegainstGM involved heseventy-twohousandUAWmembers that the automaker still employs.Theirgoalwas to stemfurther ecline ntheirnumbersby nsertingntotheagreement, orthefirstime ver, xplicit romises or nvest-mentsand productcommitments o specificplants.Butbythetimetheycalled thestrike,theunionhadalready onceded theVEBA andthe two-tieremploymentstructure.So theUAWmayhavegottenwhat twanted hroughits short trikes t GM and Chrysler, ut thenew collective argaining greements novic-tory or utoworkers.

POSTSCRIPTIn February, s thisarticlewas goingto

press,GeneralMotors nnounced hat he om-panywould offer uyoutsto all its remain-ing 74,000 unionized employees. Ford hadannounced a similarplan in January, hileChryslerffereduyoutstspecific lants.) hegoal is to expeditethe mplementationf thetwo-tierwage system by enticing roughly16,000workers o leavethecompany nd im-mediatelyhire newworkers o fill non-corepositions hat ayhalf smuch. GM claims hemaneuverwillsave the utomaker 4-5 billionannuallyby2010 (NewYorkTimes).

O#*CD1 BillParker,MinorityReportto the Mem-bers of the UAWChrysler ouncil, 007.2. Stephen Diamond, Proposed GM/UAWVEBA:A House of Cards? edited byJ.Tucker,P.Schrade, and W.Davis, 2007.3. Ibid.4. Parker, 007.5. Diamond, 2007.6. Jeffrey. Rothstein, The Uncertain Fu-

ture ofthe American Auto Industry, ew LaborForum,15:65-73,2006.7. MartinKenney and RichardFlorida,Be-yondMass Production:TheJapanese System ndIts Transfero the U.S. New York:OxfordUniver-sityPress,1993.8. Steve Babson, Lean Productionand La-bor:Empowerment nd Exploitation, ean Work:Empowermentnd ExploitationntheGlobal Auto

Industry,dited bySteve Babson, Detroit:WayneState University ress, 1995, pp. 1-37; Carl H. A.Dassbach, Lean Production,Labor Control, ndPost-FordismntheJapanese Automobile Indus-try. orthAmericanAuto Unions nCrisis, ditedbyW. C. Green and E. J.Yanarella,Albany:StateUniversity f New YorkPress, 1996, pp. 19-40;LaurieGraham,On the Line at Subaru-lsuzu:TheJapanese Model and the American Worker,Ithaca: CornellUniversity ress, 1995; Ruth Milk-man, Farewell to theFactory:Auto Workersn theLate TwentiethCentury.Berkeley: UniversityofCalifornia Press, 1997; Mike Parker and JaneSlaughter. Unions and Management by Stress.Lean Work: mpowerment nd ExploitationntheGlobalAuto ndustry,dited byS. Babson. Detroit:Wayne State University ress, 1995, pp. 41-53.


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