Labor Advocate Online

Big Three Get Big Deal
What Makes UAW Agreements ‘Historic’
by Bill Onasch

Part One

Front Page ImageWhether or not you’re a UAW member, if you work for a living in the USA you are going to feel the impact of the recently ratified contracts with the Big Three automakers. Many pundits have labeled these agreements “historic.” Indeed they are. They signify a historic defeat of immense proportions for the entire American working class. Like the wreckage left behind by a drunk driver, these deals made by Solidarity House require a thorough analysis in order to demonstrate the forensic causes of this disaster before we can assess the damage and determine what can be repaired, recycled, or replaced.

A Strategic Industry...
For nearly a century auto has been the engine of the U.S. economy. There are more cars, light trucks, vans, and SUVs on the road than there are licensed drivers to operate them. Auto is by far the biggest customer for steel, plastics, and rubber. A gigantic, ever expanding network of streets and highways is dedicated to the products of the industry. American cars have an insatiable thirst for fuel and lubricants. They must be sold, maintained, repaired, insured–and eventually junked out. This enormous economic weight is what led a CEO to once proclaim, “What’s good for General Motors is good for the USA.”

...A Strategic Union
It took a while for unionism to take root in this industry. Early organizing efforts by the old AF of L craft unions seldom got beyond agreeing to the jurisdictions of a dozen or more unions within modern assembly plants. In the early 1930s “federal labor unions,” directly affiliated to the federation, were chartered in a few cities to try to organize auto workers. The first major successful efforts came on the periphery of the industry with the
Toledo Auto-Lite strike in 1934, led by an AFL federal labor union, and sit-down strikes at Goodyear in Akron in 1935-36, establishing the United Rubber Workers.

The AFL finally granted a charter to the UAW in August, 1935. Less than a year later the union joined in the establishment of the CIO as a rival to the craft unions. The new formation was enthusiastically received by auto workers and the UAW was on the cutting edge of the turbulent upsurge that organized much of American manufacturing in the late 1930s and immediately after the Second World War.

Though they were not the only, or even first to use the tactic of the sit-down strike, the UAW took it to the highest level in this country. The first UAW sit-down victory came at parts-maker Bendix in South Bend in November, 1936, winning union recognition. Two days after Bendix, workers sat down at Midland Steel in Detroit, a supplier of frames to both Ford and Chrysler. After eight days they not only won recognition but a substantial raise as well. Then another key supplier, Kelsey-Hayes Wheel in Detroit, capitulated after a brief sit-down granting a contract, a raise, and an equal minimum wage for men and women.

The image “” cannot be displayed, because it contains errors.These actions set the stage for the legendary Flint plant occupations, a defining moment in class struggle history. For 44 days sit-downs on the inside, and thousands of picketers on the outside, shut down GM’s massive complex in Flint. The settlement resulted in the first national contract with GM.

The Flint victory inspired sit-downs at Chrysler, winning a contract there two months later.

The combination of the sit-down and mass picketing kept scabs out and ensured there would be no production during the strike. These combined tactics generally proved unbeatable wherever tried during this period.

Solidarity Trumps the Law
Of course, these actions were all illegal. The Supreme Court soon reaffirmed that plant occupations were a violation of sacred property rights. The Taft-Hartley Act later outlawed mass picketing to block plant gates as well. But the workers in those Depression days didn’t care about that. They were focused on the battle with the employer and they did what they had to do. Injunctions were flouted. Cops and the national guard were resisted.

This defiance was only possible because some of the CIO unions effectively presented their fight as a struggle for all workers. Many unemployed, and workers not directly involved, joined in these big class conflicts. Public sentiment was overwhelmingly on the side of the workers. Fearful these struggles could get out of hand, threatening their class dominance, most bosses reluctantly decided they had to deal with these new insurgent unions. (Not all. Little Steel and Ford fought on much longer than most.) That’s what finally, decisively established the power of industrial unions. Within this new movement the UAW became recognized as the strategic union in the United States, becoming the pace setter for the rest of the labor movement.

The Erosion Of Class Solidarity
The militant class confrontations were largely suspended during the war time mobilization of industry. Most unions accepted a no strike pledge (with the important exception of the United Mine Workers). A War Labor Board supplanted collective bargaining. The WLB held a tight line on wages and working conditions but through their maintenance of membership rulings union membership greatly expanded. When the auto industry went back to building cars in 1946 it was pretty much wall-to-wall UAW organized.

The WLB also facilitated the introduction of “fringe benefits.” Looking for ways to compete for workers during a time of both labor shortage and a wage freeze the employers got the blessing of the WLB to offer non-wage incentives such as paid vacations–and health insurance. Considered a minor temporary expedient at the time, this later opened up a vast new front in U.S. collective bargaining.

After the war, instead of a return to depression as many feared, American industry launched in to unprecedented growth. They would rebuild the war shattered economies of Europe and Japan. They became dominant in the collapsing colonial empires. And there was tremendous pent up domestic consumer demand for housing, appliances–and cars.

The employers initially challenged the unions, as they had done with some success after the First World War, but were met with the biggest strike wave in history and had to beat a hasty retreat. Part of that surge was a 113 day strike at General Motors, launched in November of 1945.

At the same time in Britain a Labor Party government swept in to power and established socialized medicine, launched a massive program of public housing, opened the road to college education for working class youth, and nationalized a number of key industries. As mass worker parties were reorganized in Europe they went even farther than the British, also establishing laws guaranteeing minimum vacation, sick leave, and degrees of job security for all workers.

But neither the AFL or CIO postwar leaders were interested in fighting for such sweeping reforms in this country. They rejected the very idea of a Labor Party in favor of working with their Democrat friends. And, instead of fighting for universal health care provided by government for all, they adopted a strategy of negotiating such benefits just for their own dues paying members. In so doing they sacrificed the broad support once enjoyed among the as yet unorganized and allowed themselves to be cast, not as advocates for the working class as a whole, but as a narrow interest group.

It must be acknowledged that significant gains were won for the organized sector of the American working class from the end of the war into the 1970s. The UAW was the trail blazer for much of these achievements. These included:

●In 1948 the Cost of Living Adjustment (COLA) was won protecting wages from inflation. Rolling COLA in to the base wage rate led to auto workers becoming the best paid in American manufacturing.

●In the same year the first health insurance plan was won at Ford, later extended to the rest of the industry. Eventually it would be expanded to cover dependents as well with few out of pocket expenses. Retirees were added in 1953.

●Employer paid pensions were first obtained in 1949. In 1973 retirement after thirty years of service, regardless of age, was negotiated. This meant many workers in their late forties or early fifties could hang it up, drawing up to 3000 dollars a month in pension, maintaining health insurance coverage including their spouses and dependents.

●In 1955 supplemental unemployment benefits were first established to cushion the impact of layoffs. Eventually this evolved in to the Job Bank providing nearly normal pay for the duration of joblessness.

While the auto bosses racked up huge profits they never gave away the store. These, and many other breakthroughs were often secured by lengthy strikes including 104 days at Chrysler in 1950, as well as a number of shorter ones over the years.

Once the UAW got the wedge in on these transformations of living standards and working conditions other unions could often use their pattern to make gains of their own. But, even at the peak of union “density” in the 1950s, no more than a third of the working class was covered by union agreements. The boats of the unorganized did not rise nearly so high on this tide of union improvements.

The Emergence Of ‘Big Labor’
Few unions concerned themselves with organizing during the prosperous years. The UAW did little outside raiding other unions in the farm equipment and aerospace industries. The bureaucratized CIO came to resemble more and more the AFL they had bolted from and the two federations reunited in 1955. It became common to speak of Big Labor in the same breath as Big Business. The boss controlled media did a good job in presenting the bureaucratized unions as some kind of alien third party muscling in for a piece of the action.

While the administration caucus established by Walter Reuther was as controlling as any union bureaucracy it nevertheless was based on an appeal to the UAW’s proud heritage. They endorsed many progressive social demands. This led to tensions within “Big Labor.”

The image “” cannot be displayed, because it contains errors.When the building trades unions were being sued by the NAACP for maintaining white, family job trusts, Reuther was literally by Martin Luther King’s side at the March on Washington and in Selma. As the civil rights and Black nationalist movements started penetrating the sizeable African-American UAW membership, sometimes leading to struggles outside the union’s control (such as DRUM), Reuther quickly responded by bringing Blacks, and women, on board as part of the leadership “team.”

Reuther also sharply disagreed with the jingoistic support to the Vietnam war given by the federation leadership--which included organizing on the clock hard hat workers to beat up antiwar protesters. In 1968 the UAW left the AFL-CIO to pursue a more independent course, not returning to the “house of labor” until 1981.

Many have speculated how far Reuther might have diverged from the path of the Meany wing of the bureaucracy had he not died in a 1970 plane crash. Some, including his brother Victor, suspected foul play. In any case, the bosses and mainstream union bureaucrats shed only crocodile tears for his demise. The administration caucus Reuther founded in the UAW continues to tick over to this day–though they are now a couple of more generations removed from class struggle heritage.

From Prosperity To ‘Partnership’
By the 1970s the great postwar advantages for American industry had largely come to an end. The economies of Europe and Japan had been rebuilt–with the latest technology, often better than capital neglected American industry–and were now in fact formidable competitors with the U.S.

The same period produced other problems for the American auto industry. Oil prices skyrocketed and sometimes supplies were short, leading to restrictions on gasoline purchases and long lines at pumps in the mid-70s. A 55mph national speed limit was imposed.

The gas guzzlers that dominated Detroit’s product line became less attractive and early attempts to build small cars, such as the Vega and Pinto, proved disastrous. Japanese and German automakers, offering quality, more fuel efficient cars at a competitive price, began to take a big chunk of the domestic car market.

The Big Three bosses now came to the UAW with a “we’re all in this together, partner” appeal to help make them competitive with the foreign interlopers. We must begin, they argued, by incorporating elements of the successful Japanese methods known as “lean manufacturing.”

Actually this doctrine was not all that new. Lean manufacturing represented some updated synthesizing and tweaking of principles expounded a century ago by Frederick Winslow Taylor, and Henry Ford, with a little BF Skinner psychology thrown in as well.

They began with some joint ventures with the competition. GM teamed up with Toyota to convert their Fremont, California plant to NUMMI. Soon the plant was building as many cars–both Chevrolets and Toyotas--with 2500 workers as GM had done with 5000. Ford entered a similar partnership with Mazda in Flat Rock, Michigan.

About the same time GM announced the creation of a new car company, independent of the rest of GM’s operations, and with a unique contract with the UAW–Saturn, based in Spring Hill, Tennessee. Saturn would be the Big Three’s first solo attempt to apply the Team Concept approach without Japanese helpers.

In 1987 the UAW Big Three contracts established the Team Concept phase of lean manufacturing as the new norm for all plants with a goal of extending the kind of quality and productivity breakthroughs made at NUMMI throughout the domestic industry. Then UAW president Owen Bieber crowed that the GM settlement would “make stable employment a part of the way this corporation does business.” At that time GM employed 335,000 UAW members. After the latest round of layoffs that number stands today at a little over 70,000.

This astounding refutation of Bieber’s prediction was not due just to loss in market share or increased efficiency through Team Concept–though both have certainly been factors. The single biggest component in the decimation of Big Three jobs has been outsourcing. Much of this was done through spinning off parts-making divisions as separate companies such as Delphi for GM, Visteon for Ford. Many other jobs not part of final assembly have, in the spirit of lean manufacturing, been contracted to vassal companies, big and small, scattered around the country–and the globe.

The image “” cannot be displayed, because it contains errors.As early as 1978, GM started nurturing maquiladora suppliers along the Mexican border. Within ten years this grew to 32 plants producing such components as instrument panels, air and heating controls, antennas, front lights, molds, and ceramic magnets.

Then labor’s friend Bill Clinton drove through NAFTA--taking effect in 1994--and the trickle of work to Mexico took on proportions of a dam busting flood. Delphi is today the second biggest private employer in Mexico with as many workers as GM’s entire UAW workforce in the U.S. In addition to parts supplies, the Big Three have extensive assembly operations in Mexico as well, largely geared to the U.S. market.

While Big Three employment has plummeted, the “foreign competitors” can rightly claim they are creating jobs in the USA. Toyota has 13 plants in this country employing over 30,000. Honda has three assembly plants. 5200 work at Nissan’s Smyrna, Tennessee assembly plant and another 1,000 at a nearby engine plant. 3,000 toil at Hyundai’s new state of the art assembly plant in Alabama. Daimler and BMW also have small operations. The UAW has failed to organize a single one of these “transplants.”

With No Fat Left To Trim Time To Go After Organs
With the indispensable cooperation of their UAW “partners,” the Big Three entered recent negotiations with productivity and quality standards roughly equal to the transplants. But the Japanese and Korean owned companies still have competitive advantages in three areas:

●They have no “legacy burden.” GM had obligations to three times as many retirees as they had active workers.

●Somewhat lower wages.

●Drastically lower benefits. Transplant workers get 401(k) not defined benefit pensions. They don’t have thirty and out. Their health care plans are less comprehensive and the workers must pay out much more out of pocket than UAW members did historically.

The Big Three bosses, and the Delphi spin-off, convinced their Solidarity House partners they had to close the gap in these areas too in order to survive. “Job security” for at least a core of UAW membership now required more than customary incremental concessions. They in fact couldn’t wait until 2007 negotiations to get started on gutting the fundamentals.

Two years ago Delphi declared bankruptcy–on their U.S. operations only. Bankruptcy courts have the power to abrogate contracts, even order liquidation of the company. With this threat in place Delphi’s new owners demanded the right to close or sell most plants, and impose draconian wage and benefit cuts on those remaining, as the price for continued UAW employment.

GM suggested they might also have to seek bankruptcy because of their health care and legacy burden.

In 2005, the UAW leadership negotiated big changes in health care at General Motors. More than a billion dollars earmarked for wages was given back to the company for health care costs and, for the first time, many retirees had to start paying a premium for their health insurance. Essentially the same deal was passed on to Ford–though its approval by the ranks was by the tiniest of margins. The UAW didn’t feel they had the votes to get it through at Chrysler.

GM agreed to take back, or buy out Delphi workers that still had rights under the original agreement establishing Delphi and that cleared the way for the demands of the present Delphi ownership. Most of the few UAW members remaining at Delphi are working for wages around 14 dollars an hour and with few benefits.

Since those substantial mid contract give-backs both GM and Ford announced intentions to eliminate tens of thousands of jobs. Daimler sold off Chrysler to a strip and flip private equity outfit. A bleak setting for contract talks–and that suited both sides of the table.

Over the years, a number of auto companies have gone under. When I first started noticing cars as a kid there were marques such as Nash, Hudson, Studebaker, Packard, Kaiser, Frazer, Willys, and Crosley, now long gone. But the UAW kept going because the Big Three was always there to absorb the market share of the departed.

Without the Big Three there could be no UAW. Ron Gettelfinger led the UAW team in to bargaining convinced his partners–and therefore his union–face mortal danger. Painful sacrifices of the heart and guts of the union’s heritage were necessary, in his view, to survive. The outline of this historic mission was already agreed to well in advance of the opening of a theatrical presentation sometimes tragic, other times absurd.

 With fear of job loss palpable in the ranks Gettelfinger made it clear that the objective of the union would be job security. Both he and his opposite numbers understood that give-backs go down easier if they mainly affect future workers that don’t vote on them. Both sides also understood that with so much to be surrendered this couldn’t be one of those peaceful, smiley faces negotiations but would have to offer the illusion of tough bargaining. A massive, precision choreography ensued that would have made Busby Berkeley proud. GM is stalling, hit the bricks!–for two days. Chrysler wants to scrap Mopar, shut ‘em down!–for six hours.

There was one hitch in the tempo of this elaborate staging. The chair of the Chrysler negotiating committee, veteran militant Bill Parker, argued against acceptance of what was presented as the pattern established earlier at GM because it lacked specific guarantees of jobs as GM had done. In fact, the “rescue” of Mopar that was the announced goal of the mini-strike was accompanied by agreement to close an additional plant. It took several votes to achieve a majority committee recommendation of the tentative agreement headed to a vote by the ranks. For a while the settlement seemed to be in real danger as a number of major locals rejected it. It took an unaccustomed mobilization of the caucus on the shop floor to finally seal the deal.

While there are some differences between the three contracts ratified they all shared major relief for the Big Three in their competitive shortcomings.

Legacy Burden
The bosses don’t have to wait for mortality to lighten this burden. With varying discounts and mixes of actual cash, all three bought out their retiree health care obligations once and for all, establishing the VEBA funds which will be administered by the UAW. This issue is bigger in auto than with most employers because the thirty-and-out retirements meant many retirees would be out fifteen years or more before benefits could be coordinated with Medicare.

But VEBA was only part of the long term savings in this area. From this day on new UAW workers will have a completely different retirement program. Defined benefit pensions are replaced with defined contributions and additional 401(k) plans dedicated to retiree health care. This puts the Big Three in the same league as their competitors.

Lump sum bonuses and diversion of COLA payments to health care minimized increases in the base wage rate for tenured workers.

But the real savings come in the second tier established for new hires–fourteen dollars an hour. At GM the new rate can only be initially applied to “non-core” jobs, a fuzzy definition to be determined in practice. At Ford there is no restriction on classifications–the new wage can be paid up to twenty percent of the workforce.

Fourteen dollars an hour is less than the base pay in most of the transplants.

These agreements mark the further degeneration of the UAW, going from class solidarity to union solidarity and now to generational “solidarity.” The current members and retirees hang on to their middle class life styles only at the price of selling out the new workers replacing them–in many cases their own kids.

Of course, even the grand-fathered workers are not home yet. The ink-jet spray was hardly dry on the Chrysler agreement when the flip-and-strippers announced thousands of new lay-offs. There is no “iron clad” job security in these or any other union contracts. And the precedent was set in 2005 for demanding additional major concessions even during the life of the contract. The junk yard dogs of Detroit, having tasted blood, will not be easily restrained by the paper leash of these pathetic deals.

Extending the Pattern
Over the years many workers improved their wages, benefits, and conditions by presenting what the UAW got as a pattern and demanding the same. That argument now shifts to the other side of the table. Every boss, large and small, private or public, will be demanding the same kind of relief so generously granted by the UAW to the Big Three.

That’s what makes these agreements “historic.” That’s what gives Ron Gettelfinger his fifteen minutes of fame–many will say shame.

What, if anything, can be done to survive and recover? That question deserves a Part Two–click here.

November 25, 2007

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