DETROIT — After UAW-Detroit Three contract talks launch with ceremonial handshakes Monday and Tuesday, the smiles and cordial talk will give way to what could be the most difficult rounds of bargaining in many years.
How tough will it be for General Motors, Ford and Fiat Chrysler Automobiles to reach agreement with the UAW before contracts expire at 11:59 p.m. Sept. 14?
That’s unknown. The UAW’s choice to boost strike pay this year was designed to send a clear message that the possibility of a strike is real and that workers have expectations.
After years of watching the companies rack up robust auto sales and impressive profits, the 156,000 UAW-represented autoworkers employed by the companies want to share in the good times. That’s even as darker economic clouds loom and the automakers try to stay ahead in the expensive push toward electrification and self-driving technology, forces that threaten to disrupt both the labor-management dynamics and the industry itself.
There have “been so many good years it’s hard for these companies to claim poverty and urge restraint in wage and benefit gains,” said Kristin Dziczek, vice president of the Industry, Labor & Economics Group at the Center for Automotive Research in Ann Arbor.
One problem for negotiators is numerous forecasts of a downturn in the economy during the next contract period.
John Murphy, a senior auto analyst with Bank of America Merrill Lynch, told auto journalists last month that new vehicle sales in the United States could drop from close to 17 million vehicles currently to fewer than 14 million by 2022. Not all analysts predict such a serious decline, but many expect some level of decline.
Most of the union’s goals are perhaps not a surprise — gains in health care, job security, plant investment, product commitments, wages, pensions and pushing back on hiring temporary workers — but UAW President Gary Jones has also laid out other priorities, such as dealing with opioid addiction and workplace violence.
The companies want to limit rising employee health care costs — one analyst called health care a lightning rod issue — and maintain a wage and benefit structure that does not put them at an increasing disadvantage against so-called transplant automakers, such as Toyota, Honda and Nissan. “International” companies had projected average hourly labor costs in 2019 of $50, compared with $55 for FCA, $61 for Ford and $63 for GM UAW workers, according to data from the Center for Automotive Research.
The automakers also want more flexibility with those temporary workers, which they use to cover vacations and absenteeism in the plants.
Sean Crawford, a member of Local 598 who works at GM’s Flint Truck Assembly, pointed to the use of temporary workers as well as different tiers among active workers and subcontracted work, such as for janitorial services, as major issues. Those varying groups have different levels of pay and benefits and the full-time workers have different levels of union protection from the others.
“We have a huge number of temporary workers who are being exploited,” Crawford said, noting that he knows temporary workers with five years of service, “which is definitely not temporary.”
Those differences end up hurting the union, he said.
“With all the workers in the plant divided, it’s hard to work to the same goal,” said Crawford, who transferred to Flint from Detroit-Hamtramck in February as part of GM’s controversial restructuring.
Crawford, who was a metal finisher and robot cell operator at his last plant and now works as a material driver transporting truck parts around the plant, said it’s been easier for him to make the move than others because he is originally from Flint, transferring a few years ago because of concerns about Flint’s water. This time though, he opted to live outside of the city.
GM’s moves to “unallocate” five of its plants late last year hang heavy over the coming talks. The UAW thought language connected to the current contract should have prevented those plants from closing.
GM’s plant in Lordstown, Ohio, was idled after GM said last fall that it would cease to build the Chevrolet Cruze compact car there. GM has not allocated any new vehicle for the plant to build.
Since this spring, hundreds of Lordstown’s laid-off workers have been transferred to other GM plants such as its factory in Wentzville, Missouri, where GM builds the Chevrolet Colorado and GMC Canyon midsize trucks and Chevy Express and GMC Savana full-size vans.
For those who remain, a sense of nervousness and anxiety dominates the local union hall ahead of the start of contract talks, said David Green, president of Local 1112 in Lordstown.
“Everyone’s scared because they don’t know where GM might send them,” said Green. “There are locations across the country taking transfers and our members don’t know where they’ll end up and that’s stressful.”
Green said he will get a letter from GM before month’s end relocating him and he will have to leave his post at the union and move. But he said he still has faith in contract talks.
“I’m still hopeful that Terry Dittes and UAW leadership will get product reallocated to Lordstown during contract talks,” Green said. “I have faith in the UAW’s team and I haven’t given up, I know things don’t look great, but I don’t think it’s over.”
Those product allocations are key points during bargaining, but Dziczek cautioned that hopes that one vehicle, such as the Mexican-built Chevrolet Blazer, could change the fortunes for a plant are overblown.
“The Blazer’s not going to save Lordstown or Hamtramck. There needs to be a lot more product,” Dziczek said, while noting that the three automakers each exceeded their commitments from the 2015 contracts.
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Even as it has made its decision to “unallocate” plants, GM has made numerous plant investment announcements this year, including $22 million for engines at Spring Hill, Tennessee; $36 million for future crossover production at Lansing Delta Township; and $300 million to build a new electric car at Orion Assembly.
While automakers often get praise for their investments, the timing can have implications. Announcements made following bargaining, can give the UAW something to tout. Announcements made prior to bargaining challenge that dynamic, as in the case of the $4.5 billion investment FCA announced in February for southeast Michigan, including the expansion on Detroit’s east side to build SUVs at the idled Mack Engine complex.
“It weakens the position of the union because the UAW can no longer say, ‘This is what we got for Detroit.’ It weakens the argument of the union,” said Art Wheaton, director of Western New York Labor and Environmental Programs for the Worker Institute at Cornell University, noting that such timing can be geared more toward mollifying politicians in Washington than hurting the union’s bargaining position.
The sense of anger over GM’s moves in particular have left some union members itching for a fight.
Jones, the UAW president, called the increase in strike pay from $200 to $250 per week “an important signal” that the leadership has the backs of its members. “We are ready,” he told union delegates in March.
Not all experts, however, are convinced that a strike will happen.
Wheaton said the possibility is there, but union officials will try to be practical.
“Nobody wins in a strike, and strikes are extremely risky. Would (the union) be willing to go out on strike? The answer is yes. Would they be looking to go out on strike? My answer would be no.” Wheaton said. “It’s just too risky. The only one who wins is the competition.”
That, however, doesn’t mean a strike threat is empty or that a strike has to be a lengthy affair. Strikes can also be targeted and short-lived, as evidenced by a nine-hour strike last month by the UAW against Faurecia, which has operations in Michigan and supplies parts to Ford, FCA and Tesla. Workers at the company’s plant in Saline later ratified a contract that “will implement periodic pay raises over the next four years, institute a $2,500 signing bonus, and create a union health and safety representative position,” according to the UAW.
Dziczek noted that ratification can be a challenge when many workers are new.
“(The companies) all have a lot of people … who maybe have only seen zero or one contract negotiation who’ve never seen a downturn in the industry and aren’t steeped in the traditions of bargaining,” Dziczek said.
The UAW and automakers avoided a strike in 2015, but that doesn’t mean the effort was without drama. That year, FCA was picked as the lead target for the talks, but it took a second round of bargaining to get a deal ratified.
“The UAW’s first proposed contract with FCA was resoundingly rejected by members who wanted a faster timeline to a higher wage scale and who distrusted a proposal for a new health care cooperative,” the Free Press reported in 2015, noting that it was the first national agreement autoworkers had rejected since 1982.
An embrace that raised eyebrows
Before the start of talks in 2015, a hug between the late Sergio Marchionne, then FCA’s CEO, and Dennis Williams, then the UAW’s president, presented an image that angered many of the rank and file concerned that the two sides might have become a bit too chummy. Since then, three members of the UAW’s 2015 FCA negotiating committee, including former Vice President Norwood Jewell, have been convicted in the wide-ranging training center scandal.
Federal prosecutors said the UAW’s FCA department was “fatally compromised” in its ability to represent workers during the conspiracy and said the scheme, where millions of dollars meant for worker training were instead redirected to pay for travel, jewelry, fancy dinners and even a mortgage, was carried out in an effort to buy labor peace. Alphons Iacobelli, the man slated to lead FCA’s 2015 bargaining efforts, had resigned, in what was then considered surprising timing, prior to the start of talks. To date, he is the highest-ranking former company official to be charged or convicted in the scheme.
The last stories on the scandal have yet to be written. Additional people could face charges, and Jewell is scheduled for sentencing in federal court in August. In addition, experts have warned that both FCA and the union could still face legal consequences, and FCA has acknowledged it is “in discussions with the (Justice Department) about a potential resolution of its investigation.”
Wheaton, of Cornell, said the scandal could have an impact on a ratification vote because union members could wonder how much to trust what they’re told.
Crawford hinted at the challenge for the leadership, expressing concern that corruption has not been completely rooted out despite assurances of reforms. Both the company and UAW have tried to paint the scandal as limited to a few bad actors.
“I think there’s a lot of skepticism within the membership that exists,” Crawford said.
Before any talk of ratification happens, however, a formal process has to start.
The companies and the UAW engage in so-called pattern bargaining. The union selects a lead or target company and then works toward a deal that it can then use as the basis for talks with the others. It’s not yet been announced which company will be selected.
Negotiations are likely to heat up in early September.
One thing that could make this bargaining session more interesting is President Donald Trump’s Twitter activity.
“Trump’s a wild card in this whole thing, too,” Dziczek said. “He’s been known to call out local (union) leaders by name. … I don’t think he’ll sit on the sidelines as these negotiations go on this fall.”