UAW's Sacrifices Look to
Some Like Surrender
By Peter Whoriskey
Washington Post Staff Writer
Saturday,
December 20, 2008; A01, Washington Post
For decades after its founding in 1935, the United Auto Workers stood as a powerful model for the American
labor movement, an influential organization that historians credit with
uplifting living standards for all working Americans.
But with the announcement of the federal loan deal yesterday, the union found
itself being forced into concessions that some described as tantamount to
surrender.
The $17.4 billion federal loan agreement does keep the domestic auto industry
alive. But the terms of that loan also insist that the wages and benefits for
union workers be lowered to "equal" the average of nonunion workers,
specifically, those at the U.S. plants of Nissan, Toyota and Honda.
Those and other concessions would essentially erase the significant
distinctions between union and nonunion auto workers, and the lack of such union
worker advantages would render moot the union's fundamental purpose, some
industry analysts and labor experts said.
It was the financial crisis, as well as the domestic industry's slippage
against foreign automakers in the United States, that forced the union to
acquiesce, albeit reluctantly, union leaders said yesterday.
In a statement, UAW president Ron Gettelfinger said the loan "will keep the doors of America's
factories open, keep Americans working and prevent the devastating economic
consequences for millions of Americans."
But, he noted, the union was disappointed that Bush "added unfair conditions
singling out workers."
Exactly how tough the agreement ultimately will be on union workers is far
from certain.
The language of the loan agreement sets specific "restructuring targets" that
General Motors and Chrysler must use their "best efforts" to meet. Compensation must
be made "equal" to the nonunion workers, and work rules must be "competitive"
with those at nonunion plants. The companies also must reduce compensation to
workers who have been laid off -- the jobs bank -- and at least half of the
company's payments into retiree health care must be made in stock, not cash. If
the companies fall short of those targets, they are required to explain why.
The payment in stock makes the health fund more risky. The wage concessions
could force average wages down to $24 an hour from $28 an hour, analysts
said.
But it is far from clear whether the Obama administration will hold the
companies and the unions to those requirements. Democrats immediately signaled
some opposition to the toughest provisions.
At a news conference in Chicago yesterday, President-elect Barack Obama said that workers should not be the ones "taking all
the hits" and that all stakeholders "are going to have to play a part in this
process."
Rep. Barney Frank (D-Mass.), chairman of the committee overseeing
much of the government financial rescue efforts, was far tougher.
"The president has added an unfair assault on working men and women, which
could require them to accept a disproportionately large reduction in what is
currently legally owed to them," he said in a statement. "I am particularly
opposed to the notion . . . that could give foreign auto companies in effect the
ability to dictate wages for all American auto workers."
Frank said that because those requirements were "unilaterally inserted" by
Bush, the Obama administration "should take whatever steps are necessary to
remove them."
Whatever happens, however, the financial crisis has made clear the profound
weaknesses in the union's position.
Circumstances had once been so different for the union, which was founded on
the idea of protecting worker dignity and promoted innovations such as pensions
and health care for all workers.
"The auto workers were for many years the model for the American standard of
living," said David Montgomery, emeritus professor of labor history at Yale University.
Their power stemmed in part from the stunning success of the U.S. auto
industry.
In 1950, for example, General Motors reported record profits, declared the
largest stockholder dividend in U.S. corporate history and couldn't build cars
fast enough. So when the United Auto Workers threatened to strike, the company
agreed to a landmark deal with pensions, a cost-of-living formula and cut-rate
health insurance. Fortune magazine hailed it as "the treaty of Detroit."
Twenty years later, the union seemed to have become, if anything, even more
powerful. When legendary UAW President Walter Reuther addressed the union
convention in 1970, he was bullish on the organization's prospects.
"We are, without question, the strongest and most effective industrial union
in the world," he said. "We have taken on the most powerful corporations in the
world, and, despite their power and their great wealth, we have always
prevailed."
Now, those who have followed Reuther face a far different landscape.
"We recognize that going forward there's going to be a restructuring of the
companies and all the stakeholders are going to have to make sacrifices, and
we're prepared to do our part," said Alan Reuther, the union's Washington
representative and Reuther's nephew. "But that path forward, as painful as it
may be, is preferable to bankruptcy, not only for our workers but also for the
economy and whole country."
Historians date many of the union's problems to the arrival in the United
States of foreign auto plants -- the ones they are now being leveled with -- in
the early '80s.
Workers at those plants received less in wages, benefits and jobs protection.
But when the United Auto Workers tried to organize there, they failed.
Some of that has been blamed on the cultural differences. Most of the new
foreign-maker plants emerged in the South.
But even in Marysville, Ohio, where Honda built a plant, the United Auto
Workers were unsuccessful.
"That was in their own back yard," said Jonathan Cutler, a professor at
Wesleyan University and the author of "Labor's Time: Shorter Hours, the UAW and
the Struggle for American Unionism." "If you can't organize Ohio, you can't
organize your way out of a brown paper bag."
The growth of the foreign-car plants in the United States placed increasing
pressure on the domestic automakers and, in turn, the United Auto Workers. The
foreign competitors, using nonunion labor, saved money in wages and used that
advantage to gain ground on the U.S. automakers.
"When the UAW exposed the Big Three to insurmountable competitive
disadvantages, it cut its own throat," Cutler said.
Now, with the bailout loan requiring at least rough parity with the nonunion
plants, the union essentially has been forced to capitulate to the nonunion
movement.
Getting "down to the level of foreign companies undermines the meaning of
having a union in the first place," Montgomery said.
"This is another stage in the defeat of the UAW," said Dan Luria, a former
UAW economist and now research director of Michigan Manufacturing Technology
Center. "On the other hand, it could have been a lot worse."
Staff writer Steven Mufson contributed to this report.