The U.S. and Canadian Auto Contracts

Against the Current, No. 66, January/February 1997

Caroline Lund

THE RESULTS OF this year’s contract negotiations between the United Auto Workers union and the Big Three auto companies went in the same direction as past contracts: a few more benefits for a shrinking group of relatively highly paid unionized auto workers.

Some auto workers from the Big Three might respond, “What do you mean?  We got our $2,000 first-year bonus, we got two wage increases, for the first time since 1979, we got cost-of-living bonuses for retirees, and we got $1,000 a year toward our kids’ tuition! What more could you ask?”

Let’s step back a bit and look at what auto workers really got and what is happening to the UAW.

The backdrop to the negotiations-which took place from September through November of last year-showed both the huge challenge facing the auto workers union, and the enormous potential power of the workers’ side.

An unmentioned shadow affecting both sides was the experience of the struggle at Caterpillar.  After a five-year struggle for a decent contract, after spending $30 million from the UAW strike fund, and after 80% of the 8,700 Cat workers voted NO on the company’s final offer, the union ordered members back to work on company-imposed terms.  Hundreds of workers fired for union activities are still out on the street.

Caterpillar had managed to break the tradition of pattern bargaining in the agricultural and construction implements industry.  But also part of the backdrop for the Big Three negotiations was the impressive power of a series of local strikes against the Big Three in the United States and the twenty-day strike by Canadian Auto Workers (CAW) against General Motors in October.

During the three years of the last contract, the UAW struck various GM plants nine times over local grievances.  A strike over health and safety and work overload at the giant Buick City GM complex in Flint, MI, resulted in forcing the hiring of over 700 more workers.

A seventeen-day strike last March by some 2,000 workers at two brake plants in Dayton, OH, managed to bring to a halt virtually the entire GM operation in North America, causing the layoff of 177,000 GM employees plus thousands more at supplier companies.

Contrast Between UAW and CAW

Then we saw the power of the militant CAW strike against GM. When the company tried to remove dies from the giant Oshawa parts plant in order to continue production elsewhere, the CAW mobilized hundreds of workers to occupy the plant.  They welded doors behind them and disassembled the dies in such a way that only the workers could put them back together again.

This scared GM into returning to the negotiating table, and a contract proposal soon emerged.  For the first time in CAW history, the proposed contract won unanimous approval from local union officials.

The contrast between the functioning of the UAW and CAW was striking to all observers.  The CAW tried to educate and prepare its membership prior to negotiations.  The UAW did little along these lines.  Major goals decided on by the UAW’s bargaining convention, such as the right to strike over outsourcing, were dropped unceremoniously.

An October 8 “New York Times” article contrasted “2 Countries, 2 Auto Unions, and 2 Styles of Bargaining.”

“Stephen P. Yokich, the dapper president of the United Automobile Workers,” the article read, “keeps his cards close to the vest. He has told union members and even most union officials almost nothing about this autumn’s labor talks, including his series of secret meetings with the chairmen of each of the Big Three auto companies.  .  .  .  He has been able to make a variety of compromises, like allowing lower wages for workers in any new auto parts factories, partly because he has given no details to the public or his union members this year about what he is trying to achieve.”

By contrast, the article continued, “Mr. Hargrove [president of the CAW] said that he did not mind that his public comments have limited his room to maneuver.  `It constrains me completely, and that’s how I want to be constrained-I do not believe there is a compromise here .  .  .  .  We have to be open, we have to be transparent, we can’t do things behind closed doors,’ he said. `As important as anything we do, even a collective agreement, is having people engaged in a public debate.'”

The more open and aggressive tactics of the CAW helped them win better contracts with the Big Three than the UAW won. At Chrysler, the CAW won a ban on outsourcing (which was not too difficult since Chrysler wasn’t planning much outsourcing in Canada anyway), and, more importantly, two full weeks additional vacation over the life of the agreement, which will mean more jobs.

The union conceded that GM could sell two plants, but all 3,400 workers there will get the same wages and benefits during the contract and the same health and pension benefits for nine years.

All Canadian Big Three workers won three 2% wage increases.  Forced overtime over eight hours was banned (although forced Saturday work is allowed).  Although the CAW has a two-tier wage set-up for new hires that it inherited from when it was in the UAW (85% starting pay, catching up to full pay in eighteen months), the Canadians have refused to widen the two tier to 70% with a three-year catch-up as the UAW has agreed to.

The CAW split away from the UAW in 1985.  The Canadian union disagreed with the UAW leadership’s trajectory toward “partnership” with management and granting of concessions to keep the companies “competitive.”  The culminating issue was over the UAW’s readiness to give up wage increases in exchange for lump sum payments and profit sharing.  (See box on page 9 for CAW position against union-management cooperation schemes.)

While the UAW has significantly shrunk in size over the past ten years, the CAW has grown considerably.  Through aggressive organizing, the CAW has become the largest private-sector union in Canada, going from a 3-to-1 ratio of auto workers to other sector workers, to a 1-to-3 ratio, where auto workers are a minority of a multi-industry union.

U.S. Contract Results

Just as in 1990 and 1993, the 1996 Big Three contracts were portrayed by the union as a “landmark,” or “unprecedented,” or a “milestone.”  This is a lie. While the main issue is always said to be “job security,” the UAW has continued and will continue to shrink.  This is because the strategy of the union tops is to protect only the jobs of those smaller and smaller numbers of current auto workers.  They have forgotten about people the UAW used to care about in its better days: the young workers, the unemployed, the millions of low-paid, nonunion workers.

If you read only the headlines about the new auto contracts, you would think that they guarantee to preserve 95% of current auto jobs. But a closer look shows otherwise.  The 95% excludes workers with less than one year seniority as well as “troubled businesses.”  Ford’s Executive Vice- President, Peter Pestillo, estimated to the Wall Street Journal that these two exceptions will allow Ford to reduce UAW jobs by 15%.

The “WSJ” article continues: “Industry officials have also confirmed that there are provisions to `escape’ from the minimum-employment level in cases of productivity gains, changes in technology, and industry-related declines due to a recession, a drop in a company’s market share and even a change in a company’s mix of cars and trucks.”  It sounds like these escape clauses cover pretty much every reason a company would want to downsize!

According to the Nov. 8, 1996 issue of “Business Week”, Peter Pestillo and UAW President Yokich are “golfing partners with a close personal relationship.”

The UAW pact with GM will allow the company to cut about 30,000 jobs, according to both company and union representatives.  (To maintain 95% of present employment, only 11,000 jobs could be cut.) In addition, job guarantees in past contracts have not been enforced and those losses will not be made up for.

Furthermore, GM is expecting “quantum improvements” in productivity over the next years, leading to further job losses not covered by the 95% rule. The Nov. 11, 1996 “Wall Street Journal” reported that “With each new model GM is introducing, the company plans to make enough changes in the manufacturing process to require 30% less work, translating into an eventual reduction of at least 1,000 workers in most assembly plants.”

The GM contract, moreover, didn’t settle which or how many of the company’s “troubled” plants would be closed.  The “Wall Street Journal” cited “people close to GM” as saying that “workers at such plants will have to make a case for the continued operation of their plants, which may be difficult .  .  .  because GM has too much capacity.”

Parts Workers Sold Out

In my view, the worst part of the Big Three contracts concerns its extension of two-tier wage set-ups. The new contracts maintain the old contracts’ provision that new hires receive 70% of full pay and only get full pay after three years.  UAW officials now call this creation of a second-class set of UAW members a “grow-in” wage system.

In my plant there is a lot of disgruntlement over the two- tier pay for new hires.  A big chunk of the plant’s 4,500 workers are doing a full job for less than full pay. During our last contract negotiations the two-tier was widened from new hires starting at 85% of the wage, and taking eighteen months to reach full pay, to the present situation where they start at 70% and it takes a full three years to reach the standard.

When NUMMI workers spoke out against this at a mass meeting about the proposed contract, the negotiator from the International UAW responded contemptuously: “Don’t tell me you are ready to go out on strike for someone who hasn’t even been hired yet!”

In the current Big Three contracts, the UAW gave in to company demands to extend permanent two-tier pay scales to parts workers.  For the first time, the UAW agreed that if the Big Three buy or build any new parts plants, workers at those plants could be paid the “prevailing wage” in the industry and geographic area, as determined by an independent consultant.  Generally, parts plants are nonunion and pay half or less of Big Three UAW wages.

The contract does say the wage can’t be less than those of any UAW parts workers in the area, but that doesn’t mean much because even union parts plants now make substandard wages.  For example, the Injex Company, which makes plastic parts for NUMMI, is UAW but wages are only $5-7 per hour.

As a further incentive to the Big Three, for every three low- paid parts jobs they create, they can eliminate two regular, full-paid workers through attrition.

Concessions Called Victories

As usual, the UAW leadership presented the concession concerning parts workers as a victory for the union.  In the October issue of “Solidarity,” the UAW’s magazine claims the 95% rule “guarantees full or nearly full employment at virtually every UAW-Ford facility.”  It then goes on to say: “Just as important is a contract provision that could help re-unionize the vast parts and supplier industry .  .  .  .  The contract prods Ford to buy or start new component businesses with UAW workforces.”

Tom Laney, former union president at the Ford truck plant in St. Paul, MN, says, “Real unions don’t divide their members this way-by new-hire tiers and wage sectors.  This contract might be the work of labor bureaucrats who have almost given up on the industry and feel the need to cheapen wages drastically.”

Laney is a member of UAW New Directions Movement, a grouping inside the union that is critical of the leadership’s concessions course over the past decade.  He notes that “Allowing the company to pay geographic and prevailing wage is a violation of the UAW Constitution, which mandates a system of uniform wages and working conditions.”

Laney’s first point was echoed by Ronald A. Glantz, an auto analyst at Dean Witter in San Francisco, who told the “New York Times,” “The U.A.W. has decided the only way to maintain union employment in the auto industry is to be more competitive on labor costs with the nonunion companies.”

The trouble is, most parts workers would ask: What good does it do to have a union if I have to stay at the “prevailing wage”?  This provision lends truth to the most common anti- union charge by management.  How often have union organizers heard this refrain: “The union only cares about increasing their dues base; they don’t care about improving your wages and working conditions.”

No one knows to what extent the Big Three will take advantage of the low-wage parts workers provision.  Up until these negotiations it has appeared that the auto companies were trying to sell off parts facilities rather than build or buy new ones.

There is evidence however that at least Ford Motor Co. is reconsidering its previous strategic decision to buy parts from outside suppliers.  According to the Oct. 20, 1996 “Oakland Press”, Ford has had enough bad experiences with “warranty claims, missed production schedules and delays in critical product programs to see the wisdom in keeping its own internal component-making business healthy and competitive.”

The “Press” article continued, “The theory at Ford is that a strong internal components business is required to keep suppliers honest .  .  .  .”

This thinking was echoed in a “New York Times” article, which said: “Even if the Big Three did not build or buy [parts] factories, the existence of such a provision [low pay for new parts workers] in their contracts could strengthen their bargaining position with outside suppliers, because they could threaten to enter any parts industry in which prices were particularly high.”

Thus the UAW has actually put itself, through its contracts with the Big Three, in the position of being a co-enforcer of low wages in the auto parts sector.

Many Didn’t Vote

There was little vocal opposition to the proposed Big Three contracts, due to member ignorance about the extent of concessions and to the repressive atmosphere faced by anyone who tries to criticize the UAW leadership.  The New Directions Movement did energetically call for a No vote on the GM pact. The contracts were approved by 90% at Ford, 73% at Chrysler, and 85% at GM.

In the 1970s it was common for 80-90% of members to vote on the proposed pacts.  In 1987 less than 50% of GM workers nationally cast a vote. In 1993 only 40% of Ford workers voted.  Now the figures on how many workers actually vote aren’t released.

The decreasing percentage who even bother to vote reflects the lack of involvement by rank-and-file workers in the UAW and the tight control maintained by the leadership’s cynical, pro-company political machine.

Membership apathy is nurtured by the atmosphere of cynicism we see in the union as well as in management.  The Nov. 25 “Wall Street Journal” explained how this cynicism comes into the auto bargaining procedure.  The title read, “UAW, Auto Makers Find Some Things Better Left Unsaid.”  The subtitle: “At Times, a Nod Will Suffice When It Comes to Settling Stickier Contract Matters.”

Noting that Wall Street is enthusiastic about the Big Three pacts, the article said, “According to individuals close to the talks, some of the most sensitive provisions, such as how many jobs the auto makers will actually guarantee, are settled with an `understanding’: a handshake or a wink-and-a- nod at the bargaining table.

“Of course, publicly, the union and the companies strongly deny that anything of this sort happens .  .  .  .  “But in private, most everyone acknowledges that stealthy side- agreements have been and will continue to be the lubricant in labor-management relations.  `This is tapping into an area nobody wants to talk about,’ one Chrysler official says.”

The article quotes a lawyer who represents employers in labor negotiations as saying that “in some instances, language is left purposefully unclear so as not to raise questions, especially among rank-and-file members.”

The editors of corporate mouthpieces like the “Wall Street Journal” and “New York Times.”  know that average workers don’t read these papers, so they feel freer to say what the real situation is from the point of view of the monied interests.

Framework of Competition

The framework of the current UAW leadership, like most of the other unions’ leaderships, is that jobs and wages must be dependant on the company’s being competitive in the marketplace.  This framework is killing working people, unionized and nonunion.  The UAW cannot survive as a shrinking island of relatively high-paid workers, enslaved to our company’s competitive needs.

It was so refreshing to see last year’s Dayton brake plant strike, to see the domino effect day after day, plant after plant closing down because of the strategic power of those two brake plants.  Workers could sense the awesome power in their hands-and also the threat that corporate power could come down upon them in response.

The people who were most scared of this demonstration of workers’ power were the UAW leadership.  What would their golf partners in management say!

At some point, rank-and-file workers will say, “ENOUGH! We’re going to use our power and to hell with competitiveness and any officials who stand in our way. We’re going to fight for what’s good for the working class majority of this country and world.  No more are we going to sell out the new hires, the parts workers, the unemployed.”

That’s the day I’m awaiting and will do my part to help prepare.

Caroline Lund works at the NUMMI plant (New United Motors Manufacturing, Inc., a joint venture of GM and Toyota), and is a member of UAW Local 2244 and of the USA New Directions Movement.  She is a union coordinator (working shop steward) and works on the door line assembling Toyota Corollas and Geo Prizms.

ATC 66, January-February 1997