Contract between auto giants, UAW further embraces two-tier wages

Fred Feldman ffeldman at bellatlantic.net
Fri Sep 26 03:55:09 MDT 2003


Auto Union Embraces Two-Tier Wages
==================================

by Jane Slaughter

Labor Notes,
October 2003

The United Auto Workers' new contracts with the Big
Three automakers and two top suppliers signal the
union's unabashed acceptance of a two-tier system, both
within the auto industry itself and between new hires
and current workers. New-hires at two big parts
supplier companies, Visteon and Delphi, will now be
paid "competitive wage and benefit levels"
approximately $10 lower than those companies' current
wage of over $25 an hour. The new low tier would be
permanent, with no "grow-in" to former levels. The
exact wage is unknown; UAW bargainers are pledged to
finalize it within six months.

Delphi (now 30,000 workers) was spun off from GM in
1999 and Visteon (22,000) from Ford in 2000. At that
time, the union maintained the wage parity that had
always existed between Big Three assembly, powertrain,
and stamping workers and those who made paarts.

This year, the UAW reversed course and took explicit
action to lower wages for 52,000 of its members who
have not yet been hired.

UAW President Ron Gettelfinger noted that he had
reached contracts with five of the largest
manufacturers in the world without once threatening to
strike.

Current Visteon and Delphi workers will be allowed to
escape their two-tier factories by transferring to Ford
and GM plants, as openings occur. When bargainers
settle on the two-tier wage, it will not be submitted
to members for ratification. The auto industry has
always had a multi-tier structure, of course, with
different supplier companies at different wage rates
lower than the Big Three. The situation worsened in the
1980s and 1990s, when the Big Three closed some of
their own parts plants and increased their outsourcing
from nonunion suppliers (and others in Mexico), and the
union did virtually nothing to organize the nonunion
plants.

Now the UAW is paying for that inaction. When Delphi
and Visteon management declared that their wage rates
were "uncompetitive" with other suppliers, they were
right.

SMALL GAINS, SMALL CONCESSIONS

The 2003 contracts will be significantly cheaper for
the Big Three than those in the previous round, when
the UAW bargained a 3% wage increase each year. The
pacts contain a wage increase of 5% spread over four
years, plus two lump sum payments; subtractions from
the cost-of-living allowance; small amounts of cost-
shifting on health care; small pension increases for
future retirees and none for current retirees. Since
pensions are based on wages earned, keeping a lid on
pay will also save the companies money on future
pensions.

Detroit newspapers focused on the companies' success in
keeping their costs down and on the union's "new
maturity," with headlines like "Big 3 narrow gap with
competition" and "UAW, Big 3 Unite To Rebuild." Though
this contract's money gains are modest, Big Three
workers are still far better paid, of course, than most
industrial workers, and some of those displaced by the
companies' increased flexibility to move them from
plant to plant will receive retirement incentives and
relocation allowances. More important for auto workers
than the economics are contract provisions that will
speed up the aging workforce and the destruction of
solidarity between assembly and parts workers and
between current workers and new-hires. Ironically, the
contract could make even more difficult the union's
already daunting task of organizing "the competition."

MORE WORK FOR FEWER WORKERS

At DaimlerChrysler (DCX), the company announced the
closing of two plants and the sale of three others. To
induce the company to retain four other facilities in
Detroit and Toledo, the union pledged to accept team
concept, further contracting out, and "significant
improvements in indirect labor utilization" (speedup).

The DCX proposal allows the company and the UAW
International to impose "alternative work schedules,"
including regular 10-hour days, on plants at their
discretion, with no say-so from the local union.
Likewise it mandates a team concept/lean production
program at each plant.

"We are giving them the right to reorganize the plants
at the expense of our family life, our dignity, and our
bodies," wrote Mike Parker--author of Labor Notes' team
concept books and now a DCX worker himself. "As team
concept takes away job rights, union consciousness,
solidarity, we are weakening our ability to fight next
time."

UNIONIZATION STRATEGY

The new low wages to be negotiated at Delphi and
Visteon are a boon to the Big Three companies who are
their customers, but they are more than that. Agreeing
to low wages for parts workers is also part of the
UAW's strategy for unionizing the many nonunion
supplier companies. The Delphi/Visteon contracts are a
further signal to suppliers' management that they
needn't fear the union and should sign neutrality pacts
to let workers unionize.

The Big Three have already told suppliers that they
should let the UAW organize their plants, and several
have agreed: Johnson Controls, Magna, Dana, and
Metaldyne. DCX reaffirmed this policy and also agreed
to "card-check" at the Daimler-owned Mercedes assembly
plant in Alabama.

Most Big Three workers who voted for their contracts no
doubt did so with a sigh of relief that their own
paychecks weren't cut back. But this contract does not
let them off the hook. As long as suppliers can work so
much more cheaply, the Big Three's numbers are destined
to shrink even further. Suppliers are already
performing many jobs that were once done inside
assembly plants, and, with "modular production," that
trend is accelerating.

SOUTHERN PLANTS

In addition, the Big Three face competition from the
Japanese- and German-owned auto plants operating in six
Southern states, Ohio, and Indiana. They are losing
more market share to these non-union factories every
year. The UAW has made no headway at all in organizing
those companies, and seems to have conducted this
bargaining round with an eye to convincing Japanese
managers that the union would make a good partner.

This strategy is not likely to succeed as it appears to
be doing at the supplier companies. The Big Three can
tell the suppliers that they prefer to do business with
unionized companies. But the Japanese-owned assembly
plants, and BMW in South Carolina, have no incentive to
accept the UAW (as long as it maintains any
independence at all).

So here is the union's Catch-22: If the Big Three's
competition can't be organized from the top down, then
the union must convince the workers there that joining
the union would make their jobs safer and their lives
better. But a management-friendly strategy will not
inspire the major shift in consciousness that would be
needed to fire organizing drives at the southern
plants.

RATIFICATION

Members were expected to ratify the contracts by
comfortable margins, with low turnout. Votes were held
quickly, with most members seeing only the union's
summary rather than any contract language. UAW leaders
had cultivated low expectations, except on maintaining
health benefits. Many workers were relieved to see any
wage increases--and the $3,000 lump-sum "signing bonus"
was a deal-closer.

Members of the dissident UAW Solidarity Coalition
scrambled to get their hands on contract language and
to analyze it for fellow workers (see
http://hawk.addr.com.uawsc). In a leaflet for fellow
workers at the Ford Rouge plant in Dearborn, Michigan,
skilled tradesman Ron Lare wrote, "New-hire wage
concessions point to the next generation that we will
all depend on. After we retire, the next generation may
ask, 'Why should we defend your pensions? You didn't
defend our pay when we were young!'... "Not only is our
neighbor's house on fire, but they're moving our
children into it."

Auto Union Embraces Two-Tier Wages
==================================

by Jane Slaughter

Labor Notes,
October 2003

The United Auto Workers' new contracts with the Big
Three automakers and two top suppliers signal the
union's unabashed acceptance of a two-tier system, both
within the auto industry itself and between new hires
and current workers. New-hires at two big parts
supplier companies, Visteon and Delphi, will now be
paid "competitive wage and benefit levels"
approximately $10 lower than those companies' current
wage of over $25 an hour. The new low tier would be
permanent, with no "grow-in" to former levels. The
exact wage is unknown; UAW bargainers are pledged to
finalize it within six months.

Delphi (now 30,000 workers) was spun off from GM in
1999 and Visteon (22,000) from Ford in 2000. At that
time, the union maintained the wage parity that had
always existed between Big Three assembly, powertrain,
and stamping workers and those who made paarts.

This year, the UAW reversed course and took explicit
action to lower wages for 52,000 of its members who
have not yet been hired.

UAW President Ron Gettelfinger noted that he had
reached contracts with five of the largest
manufacturers in the world without once threatening to
strike.

Current Visteon and Delphi workers will be allowed to
escape their two-tier factories by transferring to Ford
and GM plants, as openings occur. When bargainers
settle on the two-tier wage, it will not be submitted
to members for ratification. The auto industry has
always had a multi-tier structure, of course, with
different supplier companies at different wage rates
lower than the Big Three. The situation worsened in the
1980s and 1990s, when the Big Three closed some of
their own parts plants and increased their outsourcing
from nonunion suppliers (and others in Mexico), and the
union did virtually nothing to organize the nonunion
plants.

Now the UAW is paying for that inaction. When Delphi
and Visteon management declared that their wage rates
were "uncompetitive" with other suppliers, they were
right.

SMALL GAINS, SMALL CONCESSIONS

The 2003 contracts will be significantly cheaper for
the Big Three than those in the previous round, when
the UAW bargained a 3% wage increase each year. The
pacts contain a wage increase of 5% spread over four
years, plus two lump sum payments; subtractions from
the cost-of-living allowance; small amounts of cost-
shifting on health care; small pension increases for
future retirees and none for current retirees. Since
pensions are based on wages earned, keeping a lid on
pay will also save the companies money on future
pensions.

Detroit newspapers focused on the companies' success in
keeping their costs down and on the union's "new
maturity," with headlines like "Big 3 narrow gap with
competition" and "UAW, Big 3 Unite To Rebuild." Though
this contract's money gains are modest, Big Three
workers are still far better paid, of course, than most
industrial workers, and some of those displaced by the
companies' increased flexibility to move them from
plant to plant will receive retirement incentives and
relocation allowances. More important for auto workers
than the economics are contract provisions that will
speed up the aging workforce and the destruction of
solidarity between assembly and parts workers and
between current workers and new-hires. Ironically, the
contract could make even more difficult the union's
already daunting task of organizing "the competition."

MORE WORK FOR FEWER WORKERS

At DaimlerChrysler (DCX), the company announced the
closing of two plants and the sale of three others. To
induce the company to retain four other facilities in
Detroit and Toledo, the union pledged to accept team
concept, further contracting out, and "significant
improvements in indirect labor utilization" (speedup).

The DCX proposal allows the company and the UAW
International to impose "alternative work schedules,"
including regular 10-hour days, on plants at their
discretion, with no say-so from the local union.
Likewise it mandates a team concept/lean production
program at each plant.

"We are giving them the right to reorganize the plants
at the expense of our family life, our dignity, and our
bodies," wrote Mike Parker--author of Labor Notes' team
concept books and now a DCX worker himself. "As team
concept takes away job rights, union consciousness,
solidarity, we are weakening our ability to fight next
time."

UNIONIZATION STRATEGY

The new low wages to be negotiated at Delphi and
Visteon are a boon to the Big Three companies who are
their customers, but they are more than that. Agreeing
to low wages for parts workers is also part of the
UAW's strategy for unionizing the many nonunion
supplier companies. The Delphi/Visteon contracts are a
further signal to suppliers' management that they
needn't fear the union and should sign neutrality pacts
to let workers unionize.

The Big Three have already told suppliers that they
should let the UAW organize their plants, and several
have agreed: Johnson Controls, Magna, Dana, and
Metaldyne. DCX reaffirmed this policy and also agreed
to "card-check" at the Daimler-owned Mercedes assembly
plant in Alabama.

Most Big Three workers who voted for their contracts no
doubt did so with a sigh of relief that their own
paychecks weren't cut back. But this contract does not
let them off the hook. As long as suppliers can work so
much more cheaply, the Big Three's numbers are destined
to shrink even further. Suppliers are already
performing many jobs that were once done inside
assembly plants, and, with "modular production," that
trend is accelerating.

SOUTHERN PLANTS

In addition, the Big Three face competition from the
Japanese- and German-owned auto plants operating in six
Southern states, Ohio, and Indiana. They are losing
more market share to these non-union factories every
year. The UAW has made no headway at all in organizing
those companies, and seems to have conducted this
bargaining round with an eye to convincing Japanese
managers that the union would make a good partner.

This strategy is not likely to succeed as it appears to
be doing at the supplier companies. The Big Three can
tell the suppliers that they prefer to do business with
unionized companies. But the Japanese-owned assembly
plants, and BMW in South Carolina, have no incentive to
accept the UAW (as long as it maintains any
independence at all).

So here is the union's Catch-22: If the Big Three's
competition can't be organized from the top down, then
the union must convince the workers there that joining
the union would make their jobs safer and their lives
better. But a management-friendly strategy will not
inspire the major shift in consciousness that would be
needed to fire organizing drives at the southern
plants.

RATIFICATION

Members were expected to ratify the contracts by
comfortable margins, with low turnout. Votes were held
quickly, with most members seeing only the union's
summary rather than any contract language. UAW leaders
had cultivated low expectations, except on maintaining
health benefits. Many workers were relieved to see any
wage increases--and the $3,000 lump-sum "signing bonus"
was a deal-closer.

Members of the dissident UAW Solidarity Coalition
scrambled to get their hands on contract language and
to analyze it for fellow workers (see
http://hawk.addr.com.uawsc). In a leaflet for fellow
workers at the Ford Rouge plant in Dearborn, Michigan,
skilled tradesman Ron Lare wrote, "New-hire wage
concessions point to the next generation that we will
all depend on. After we retire, the next generation may
ask, 'Why should we defend your pensions? You didn't
defend our pay when we were young!'... "Not only is our
neighbor's house on fire, but they're moving our
children into it."



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