Monday, December 22, 2008

The End Of The UAW As We Know It?

Uaw The Washington Post has two recent pieces on the UAW and the recent automakers bailout, with the theme in both centered on the union's declining relevance.  I think both are a bit too down on the UAW, as the union has done a pretty good job handling some very tough economic realities over the past few years (as the Warren Brown piece notes, "despite claims to the contrary in White House and Capitol Hill bailout chatter, the UAW repeatedly has taken pay and benefits cuts to help the companies stay in business.").  But those harsh realities are significant for the labor movement in their own right. 

The first article examines whether the White House bailout plan negates any purpose for the UAW:

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 "competitive" to that of 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. . . .

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.

In the second piece, Warren Brown strikes a similar chord:

The UAW's failure to organize foreign rivals in America has undermined the value of the union's employment agreements with Detroit. As long as workers at nonunion companies receive lower pay than their counterparts at UAW-represented rivals, the union will be under pressure to make concessions at the bargaining table.

The federal bailout loan agreement greatly increases that pressure. The money will help the companies, which long ago began an aggressive restructuring of their operations. But its terms of agreement mean that the UAW will have to live with less, which means that nonunion workers will be asked to live with the same thing.

In some ways, this situation is unique in that the Detroit automakers have had a particularly bad business model long before the economic crisis began.  The automakers' problems have to hit the UAW, no matter what the union does.  On the other hand, despite factors unique to the auto industry, the UAW's troubles reflect in part the difficulty of our traditional collective bargaining model in a more globally competitive economy.  Whether and to what extent unions and labor law can adjust is still an open book (shameless plug:  I've written some on this topic with my father, and many others have as well).

Hat Tip:  Dennis Nolan


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I just want to say how cool it is--and how fortunate you are--to have penned this article with your dad!

Posted by: Patrick S. O'Donnell | Dec 22, 2008 8:49:46 AM

The industry problems reach back at least 30 years. The UAW is a partner in the unraveling of the domestic OEMs. The difficulty lies not in the "model" process but in the short term outlook of all involved.

Posted by: JR | Dec 23, 2008 6:18:24 AM

1. Structuring the bailout such that the Big 3 bear the burden of obtaining UAW concessions (as opposed to Southern Republicans) was a savvy move. It carries the potential to keep the automaker's feet to this fire for far longer than it will take them to financially recover.

2. The UAW's flaw was in fighting to maintain the old status quo of blue-collar success. If we are going to (rightfully) question what the UAW did to help bring down the automakers, we must also start asking why it is we can't (or won't) pay employees enough to safely raise a family on a single income, absent post-graduate education.

Posted by: Tim Eavenson | Dec 23, 2008 7:42:32 PM

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