Detroit carmakers worried about future of auto union
DETROIT — The United Auto Workers’ membership and dues are down sharply from just six years ago. In another sign of weakness, the union suffered a stunning defeat this month when it tried to organize a Tennessee factory run by labor-friendly Volkswagen.
The rejection, by a close vote, was a major setback in the union’s effort to expand in the South, where non-union, foreign companies such as VW, Nissan and Hyundai are rapidly growing.
But instead of relief, Detroit’s three automakers — Ford, Chrysler and General Motors — are increasingly anxious about the 78-year-old union’s future.
For them, it’s a “devil you know” situation. They worry that the 382,000member UAW could be absorbed by a more hostile union. Such a merger could disrupt a decade of labor-management peace that has helped America’s auto industry survive the financial crisis and emerge much stronger, according to a person with knowledge of executive discussions.
Another union might not be as willing to keep labor costs competitive with overseas automakers, says the person, who asked not to be identified.
Despite talk of a union merger, Gary Chaison, a labor relations professor at Clark University in Worcester, Mass., says he doesn’t see the UAW giving up its identity and history by combining with another organization.
“It’s something that the employers always fear,” he says.
Spokesmen for Ford, GM and Chrysler declined to comment, and a top UAW official says the automakers’ worries are unfounded.
Even as it struggles, the UAW remains the wealthiest union in the nation, with assets of more than $1 billion at the end of 2012. Officials point to a revived U.S. auto industry and more hiring at UAW-represented factories, moves that have stabilized membership dues that have been falling since 2006.
Tightening its belt
Still, the union’s loss at the VW plant in Chattanooga, Tenn., heightened concerns about how it can grow.
Annual dues collected were down more than 40 percent to $115 million from 2006 to 2012, as the union’s ranks fell by 30 percent. Thousands of members took buyouts and early retirement as Detroit’s auto industry lost billions during the financial crisis and worst economic downturn since the Great Depression. Membership has risen slightly since 2009, but dues collected con- tinue to decline.
The union had hoped VW would give it a foothold in the South and help revive its fortunes. Even though the Detroit Three have hired thousands in the past four years as auto sales have recovered, union membership is nowhere near a 1979 peak of 1.5 million. And the new hires are paid only two-thirds of what veteran workers get, keeping dues revenue down. The union agreed to the lower wages and became more cooperative seven years ago to help the companies survive the recession.
As it struggles to reverse declines, the union has been forced to tighten its belt. It cut spending 15 percent from 2006-2012 but had to sell more than $300 million worth of assets to pay expenses. The union may raise dues this year for the first time in 47 years.
Strikes are costly
A weaker UAW is worrisome for American automakers who only recently reached a labor peace with the union after decades of fighting. The peace resulted in lower wages for new hires and in health care concessions that nearly erased a $1,500 difference in production costs per car between U.S. and Japanese automakers.
A more radical union could bring a return to strife-filled days, when UAW strikes cost automakers dearly. The last major strike, in 1998 at a GM factory in Flint, Mich., cost the company about $2 billion in profits.
For the UAW, dues won’t rise by much without an influx of fresh recruits in the South, where most of the auto industry’s growth is occurring.
Bob King, the UAW’s president, has said the union has no long-term future if it can’t organize Southern foreign-car plants. Automakers from Japan, Korea and Germany have 14 assembly plants in the region, including eight built in the past 10 years, a time when Detroit was closing factories.