Workers And Bosses Unite?

Loud voices in the UAW want carmakers' help in organizing suppliers. The union's future is on the line

The United Auto Workers just got some good news. For the first time since 1989, the 780,000-member union last year added more members than it lost--7,800, in fact. And the pace has picked up so far this year. "If we continue on that route, we don't have to worry about the future," UAW President Stephen P. Yokich boasted at a late-March convention in Detroit, which was called to plan bargaining demands for contract talks with Big Three auto makers this fall.

But Yokich also knows that membership growth alone won't ensure his union's long-term health. Many of the UAW's recent organizing successes, such as 9,000 graduate students at University of California at Berkeley who signed up in March, add members and help fill union coffers. But they do nothing to stem the two-decade slide in the UAW's share of the country's auto workers. And the decline is likely to worsen. Up to half of the 450,000 UAW workers at the Big Three will be eligible to retire within the next five years. Auto makers also want to shift more parts work to suppliers, most of which are nonunion and pay lower wages. These trends have eroded the UAW's grip on its core industry, endangering its clout and its ability to defend the $50,000-a-year jobs members enjoy at the Big Three.

That's why UAW leaders are now weighing a bold but risky new strategy for this year's contract talks: asking the Big Three for help. Top officials are in the midst of a debate about whether to demand that auto makers pressure auto- parts suppliers not to oppose UAW organizing drives.

FLEXING MUSCLE. To UAW Vice-President Bob King, who was tapped last year to lead the union's organizing efforts, it's nothing less than the union's future at stake. He is pushing for massive recruitment drives among the country's 400,000-plus nonunion auto-parts workers. The union has doubled its recruiting staff and set up about 10 organizing centers around the country. But the plan is more likely to succeed, King argues, if the union can head off an anti-unionization war by suppliers. So he wants the UAW to use its bargaining muscle with the Big Three to help gain membership strength in auto parts. Clout there is crucial to preserving the union's ability to keep the industry's wages high. "Either we raise the wages of the unorganized, or they're going to drag the rest of us down," says Bruce Baumhower, president of UAW Local 12 in Toledo, Ohio. King and Yokich declined to be interviewed for this story.

LEGAL HURDLE. The new strategy is fraught with uncertainty. Yokich and other top leaders agree with King's logic, but they also feel the need to push traditional demands, such as better pay and job security. They worry that members might have to trade off some wage and benefit increases at the Big Three to organize parts workers and ensure a stronger union. Skeptics also wonder how such an agreement could be enforced. Labor and antitrust laws prohibit one company from interfering with the labor relations of another. So any agreement between the UAW and the Big Three would have to be couched in vague language, say union officials and sources close to the auto makers. That could be difficult for the union to enforce.

Still, UAW leaders face real pressure to pursue King's approach. Although auto industry employment has climbed in recent years, most jobs have been created in the nonunion parts sector. This has cut unionization rates at parts suppliers to 10%, from 20% three years ago, the UAW says. And workers at the nonunion suppliers earn an average of $10 an hour, vs. $13 at unionized shops and $20 at the Big Three's in-house parts factories, including General Motors Corp.'s huge parts unit, Delphi Automotive Systems Corp., which is being spun off as a separate company. With such a huge wage gap, auto makers have an incentive to ship work to nonunion suppliers. "Not organizing is killing us," says Baumhower. "It's a race to the bottom."

King's plan is to build on smaller-scale efforts the union made in the past. When the current Big Three contracts were penned three years ago, the UAW won a vague clause in which auto makers agreed to "urge suppliers to treat their employees in a good, fair, and equitable manner and to avoid conduct which violates national or state labor and employment laws."

The language, union officials say, helped persuade Ford Motor Co. to support the UAW in a dispute over organizing rights at Johnson Controls Inc., a big parts supplier. The year before, Ford had asked Johnson to voluntarily recognize the UAW at two plants, UAW officials say, after the union complained when Ford outsourced seats and other parts to Johnson. Johnson agreed and acceded to most of the UAW's wage demands. But when it refused to remain neutral in future recruitment drives, UAW workers at the two plants walked off the job. The UAW then asked Ford to reject seats manufactured by replacement workers Johnson hired. When Ford went along with that, Johnson threw in the towel, lifting pay at the plants by 33%.

Still, Ford, which has the best relationship with the UAW, is likely to resist expanding this precedent in the fall talks. Ford denies it helped the union to win new members at Johnson. And Ford Vice-Chairman Peter J. Pestillo, who heads the company's labor relations, says Ford rejected Johnson's seats in 1997 simply to avoid a walkout at its own plant. The Johnson strike "represented a unique set of conditions that put me at risk of converting their labor dispute into my own," says Pestillo.

MODULAR MOVE. GM has the most incentive to give the UAW at least some of what King wants. While parts suppliers adamantly oppose any union-friendly requirements, GM wants the union's cooperation to make the Delphi spin-off go smoothly. GM also wants the union to go along with its own plan to use so-called modular assembly for two new small-car plants. The technique relies on suppliers to build large component modules, such as entire interiors, and would require only a third as many GM assembly workers. Earlier this year, a GM official told BUSINESS WEEK that in exchange for the union's cooperation, GM would encourage suppliers that win new modular contracts to accept the UAW. Says Harley Shaiken, a labor professor at University of California at Berkeley: "GM has an opportunity here; a bold move could go a long way toward improving its relationship with the union."

Indeed, last fall, GM and local union officials began informal talks over such an agreement at assembly plants in Lansing, Mich., and Lordstown, Ohio. But in February, Yokich halted the talks, insisting that such explosive issues be handled at the national level.

Ultimately, Yokich will decide how many chips to spend at the bargaining table this fall to win auto makers' support for a new organizing drive. So far, he's holding his cards close to his chest. The strategy he chooses will set the course for the union, the Big Three, and their suppliers as they enter the next bargaining season.

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