Commentary: Can the UAW Stay in the Game?

Its ability to set wages hinges on battles in the South

Few U.S. labor unions today influence their core industry as powerfully as the United Auto Workers. Since its inception in 1936, the UAW has set wage rates and work standards across the industry. Today, only the airline unions, and perhaps the professional baseball and football unions, have similar muscle.

But now, as autoworkers prepare to install a new leader, the UAW faces the very real danger that it could lose its clout at the bargaining table, much as the steelworkers and other industrial unions have in recent decades. Globalization, coupled with a decades-long slide in membership at General Motors (GM ), Ford (F ), and Chrysler (DCX ), has brought the UAW to a crossroads. The union needs new members to keep its strength. To that end, it can push the Big Three to pressure their largely nonunion parts suppliers to stop resisting unionization. But doing so would likely drive up suppliers' costs, squeezing Detroit and ultimately forcing the auto makers to sign less generous contracts. So union leaders have a choice: Will they continue to push for the well-being of today's Big Three members or will they risk their clout and resources on organizing nonunion factories?

The challenge falls to Ronald A. Gettelfinger, a tough and pragmatic UAW veteran who takes over the presidency of the 700,000-member union on June 6. Gettelfinger inherits a mixed legacy from his predecessor, Stephen P. Yokich. During his seven-year reign, the fiery Yokich won generous wage and benefit hikes for Big Three workers and protected retirees' pensions and health-care benefits. But in doing so, he may have sacrificed the union's future by failing to exert its bargaining muscle with the Big Three to expand UAW membership.

True, Yokich appointed a dynamic leader named Bob King to head up recruitment and gave him more resources. But half the 80,000 members who have joined since 1998 aren't in the auto industry. Despite some two dozen victories in small auto-parts plants in the South, the UAW still represents only 20% of all parts workers. And the biggest trophies, assembly plants run by foreign carmakers, also remain elusive (table).

Unless Gettelfinger can reverse the trend, the UAW's considerable influence could fade. Until now, the mere threat of unionization has forced foreign-owned factories to boost wages closer to the UAW's $25 an hour. But U.S. auto makers are rapidly losing market share to foreign-based rivals. As more transplant factories open in the U.S. and more Big Three jobs disappear, the pressure to match Big Three wages will lessen.

If that happens, the Big Three will have to take a harder line with the UAW. To avoid such a fight, company officials would love to see Gettelfinger organize the transplants. Although they won't say so publicly, "the pressure on us increases as they fail to organize elsewhere," says one GM insider. Warns former UAW President Douglas A. Fraser, now a labor studies professor at Wayne State University in Detroit: "Sooner or later--and it's probably sooner--the Big Three are going to say, `We're becoming noncompetitive, and unless you organize the transplants, we're going to have to modify the proposals we make to you."

The defining moment in the UAW's trade-off of current wages vs. future growth came in 1999 when it tried to organize a Mercedes-Benz assembly factory in Vance, Ala. Daimler Benz's 1998 purchase of Chrysler Corp. gave the UAW potentially unprecedented leverage at the factory. With Chrysler and Mercedes under one corporate umbrella, union leaders hoped to use 1999's national contract talks at Chrysler to pressure Mercedes to drop its fierce resistance to the union. But in the end, Yokich accepted a generous contract for Chrysler workers and squishy promises in Alabama that changed little.

King has since launched more drives at the transplants. He now has campaigns under way at the three largest: Toyota (TM ), Honda (HMC ), and Nissan (NSANY ). But since the union lacks the leverage it holds at Mercedes, the companies are unlikely to drop their antiunion stance, and the campaigns are expected to fizzle. Just last October, workers at Nissan Motor Co.'s Smyrna (Tenn.) complex voted 2-1 against joining the UAW after the union's fourth run at the factory in 12 years. The UAW blamed Nissan for suggesting that the factory could close or move to Mexico if labor costs got too high.

Eventually, if the dynamics don't shift, it will be the foreign manufacturers that set industry wage rates, not the UAW. In recent years, the Asian and German auto makers have launched a massive U.S. building boom. Existing plants are expanding, and new ones are popping up across the South, a region traditionally hostile to unions. Overall, foreign-based manufacturers, which now operate 17 U.S. factories, plan to boost production by 40% over the next three years and add 10,000 workers. With wages starting at $14 an hour--reaching $25 for assembly jobs--these factories offer prosperity that many displaced Southern textile and steel workers have never known. "We're doing fine without the union," says Sara Brown, an hourly worker at

Honda's new minivan plant in Lincoln, Ala.

Still, Gettelfinger may be more aggressive than Yokich. For instance, in 1999, the UAW lost an organizing drive at ZF Industries Inc. after managers told workers that the company could lose a contract to supply axles to Mercedes' Alabama plant if they joined the union. Gettelfinger asked Ford, which has a separate joint venture with ZF, to help him persuade ZF to drop the scare tactics. It did, and workers voted overwhelmingly to join the union.

That was a critical win. But unless the new leader can also conquer the foreigners, the UAW will lose its stature as the last commanding industrial union.

By Joann Muller

With David Welch in Lincoln, Ala.

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