UAW's power sapped by loan deal
By Peter Whoriskey
Washington Post
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WASHINGTON — For decades after its founding in 1935, the United Auto Workers stood as a powerful model for the American labor movement, an influential organization that historians credit with uplifting living standards for all working Americans.
But with the announcement of the federal loan deal last week, the union found itself being forced into concessions that some described as tantamount to surrender.
The $17.4 billion federal loan agreement does keep the domestic auto industry alive. But the terms of that loan also insist that the wages and benefits for union workers be lowered to be "equal" to the average of nonunion workers, specifically, those at the U.S. plants of Nissan, Toyota and Honda.
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.
It was the financial crisis, as well as the domestic industry's slippage against foreign automakers in the United States, that forced the union to acquiesce, albeit reluctantly, union leaders said.
In a statement, UAW President Ron Gettelfinger said the loan "will keep the doors of America's factories open, keep Americans working and prevent the devastating economic consequences for millions of Americans."
But, he noted, "we are disappointed that (Bush) has added unfair conditions singling out workers."
Exactly how tough the agreement will ultimately be on union workers is far from certain. The language of the loan agreement is specific and tough in setting "restructuring targets":
The payment in stock makes the health fund more risky. The wage concessions could force average wages down from $28 an hour to $24 an hour, analysts said.
But it is far from clear whether the Obama administration will hold the companies and the unions to those requirements. Democrats immediately signaled some opposition to the toughest provisions.
'TREATY OF DETROIT'
President-elect Barack Obama said last week that workers should not be the ones "taking all the hits" and that all stakeholders "are going to have to play a part in this process."
Whatever happens, however, the financial crisis has made clear the profound weaknesses in the union's position.
Circumstances had once been so different for the union, which was founded on the idea of protecting worker dignity and promoted innovations such as pensions and healthcare for all workers.
"The auto workers were for many years the model for the American standard of living," said David Montgomery, emeritus professor of labor history at Yale University.
Their power stemmed in part from the stunning success of the U.S. auto industry.
In 1950, for example, General Motors reported record profits, declared the largest stockholder dividend in U.S. corporate history, and couldn't build cars fast enough. So when the UAW threatened to strike, the company agreed to a landmark deal with pensions, a cost-of-living formula and cut-rate health insurance.
Fortune magazine hailed it as "the treaty of Detroit."
Twenty years later, the union seemed to have become even more powerful. When legendary UAW President Walter Reuther addressed the union convention in 1970, he was bullish on the organization's prospects.
"We are, without question, the strongest and most effective industrial union in the world," he said. "We have taken on the most powerful corporations in the world, and, despite their power and their great wealth, we have always prevailed."
Now, Reuther's descendants face a far different landscape.
"We recognize that going forward there's going to be a restructuring of the companies and all the stakeholders are going to have to make sacrifices, and we're prepared to do our part," said Alan Reuther, the union's Washington representative and Reuther's nephew. "But that path forward, as painful as it may be, is preferable to bankruptcy, not only for our workers but also for the economy and whole country."
FOREIGN-CAR PLANTS
Historians date much of the union's current problems to the arrival in the United States of foreign auto plants — the ones they are now being leveled with — in the early '80s.
Workers at those plants received less in wages, benefits and jobs protection. But when the UAW tried to organize there, they failed. Some of that has been blamed on the cultural differences. Most of the new foreign-maker plants emerged in the South.
The growth of the foreign-car plants in the United States placed increasing pressure on the domestic automakers and, in turn, the UAW. The foreign competitors, using nonunion labor, saved money in wages and used that advantage to gain ground on the U.S. automakers.
"When the UAW exposed the Big Three to insurmountable competitive disadvantages, it cut its own throat," said Jonathan Cutler, a professor at Wesleyan University and the author of "Labor's Time: Shorter Hours, the UAW and the Struggle for American Unionism."
Now, with the bailout loan requiring at least rough parity with the nonunion plants, the union essentially has been forced to capitulate to the nonunion movement. Getting "down to the level of foreign companies undermines the meaning of having a union in the first place," Montgomery said.
"This is another stage in the defeat of the UAW," said Dan Luria, a former UAW economist. "On the other hand, it could have been a lot worse."
Post staff writer Steven Mufson contributed to this report.
