The UAW: Then and Now 50 Years of United Auto Workers Union History
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UNIONS The UAW: Then and now 50 years of United Auto Workers union history Frank Goeddeke Jr. Marick F. Masters ifty years after the death of Walter Reuther, we assess the current state of the UAW, re- Fviewing major trends that have shaped the UAW’s destiny over this half century and discuss- ing the challenges that lie ahead. The UAW in 1970 In the late 1960s, the UAW towered in power and reputation. As the decade closed, it had 1.4 million members as the largest affiliate of the AFL-CIO be- fore it bolted in July 1968. The UAW’s sheer size translated into economic and political clout, which has correlated with the fortunes of the Detroit 3. In 1970, General Motors, Ford, and Chrysler ranked number 1, 3, and 6, respectively, on the Fortune 500, dominating the world in auto manufacturing. Marick Masters and Frank Goeddeke recount 50 years of United GM alone employed 400,000 hourly workers. The Auto Workers union history: UAW attracted national attention as it prepared • In the 1960s, the UAW was at the height of its power influence. Its for the 1970 round of negotiations with the De- membership peaked in 1979 with 1.5 million members. troit 3 because its bargaining demands would set a • Foreign automakers hurt U.S. auto sales. The great recession pattern for numerous other industries (see Levine brought bankruptcy and a federal bailout for GM and Chrysler. 1970). At the start of the year, Secretary of Labor Both cut employees and plants. George Shultz (a past LERA president) predicted • The UAW had to sell $385 million in assets between 2007 and “tense” negotiations, a forecast borne out when 2015 to fund its operating budget and in 2007 agreed to a two- the UAW led a 67-day strike against GM. tier wage structure, which has been a point of contention ever since. • Scandal hit the UAW in 2017 as both labor and management Key economic, colluded to obstruct the collective bargaining process to organizational personally enrich officials from both sides. President Dennis developments Williams and other high-level UAW officials were implicated. Several major econom- • To right itself, the UAW must, according to Masters and ic trends in the past 50 Goeddeke, put the scandal behind it, organize new members, years in the U.S. auto and participate in the technological changes coming to the auto industry as vehicles evolve and the supply chain changes, manufacturing industry bringing the opportunity to organize new workers. have directly impacted the UAW. First, the Detroit George Shultz, U.S. 3’s market share dropped Secretary of Labor (1969– dramatically, falling from 1970) in the Richard Nixon administration. He’s about 85 percent in the a past president of LERA. early 1960s to less than 50 percent by 2015 (see 40 LERA PERSPECTIVES ON WORK 2020 Figure 1. Market Share of Detroit 3, 1961–2015 Figure 2. UAW Membership: 1955–2018 (in thousands) (Sources: Masters 1997; U.S. Department of Labor, Office of Labor–Management (Source: Schwartz, A.R. (2015, June 23). Leading Up to the 2015 UAW-Detroit Standards, Online Public Disclosure Room, UAW’s LM-2 financial reports, Three Talks. Center for Automotive Research Conference.) 2000–18.) Figure 1). Second, at the same time, the U.S. automakers’ em- ployment cratered, dipping from about 1 million in the United Figure 3. UAW Revenues States in the late 1970s to fewer than 200,000 in 2010 at the nadir of the Great Recession. Third, the footprint of the trans- nationals in the United States grew sharply to about 300,000 workers in the early 2000s. The UAW’s position declined with the downturn in the Detroit 3. Its membership reportedly peaked in 1979 at roughly 1.5 million workers. Chrysler faced such dire straits in 1979 that it received a $1.2 billion federal loan guarantee to stanch the potential loss of hundreds of thousands more jobs. Facing eco- nomic and energy threats, the UAW ranks fell 76 percent from 1979 to 2009 (Figure 2). In the first decade of the twenty-first (Source: U.S. Department of Labor, Office of Labor–Management Standards, Online Public Disclosure Room, UAW’s LM-2 financial reports, 2000–18.) century, the U.S. auto manufacturing industry lost 435,000 jobs, most of which occurred before the recession of 2008. The UAW membership dropped 31 percent between 2001 and 2009. Both declared bankruptcy to undergo major restructuring to slash labor costs and production capacity. Ford avoided bank- The Great Recession, bankruptcy, and ruptcy because it had leveraged itself for a massive loan, but the new Detroit 3 it too had to implement sizable downsizing. GM and Chrysler emerged rapidly from bankruptcy as “new” companies. Com- The Great Recession of 2008–09 hammered the already trou- pared to its “old” self, the “New GM” had bled auto industry, jeopardizing the survival 34,500 fewer employees worldwide and 13 of the Detroit 3. In fact, the UAW negotiat- The UAW member- fewer plants. ed major concessionary contracts with auto companies in 2007. The union agreed to es- ship dropped 31 As a result, the UAW suffered financially. As tablish a two-tier wage structure, with new percent between shown in Figure 3, the union’s dues dropped hires earning substantially less. It also con- 2001 and 2009. by 48.5 percent between 2000 and 2012, re- ceded that new hires would no longer receive maining relatively flat until the UAW adopted retiree health care, while the coverage of leg- rate hikes at its 2014 convention. To fund its acy retiree workers would be shifted to a newly established operating budget, the UAW had to sell almost $385 million in Voluntary Employee Beneficiary Association (VEBA). assets between 2007 and 2015. Indicative of the severity of the economic dip in the auto indus- In the midst of bankruptcy and immediately thereafter, the try, GM’s sales had fallen by 22.7 percent in 2008, while Ford UAW and the Detroit 3 negotiated new collective bargaining experienced a 20.3 percent decline and Chrysler an even steep- agreements in 2009 and 2011. The union made additional er 30.3 percent. Sales continued to fall in 2009, as the volume concessions to help the companies regain profitability. It con- of vehicles sold by the Detroit 3 plummeted from roughly 8.74 tinued the freeze on wages, conceded the cost-of-living allow- million in 2008 to 5.75 million. ance (COLA), and gave up the “jobs banks,” a jobs security To save the industry from collapse, the federal government pro- provision. However, in 2011 the union did negotiate sizable vided more than $80 billion in assistance to GM and Chrysler. ratification bonuses and continued the potentially lucrative UNIONS 41 To fund its operating budget, the UAW sold almost $385 million in assets between 2007 and 2015. The situation facing the UAW, however, turned dramatically as the news media reported evidence of a scandal in July 2017. profit-sharing plans. In the years following the 2008–09 reces- period, which the members ratified. Successive agreements fol- sion, the Detroit 3 (with Chrysler having entered into a part- lowed at GM and Ford. At the end of the 2015 negotiations, nership with Fiat, culminating in a 2014 merger to become the parties looked forward to a brighter future. FCA) regained profitability and had begun bringing jobs back by the time the UAW contemplated the 2015 round of contract The UAW embroiled in scandal talks. The UAW had declared it wanted its fair share of the The situation facing the UAW, however, turned dramatically as companies’ profits in wage hikes and lump-sum increases as the news media reported evidence of a scandal in July 2017, well as profit sharing. when the U.S. Attorney filed indictments against FCA and UAW The UAW chose FCA as its “target” for the 2015 round, reach- officials after two years of investigation. The indictments alleged ing a tentative agreement in September. However, the union that these officials had embezzled funds from the treasury of the had failed to meet demands to close the gap between the wage joint training center (UAW–Chrysler National Training Center, tiers, and FCA workers thus voted lopsidedly against ratifica- NTC) funded by the company. High-level officials on both the tion. The UAW and FCA renegotiated the tentative accord to union and management sides had participated in schemes to en- include a plan to close the two-tier wage gap over an eight-year rich themselves and corrupt the collective bargaining process to the advantage of FCA, whose CEO Sergio Marchionne wanted to merge with GM. Despite the UAW’s efforts to downplay the scope and signifi- cance of wrongdoing, evidence of much wider union misconduct continued to materialize. Over the ensuing three years, it be- came clear that the UAW scandal had implicated then-president Dennis Williams, his immediate successor, Gary Jones, four UAW International vice presidents, several UAW regional directors, a UAW regional Community Action Program leader, selected other UAW staff and associates, plus several corporate officials at FCA, including the deceased CEO Sergio Marchionne and former vice president of employee relations, Alphons Icobelli, who is current- ly serving a term in federal prison. The scandal itself involved the misuse of funds at two of the joint training centers (UAW– Chrysler NTC and UAW–GM Center for Human Resources) and union dues by officials of Region 5 and the International UAW. To date, 15 people have been indicted, with most having Sergio Marchionne, chairman of Fiat–Chrysler pled guilty.