Auto Workers Union Preps for Detroit Showdown

Enlarge Lindsay Mangum, NPR

According to the 2007 Harbour Report, which surveys automaker productivity, Japanese automakers continued to outpace their American counterparts in efficiency in 2006. One telling statistic: pre-tax profits per vehicle. While Nissan, Honda and Toyota all earned more than $1,00 on average per vehicle produced in North America, Ford lost an average of $5,234, while GM lost $1,436 and Chrysler lost $1,072. The Detroit Three's higher costs per vehicle are due in large part to their unionized workforce, and the associated health care and pension costs.

Lindsay Mangum, NPR

According to the 2007 Harbour Report, which surveys automaker productivity, Japanese automakers continued to outpace their American counterparts in efficiency in 2006. One telling statistic: pre-tax profits per vehicle. While Nissan, Honda and Toyota all earned more than $1,00 on average per vehicle produced in North America, Ford lost an average of $5,234, while GM lost $1,436 and Chrysler lost $1,072. The Detroit Three's higher costs per vehicle are due in large part to their unionized workforce, and the associated health care and pension costs.

On Friday, the United Auto Workers begins some of the toughest contract talks in the union's seven-decade history. UAW president Ron Gettelfinger will meet with Chrysler on Friday, and with Ford and General Motors on Monday.

The Detroit companies have bled billions of dollars in recent years, and they continue to lose market share to foreign competitors. Fighting for survival, they will be pressing the union for major concessions.

In the past, the UAW would go to the bargaining table with a list of demands and they would usually come out ahead. But these days, instead of demanding more for its members, the union just hopes to protect what it has.

The union has lost more than 60,000 members to company buyouts in the last two years. In May, Daimler-Chrysler actually paid a private equity firm to take struggling Chrysler off its hands.

Things are so bad, nobody calls them the Big Three anymore.

"They're the Detroit Three," says Sean McAlinden, an economist with an auto industry think tank. "Let's face it, Toyota is the No. 2 seller of cars in the United States."

Waning Union Strength

When Detroit dominated the market in earlier decades, the United Auto Workers got great benefits for their members and built a virtual welfare state. Now, the Detroit companies are trying to dismantle it.

At the bargaining table, the companies are expected to try to reduce some retiree obligations. Last year, they spent $11 billion on health care for more than a million retirees and dependents.

McAlinden says those costs are a huge competitive disadvantage.

"Last we checked, Toyota had less than 300 retirees in the United States," McAlinden says.

One plan under consideration is to put the money in a trust fund and let the union run it. Another way the companies might propose to cut costs is to hire more new workers at much lower wages.

Many UAW members are scared.

Brian Henry works at GM's Cadillac plant, where rumors are swirling.

"Everybody's a little shaky," he says, his face still covered in sweat from the hot plant.

Like other workers, Henry is resigned to concessions.

"We've been getting, getting and getting, and we may need to give a little back," he says. "It's as simple as that."

But he also thinks that if the UAW president makes too many concessions, workers will reject the contract.

"There are a lot of old timers here who don't want to give up what they've got," Henry says. "We don't mind giving up some, but if [Gettelfinger] gives up too much, I don't think anything could get ratified."

Tense Talks Ahead

Yet the consequences of that could be even worse, according to McAlinden. He says the companies will just ship jobs to low-cost countries.

"They will have to offshore U.S. production as rapidly as possible. So, I see a massive investment immediately in Mexico, Brazil and China — and very few UAW jobs left by 2011," McAlinden says.

Although the talks begin Friday, the tough decisions won't come until September, when the contract is set to expire. In the final days, bargaining will go round the clock. During breaks, people will rest in their cars, nap on air mattresses or just sleep on the floor.

Tempers will be short.

"There's a great deal of profanity," says Douglas Fraser, who ran the auto workers in the early 1980s and remains in touch with the leadership.

"There are all sorts of blowups, pounding on the table," Fraser says. "One thing I remember is, you pick up all your notes and everything, stuff them in your briefcase as though you're going to walk out. Then, when nothing happens, you have to take them out of your briefcase again."

No one is predicting how talks will turn out this time around, but nearly everyone agrees there won't be a strike. With the union's ranks shrinking, and the companies wounded, a strike could destroy both.