UAW leader gives up wages to protect GM’s profits

This July 26 is the day of the traditional handshake across the table — when contract negotiations begin between Ford, General Motors and Chrysler, and the United Auto Workers. UAW President Bob King is trying to convince the membership that asking for raises is a bad idea at this time.

“The transnational auto companies have gained a large percentage of the United States market, in part by keeping their total labor costs under what is paid by the unionized automakers,” according to an article in the July/August issue of the UAW magazine Solidarity. “The labor costs at Toyota — the largest transnational company — set the pattern that union workers had [WW emphasis] to follow.

“The dilemma is clear: If the UAW bargains fixed cost compensation from the unionized companies that is higher than the nonunion companies, the added fixed costs of the domestic automakers will harm the competitiveness of the unionized companies, making our products more expensive or reducing the revenue margin needed for new product investment.”

What isn’t stated is that, with concessions made in the 2007 contract and the 2009 modifications, unionized U.S. autoworkers have caught up (or down!) with their non-union counterparts in reducing hourly labor costs. At Chrysler total hourly compensation — which includes health benefits, pension contributions, life insurance, sick pay, vacation and holiday pay and more — averages around $49 an hour. At Toyota the figure is about $55 an hour! (Reuters, July 4)

Moreover, through decades of restructuring, productivity has skyrocketed. This has led to drastic shrinking of the workforce and dozens of plant closings-cost savings pocketed by the companies and by Wall Street.

Not one to appreciate worker sacrifice, Chrysler and Ford have stated that they have no intention of giving any raises and GM is crying for cuts in health-care costs.

Competitiveness on the backs of low-paid workers

A new wave of autoworkers-many of them women and workers of color-are coming into the plants at half the wage of the previous generation.

GM’s subcompact assembly plant in Lake Orion, Mich., was the subject of a front page article in the July 12 New York Times entitled, “With Chevrolet Sonic, GM stands automaking on its head.”

“The radically revamped factory here,” explained the Times, “operates with fewer and cheaper workers, many of whom are paid $14 an hour rather than the full UAW wage of $28 an hour.” This came about through a secret deal between the UAW and GM allowing the company to pay the lower wage to 40 percent of the workforce now and eventually all production workers in the plant.

The agreement, which rank-and-file workers were not allowed to vote on, was cooked up when “negotiators from the company and the union began brainstorming about what it would take to make a profitable subcompact car in the United States.” Many workers had to transfer to out-of-state plants to keep their normal rate of pay. Hundreds of contract employees are working alongside UAW workers for only $10 an hour.

It doesn’t take much insight to figure that “fewer and cheaper workers” equal higher profits. Towards this end GM invested a record $545 million in retooling Lake Orion. If the Sonic and the higher-priced Buick Verano sell well, “fewer and cheaper workers” will allow GM to more than recover its investment.

In the meantime, who is paying for this half-billion dollar gamble? That $545 million could allow the plant’s 720 lower tier workers to make the same pay as everyone else for the next 27 years! If wage increases are “uncompetitive” because they raise the price of union-made vehicles, can’t the same be said for the billions spent on retooling and building new, modern plants all over the world?

What about the billions in profits that Ford, GM and Chrysler are raking in? If competitiveness is the goal, why not lower prices by reducing profits instead of wages? In the 1950s the UAW demanded that the companies keep car prices affordable.

The UAW’s embrace of tiered wages, which began at Caterpillar in the 1990s and is now widespread, has had disastrous consequences. The situation at Nexteer in Saginaw, Mich., should be a wake-up call.

Originally a GM steering plant, Nexteer became part of Delphi when GM spun off its parts division. Then UAW-represented Delphi workers agreed to a lower wage for new hires. In 2007, with Delphi in bankruptcy and lower-paid workers now the majority, a new contract eliminated the higher tier.

When Delphi emerged from bankruptcy, GM bought the plant back, only to put it up for sale. Union members reluctantly agreed to further pay cuts and additional wage tiers demanded by the buyer, Nexteer, to keep their plant open.

Now members of UAW Local 699 work under a confusing and exploitive arrangement with nine different pay “buckets.” Most are below the average U.S. manufacturing wage of $18-an-hour-based on date of hire and the level of job complexity.

This is what UAW members at the Detroit Three — and if the trend is unchecked the whole labor movement —could look forward to in the future.

Many rank-and-file workers view two-tier and multi-tier pay systems as a danger to the union, and believe that reinstituting pay equality should be a priority for these negotiations. They are responding favorably to leaflets from Autoworkers Caravan calling on them to “defend union solidarity” and vote down any contract with tiered wages. The group is holding a forum on Aug. 13 on the devastating effects of unequal pay structures.

Autoworkers here — and all workers up against demands for yet more concessions — would do well to adopt the attitude of the Greek working class and refuse to pay the cost of a crisis they did not create.