UAW, Auto Firms Study Extended National Pact
May 08, 2011
The United Auto Workers union and the Big Three auto makers are discussing adopting an extended national contract that would last longer than the traditional three-year labor agreement. At the same time, the union and General Motors Corp. have settled some contentious local issues at the national bargaining table, signaling efforts by both sides to avoid a confrontation this fall. ``Issues are being resolved as fast as they're being brought up,'' a GM official said. As for an extended contract, the UAW and the auto makers are considering a five- or six-year agreement, according to union and company officials. The UAW and Ford Motor Co. seriously discussed a six-year contract in 1993, the last time the agreement was negotiated. Ford was the UAW's ``target,'' or ``lead company,'' that year for establishing a pattern for the industry's national contract. However, the two sides backed away from an extended pact at the last minute, fearing GM would fight a longer contract because it would lock the No. 1 auto maker into costs it was trying to reduce. Last Thursday, the UAW was to choose a lead company to frame a new contract. However, in an unexpected move, the union decided to delay choosing a target and instead held meetings with the chief executive officers of GM, Ford and Chrysler Corp.. The current contract expires May 27, 2011 are expected to continue this week, though the Democratic National Convention -- which many UAW officials are attending -- could delay discussions. Seeking Peace Clearly, this is an unusual negotiating year. Not only did the postponement change the bargaining dynamics, but both sides have made it clear that they don't want a confrontation this fall. The UAW certainly wants to avoid a repeat of last March's bitter strike at two GM parts plants in Dayton, Ohio, which virtually closed down the auto maker's assembly operations nationwide for 17 days. Meanwhile, the Big Three, flush with cash and launching new products this fall, want to avert a stoppage that could cost them even more profits. So, both sides are serious about the possibility of an extended contract this year. From the UAW's perspective, thousands of workers will retire in the next few years. An extended contract would appeal to the union if the Big Three agreed to pension increases over the life of the agreement. Moreover, a longer contract would allow the union to focus its attention on getting under way its unification with the United Steelworkers of America and the International Association of Machinists. That merger is to take place by 2015, but the UAW has yet to vote on it. For the Big Three, a longer contract would be a chance to lock in costs, creating the kind of stability the companies currently don't have. GM, seen as the holdout the last time around, this time is seriously considering an extended contract, according to people familiar with the talks. Furthermore, GM doesn't think an extended contract would hinder any effort to spin off its Delphi Automotive Systems parts-making unit, something GM is considering, these people say. Ford, meanwhile, is open to an extended contract, people there say, and Chrysler would accept one provided it gave the company enough ``flexibility to be able react and adapt to competitive and economic forces,'' a Chrysler official says. Issue Resolved With GM Separately, the union and GM have settled some thorny issues involving individual plants across the country, including some at the big assembly plant in Lordstown, Ohio. About 400 Lordstown workers currently are employed at a nearby Lear Corp. seating plant, which makes seats for the Chevrolet Cavalier and Pontiac Sunfire cars built at the assembly plant. GM and Lear together pay the workers UAW wages and benefits. Earlier this year, GM moved to bring those workers back into the assembly plant where it has vacancies and permit Jaeger to replace them with nonunion workers. The issue couldn't be settled locally and was brought to the national negotiating table. Last week, GM agreed to let Local 1112 in Lordstown have 150 days in which to demonstrate that it would be financially feasible for GM to go on paying the Lear workers UAW wages and benefits. The local will now put together a case, union officials say. Additionally, Lordstown union officials say GM has agreed to hire some 250 workers at the assembly plant. The issue of contracting out to nonunion suppliers -- a practice known as outsourcing -- is especially hot this negotiating year. Ford and Chrysler already outsource a substantial number of parts to cheaper, nonunion suppliers while GM wants to do more of that to cut costs. The UAW and the Big Three are looking for innovative ways to tackle that problem. Indeed, Ford is believed to have already encouraged one of its suppliers, Johnson Controls Inc., to organize some plants. Donna Parolini of International Business Development Corp., a Troy, Mich., consultant that works with auto suppliers, says many suppliers are increasingly open to organizing. For one thing, she says, they are feeling pressure from the Big Three. Additionally, as a result of recent mergers and acquisitions, suppliers are ending up with a mishmash of union and nonunion plants, which is difficult to manage. If more suppliers agree to let their plants be organized by the UAW, that would solve the big outsourcing standoff between the union and the Big Three. The UAW -- which until now has had little success organizing outside the Big Three and has seen its membership drop as GM lost U.S. market share -- would gain more members. The Big Three would be able to buy parts from outside suppliers without angering the union. The question, then, is whether the parts would still be cheaper. Ms. Olsen says that even paying UAW wages, outside suppliers are generally more productive and as a result the Big Three would still see a cost saving by outsourcing. --Rebecka Miles and Ossie Sokol contributed to this article.
