US automakers head for union showdown

As financial losses mount, US automakers are headed for a showdown with the United Auto Workers union in contract negotiations this summer.

While the United Auto Workers (UAW) made major concessions last year as General Motors and Ford began racking up multibillion dollar losses, dissent is brewing among the rank-and-file.

One issue which has drawn significant union ire is that Ford is considering giving bonuses to executives while it is in the midst of laying off 44,000 workers and shuttering 16 plants across North America.

Ford Motor Co. chief executive officer Alan Mulally defended that decision in a conference call last week discussing the automaker’s 12.7 billion dollar (9.8 billion euro) annual loss in 2006, saying that “competitive” compensation packages were necessary to retain top management.

Meanwhile, investors are pressuring automakers to make sweeping changes to the contracts, which include some of the highest wages in industrial America as well as generous health-care and pension benefits.

“A lot of investors believe really that to make the significant gains in a business, a company needs to take a strike,” Bank of America Securities analyst Ron Tadross told Mulally in a conference call last week.

Mulally, who presided over a strike when he was head of Boeing, noted that Ford had a good relationship with the UAW but said his first priority would always be increasing the competitiveness of the company.

“I have always been very respectful of the union as an institution and either one of us, the union or Ford, can destroy the Ford company,” he said. “So it is not about taking a big stance.”

General Motors, which lost more than 2.5 billion dollars in 23 strikes between 1990 and 1998 as it battled with the union over downsizing, is more strike adverse.

The toughest talks may be at DaimlerChrysler where executives from the Chrysler Group have been frustrated by the UAW’s refusal to approve contract modifications on health care similar to those the union made at GM and Ford in 2005.

The union’s refusal meant Chrysler’s 55,000 workers got a raise of roughly one dollar per hour in September while GM and Ford workers gave up a pay increase as part of the health-care concessions.

Tom LaSorda, Chrysler Group chief executive officer, has insisted the union must grant concessions. So far, however, the UAW has balked and the dispute over concessions continues to simmer, though the union agreed to take another look at DaimlerChrysler’s financial reports.

A UAW spokesman declined to comment on the negotiations over the union’s current four-year contract which runs out September 14.

Harley Shaiken, a labor expert from the University of California-Berkley with close ties to the UAW, said 2007 contract talks in Detroit could wind up being far less dramatic than some analysts anticipate.

“Clearly these are trying times,” Shaiken said. “The general sentiment inside the union is to do something to help the companies.”

However, the UAW isn’t willing to give up on key principles, such as making sure it protects the incomes of long-time employees idled by management, Shaiken said.

And some union members are actively pushing for a tough stance. “Should workers volunteer to bankrupt themselves to save the company? Or should the companies and the unions together demand a solution that benefits all Americans by leveling the playing field with our European and Japanese competitors?” noted Greg Shotwell, a GM worker in Lansing, Michigan.

“The UAW has bargained too narrowly for too long. We deserve a strategy of confrontation that connects the struggle of union members with the struggle of all Americans,” Shotwell said in recent e-mail to Soldiers of Solidarity, which he founded in 2005 to prod the union into greater militancy.