UAW likely soon to set Big 3 target

Chrysler, Ford, GM have contracts expiring next week

Union to pick one company

No. 1 issue continues to be job security as vehicle sales skyrocket

September 05, 1999|By Kristine Henry | Kristine Henry,SUN STAFF

Between the record-high auto sales expected this year and the still-painful memory of the strike against General Motors Corp. last year that cost the company $2 billion and idled 200,000 workers, industry analysts are predicting that the national contract talks between Detroit's Big Three automakers and the United Auto Workers to go relatively smoothly despite the thorny question of job security.

The current three-year contracts -- which cover about 370,000 workers, including 2,600 at GM's van-assembly plant in Southeast Baltimore, expire Sept. 14.

UAW officials have been meeting with representatives of the three automakers since mid-June, and both sides are tight-lipped about what they're asking for, which many say is a positive sign.

"Given that there hasn't been a lot of public posturing, I think that's a good sign that people are focused on issues to get the national agreement laid out," said David Andrea, chief economist at the automotive research firm CSM Worldwide in Northville, Mich. "Granted, though, the elements that still bring both sides to the table and force a deal through is the threat of a strike."

Wages will take a back seat to the question of out sourcing. The auto companies want the freedom to shrink their work forces and contract more work to lower-paid, nonunion labor. The union wants assurances that its jobs will remain safe. Additionally, with one third of the industry's work force eligible for retirement in the next two to three years, pension funding will be at the forefront.

"It's always job security, pensions, and everybody looks at the pay raise," said Charles R. Alfred, president of UAW Local 239, which represents workers at the GM plant on Broening Highway. "But the big issue is the out sourcing of our work."

The automakers are coming to the table with healthy numbers in their books. GM had a record second quarter this year with profits of $1.73 billion.

At the end of last year, Ford had more than $23 billion cash on hand, and DaimlerChrysler's revenue was up 10 percent in the second quarter. The number of cars and trucks sold this year is expected to hit an all-time high.

"With auto companies making good money, they can't plead poverty," said David Healy, an auto analyst with Burnham Securities Inc. "And, as a result of the prolonged strike against GM a year ago, there isn't a great deal of appetite this year for yet another strike. It was disastrous on both sides, and nobody won."

Yet, there are questions of productivity, especially at GM, which has been steadily losing market share. Earlier this decade, when Ford and Chrysler were struggling, the UAW agreed to job cuts in exchange for other concessions. GM, meanwhile, kept its workers in hopes of maintaining strong production and outmaneuvering its rivals, a move that backfired and left it overstaffed and its cars more expensive to make.

GM takes an average of 45.6 hours to assemble a vehicle, according to manufacturing consultant Harbour and Associates, while DaimlerChrysler takes 44.3 hours and Ford takes 34.8 hours.

The question of which of the three companies will be the target, or focus, company is still unannounced. Every three years during negotiations, the UAW picks one company -- usually the one it has the best relationship with -- and hammers out an agreement. The UAW then takes that to the other two companies, who usually agree to virtually identical contracts.

UAW officials have not announced which company they will target, and industry watchers haven't formed a clear consensus on who might be picked. A decision is expected this week.

"When you're the lead company, you get to bargain first and put issues that are unique to your company on the table in a more constructive way," said Edward Miller, a spokesman for Ford, which has been the target for the past two contracts.

One of the potentially hot issues at Ford is what will happen to workers if its auto parts supplier, Visteon Automotive Systems, is spun off as planned.

GM spun off its parts division, Delphi Automotive Systems, this year, upsetting the UAW because after Sept. 14 its members at Delphi will no longer be covered under contracts with the automakers. Instead, they will bargain along with other parts workers, who typically earn 30 percent to 50 percent less than their counterparts at Ford, GM and DaimlerChrysler, Andrea said.

Additionally, as Delphi hires more nonunion workers in plants overseas, the UAW makes up a smaller piece of the company's pie.

In January, GM announced plans to build several small-car plants that would require far fewer workers than the plants they would replace. Part of that productivity increase would come through "modular assembly," in which an automaker buys pre-assembled parts, such as dashboards, from outside suppliers instead of making the parts itself.

The company has since backed down from that proposal, preferring to defer the issue until contract negotiations are complete.

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