UAW walks out at GM

Union chief, CEO both in struggle to reverse losses

September 25, 2007|By Stephen Franklin and Rick Popely | Stephen Franklin and Rick Popely,CHICAGO TRIBUNE

They are intense. They both like to know even the smallest details. They also are sometimes hard to read.

And they have both reached the peak of their careers just as their organizations are struggling to reverse deep, long-term losses.

That is why the United Auto Workers union strike against General Motors Corp. is not only the clash of two giants of the American auto industry but of two men, UAW President Ron Gettelfinger and G. Richard Wagoner Jr., GM's chief executive and chairman.

Their commitment to their causes may explain why the talks collapsed after 10 days. The length of the talks had raised hopes that the two sides were close, but also showed how difficult the negotiations were. As union officials explained, their failure to win a bottom-line issue - GM's pledge to keep jobs in the U.S. in exchange for concessions and other changes by the union - was one of the triggers that led to yesterday's strike by 73,000 UAW members.

"We're shocked and disappointed that General Motors has failed to recognize and appreciate what our membership has contributed during the past four years," Gettelfinger said in a statement issued yesterday.

Just as the UAW is struggling to keep its numbers up and its members working, the carmaker is struggling to stay competitive and that translates, in many cases, into trimming UAW jobs.

GM pointed to the importance of jobs for both union and the company, saying in a statement yesterday that "the bargaining involves complex, difficult issues that affect the job security of our U.S. work force and the long-term viability of the company."

Like the union, GM is a shadow of its former self.

In the 1960s GM controlled more half of the U.S. auto industry market. Today its market share is just 23.6 percent. The company last reported an annual profit in 2004, when its net was $2.8 billion. It lost $10.4 billion in 2005 and $2 billion in 2006.

While GM earned $953 million in the first half of 2007, it continues to lose money in North America.

GM's survival strategy for the past few years has been to shed costs while Toyota has toppled it as the world's leading automaker.

Since taking the reins four years ago as GM's top executive, one of Wagoner's tactics has been to discard plants and workers.

And despite his gruff, outspoken ways, Gettelfinger has been a far more pragmatic union leader than many expected, shepherding the UAW into deals to ease the financial burdens on Detroit's automakers.

But his pragmatism apparently wore out, observes Harley Shaiken, a labor expert at the University of California at Berkeley.

`Pushed over edge'

"Gettelfinger was really pushed over the edge," Shaiken suggested.

"They made huge efforts to avoid the strike, and GM misinterpreted a cooperative attitude for a compliant attitude," he said. "They don't want to be giving things back at the bargaining table only to see factories moving to China or Mexico."

As an example, Shaiken pointed to the uncertain fate of GM's plant in Lordstown, Ohio, where the company builds the Cobalt car.

"They are going build the Cobalt for another year, and there is no product placed there after that. The UAW is saying, `We want promises that the work is going to Lordstown, not Mexico,'" Shaiken said.

One of the strategies employed by Wagoner, a veteran of the carmaker's overseas operations, has been to make GM into a global company, and that has added to the union's woes.

Outsourcing

With its membership down to 530,000 from a 1.5 million peak in 1979, the UAW has been searching for ways to stem the flow of work that GM, like other carmakers, has spread around the world.

Before Wagoner's takeover, GM operated in four largely autonomous global regions. But today the company develops vehicles under the same engineering system and builds them under the same manufacturing system, so what it learns in Europe can be applied in North America.

And as more GM vehicles are sold globally, they have more common parts, maximizing return on investment and reducing cost and complexity. This also means the company can build more vehicles elsewhere for the United States.

"What Wagoner is trying to do is to find a way to salvage GM," said Jim Hossack, of AutoPacific, an auto industry forecasting firm in Santa Ana, Calif.

One of GM's major problems in the United States is its health care and pension costs, he said. "It is not only a UAW problem, but the UAW is a major part of it, and I think he [Wagoner] will try very to reverse that part of the problem."

Wagoner's challenge, Hossack added, is winning a battle with the UAW that other GM executives and carmakers have been unable to win.

That may not be so easy.

With the union shrinking, it would seem normal to expect the UAW's influence at the bargaining table to wither, too.

This is a reality that nearly all of the nation's blue-collar unions have had to swallow, and which the UAW has learned on a number of fronts, including its long battle in the 1990s with Caterpillar Co.

Union still powerful

But as Shaiken points out, the UAW still has influence in Detroit.

"The union's membership with the carmakers is down to about 180,000 as compared to over 300,000 four years [ago]. That's a big drop. But they have a powerful leverage because the Detroit Three are 100 percent organized."

Stephen Franklin and Rick Popely write for the Chicago Tribune.

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