Week In Review Chrysler Contract Extra

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Oct 112015

onaschoutsmall  by Bill Onasch

Second Try
After the stunning 2-1 rejection of a Tentative Agreement with Fiat Chrysler Automobiles, UAW president Dennis Williams decided to take another shot at a deal with his Fiat “partner” Sergio Marchionne. If approved it will also serve as a pattern for contracts with General Motors and Ford. Both Sergio and Dennis had cautioned there was little if any more money available to sweeten the overall package. But with much imaginative tweaking, and deferring, they hope there are enough perceived improvements to convince a majority to now say yes.

Downsizing Inequality
Many news stories about the new TA proclaimed the second-class Tier 2 would be eliminated. This is an exaggeration to say the least.

The Tier 2 wage rate, around 19 dollars an hour in the expired contract, will catch up with the new Top Tier rate of 29+ change—in eight years. Since the contract currently being voted on would expire in four that requires faith—perhaps misplaced–in the company to voluntarily abide by today’s promise in the next negotiations. At best, it is a lengthy journey to the two rates coinciding, not merging.

No Tier 2 workers will actually be upgraded to Top Tier where the differences include not only wages but, among other advantages, defined benefit pensions rather than a 401(k) and better health coverage as well. And, there are other new reminders of their still inferior status. The new TA increases the signing bonus for Top Tier by a thousand dollars while Tier 2 gets nothing additional. The rejected deal provided bigger profit sharing payouts to Tier 2; now, in this regard, they will be equal. Even if all goes as projected, in eight years Tier 2 will still be second-class members of Unequal Auto Workers.

Still, a ten dollar raise, even so spread out, will look attractive to many making 19. Dennis and Sergio hope this will change a lot of minds. The Wall Street Journal estimated the 25 dollar goal for Tier 2 in the first TA would have increased Chrysler labor costs ten percent. Since most of the four dollar increase is backloaded to the next contract the current deal should leave that ten percent pretty much intact. Currently, Chrysler labor costs are somewhat lower than GM and Ford and close to the biggest nonunion transplant, Toyota. To the relief of both Dennis and Sergio that shouldn’t change much.

Deleted from the current TA is any mention of the Dennis Williams pipe-dream of establishing a health care co-op covering all employees of the Big Three. This ill-advised and even more clumsily motivated proposal vaguely mentioned in the first deal would be a sort of super-VEBA–like UAW pensioners got stuck with in 2007. This understandably made many members nervous. Except for a new emergency room co-pay, current health benefits remain unchanged. But unchanged isn’t so great for Tier 2 who have a six percent co-pay of sure to rise medical expenses.

Instead of trying to win adequate, affordable health care through collective bargaining, the UAW should be working with other unionists to win Canadian-style single-payer. The Labor Campaign for Single-Payer will be a host of an important strategy meeting in Chicago October 30—details here.

What Workers Don’t Get
There’s no reinstatement of the Cost of Living Adjustment (COLA), pioneered by the UAW, that protects wages from inflation. For many years the formula of annual productivity raises coupled with COLA made UAW members the highest paid workers in manufacturing.

Top Tier workers will get two three percent raises under the proposed contract—their first boost in a decade—and two four percent lump sum payments that don’t get folded in to the wage rate. Inflation was one factor in the 21 percent decline in real wages in the auto industry in the last available comparison of 2003-2013.

A very big issue for affected workers is the Alternative Work Schedule requiring rotation through different shifts of four ten-hour straight time days. Not used by GM or Ford, this mean-spirited work change was solely devised to get nearly 24-7 production without paying overtime rates. Most workers consider it exhausting and unhealthy and hate the disruption it causes to family and social life. The September 18 Detroit Free-Press ran a story titled “UAW Wins Changes to Hated FCA Alternative Work Schedule.” But this tempting appetizer was followed by pretty thin soup,

“The UAW says its new [first] tentative agreement with Fiat Chrysler includes ‘significant alternative work schedule changes,’ designed to quell discontent among workers over the schedules. The tentative agreement, reached Tuesday, would pay workers more for Saturday shifts and prevent workers from being scheduled on consecutive Fridays.”

That hardly addresses the complaints about the loss of the eight hour day, regular shifts and regular days off, much less exhaustion and safety concerns. I could find nothing beyond this tweaking in the highlights of the new TA.

And What About Jobs?
Jobs are what defines workers—and, in union shops, payers of union dues. From World War II to the 1970s the American auto industry was nearly 100 percent unionized in the UAW. The UAW strategy since the 1980s has purportedly been all about jobs. Saving jobs was the rationale for give-back bargaining.

UAW membership peaked at 1.5 million in 1979. Today the number of active working members is about 390,000, along with more than 600,000 retirees who receive pensions and health care payments negotiated by the UAW. Membership at Big Three plants has dropped 42 percent in just the last decade. Only 15 percent of parts-makers are unionized. A substantial number of today’s UAW members are outside the auto industry. For example, I pay dues to UAW Local 1981—the National Writers Union.

Much of the membership loss has been due to automation, outsourcing, and offshoring. But a bigger factor has been the game-changing rise of Asian and European owned transplants building cars, SUVs, and light trucks in the USA–and taking nearly half the share of American production away from the Big Three. Counting parts suppliers and transplants, the auto industry still employs 900,000 workers. The UAW has failed to organize any transplant start-ups. Their effort to organize the Chattanooga VW plant through a sweetheart deal with the employer was shot down by VW workers—and this embarrassing episode will haunt them in other campaigns elsewhere.

Chrysler took advantage of unrestricted Tier 2 to go on a hiring spree, adding about 15,000 workers the last few years. That’s coming to a halt. The union summary of the new TA projects Chrysler adding 2,959 jobs at some plants over the next four years while eliminating 2,856 at others. That means a whopping 103 new jobs are expected. There has been no change in plans to move Dodge Dart and Chrysler 200 work to Mexico.

No Winner, Winner, Chicken Dinner
Some will congratulate brother Williams for crafting a win-win settlement that gains some improvements for workers while preserving Fiat Chrysler Automobile’s ability to successfully compete in the American and global markets. Suffering from both memory loss and myopic vision, they are only half right.

My take is that Sergio has bought labor peace on the cheap at a time when consumer demand is finally coming back with purchases deferred during the Great Recession and Jobless Recovery. Relatively cheap gasoline is luring more to the gas-guzzlers that are most profitable for the Big Three.

No one knows how long these favorable market conditions may last. Gasoline prices will eventually rebound and the decline in value of the Mexican peso will make that country even more attractive for job exports. Right now is a window of opportunity for the workers to at least be reclaiming some of what was surrendered—or confiscated through bankruptcy—in tougher times. An adversarial union would have been preparing the ranks for a fight for substantial gains rather than tweaks—including an old-school strike if need be.

Dennis entered negotiations proclaiming what has become the slogan of an online dating service aimed at my generation—It’s Our Time. But the one-party regime of the ruling Administration Caucus has devolved in to the polar opposite of adversarial. They are irrevocably dedicated to partnership with the boss. Far from being part of the solution, the Solidarity House bureaucracy is a big part of the problem for the workers they represent.

A reliable observer of worker trends at Chrysler recently wrote in an e-mail message, “If a worker isn’t ready to face a strike, there are enough excuses provided here. Plus a total lack of confidence in the top leadership to properly conduct a strike. If a worker is ready to face a strike, then they will voice their displeasure at all that is missing.”

I suspect he is, as usual, spot on. I won’t make any predictions. If this TA is rejected Dennis will probably try his luck with GM or Ford for a pattern agreement. If ultimately UAW workers decide to strike it will be a big battle deserving the unconditional solidarity of all class aware workers. We shall see.

An Even Longer View Is Needed
Today auto workers are properly focused on wages, benefits, and working conditions for the next four years. But it’s also high time to start seriously addressing the challenges facing an industry based on consumption of fossil fuel that is changing our climate and threatening the future of civilization. I’ll soon return to the topic of how auto fits in to the fight for both class and climate justice.

In closing I again thank my Detroit friend Larry, a UAW Chrysler retiree, for the articles and other information he has diligently supplied.

That’s all for this Extra.
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Bill Onasch is a paid up NWU member

Bill Onasch is a paid up NWU member

Week In Review October 6

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Oct 062015

onaschoutsmall  by Bill Onasch

Unequal Auto Workers
First, I want to thank my friend Larry in Detroit. A UAW Chrysler retiree, he responded to my complaint in the last WIR about a dearth of hard information regarding the tentative agreement with Fiat Chrysler Automobiles. The articles and personal observations Larry sent were quite useful.

A journalist team, probably after consulting Roget’s Thesaurus to avoid word echo, used the term angst to describe the mood of Chrysler workers going in to the current round of bargaining. Angst, of course, is a fancy way of saying anxiety—though it is usually used to describe unsettling feeling about the big picture precarious human condition. Global capitalism certainly has created much for all of us to be anxious about—more on that later.

But when the vote was taken on the TA, that had been sealed with a hearty man-hug between UAW president Dennis Williams and Fiat CEO Sergio Marchionne, the bosses and bureaucrats soon realized they faced more than an existential uneasiness on the shop floor. The proles seemed to be pretty damn mad. That suspicion was confirmed when the UAW ranks rejected the deal by a 2 to 1 margin.

This anger was expressed on a hand-made picket sign carried at a rally in front of UAW Solidarity House: UAW–Unequal Auto Workers. The transformative 2007 Big Three national contracts, among other historic give-backs, established a second tier for new hires. Their wages were little more than half those of workers hired prior to the 2007 agreements. The new workers were frozen out of the traditional generous pension plan and received only a 401(k). They also got stuck with substandard health insurance.

The number of Tier 2 workers was capped at General Motors and Ford at around 20 percent. Chrysler accepted 25 percent in the 2011 contract—or so workers were told in the contract summary issued by union officials. In fact, 43 percent of Chrysler workers are in Tier 2 today and the company has not agreed to upgrade any to top Tier. An article in the Detroit Free-Press exposes skulduggery,

“Thousands of UAW members believe the union and the company broke a promise to put a cap in place that would have bumped some workers who earn $19.78 or less up to $28 per hour.

“The source of the promise is a prominent section of a summary of the UAW’s contract from 2011 that was distributed to workers back then. It said a cap would be adopted ‘at the end of this contract,’ which was set to expire on Sept. 14 this year. It has since been extended during negotiations. That formula would have capped the percentage of workers at the entry level wage at 25 percent.
“Images of that old contract summary, which most workers depend on as a primer, have been widely circulated on Facebook pages and e-mails among workers in recent weeks. But that cap never existed in the UAW’s actual 2011 contract with the automaker, only in the summary.
“UAW Vice President Norwood Jewell told workers that he can’t find any language about the cap in the union’s 450-page 2011 contract with FCA.
“’It was wrong of them to say what would happen in the next contract,’ Jewell told workers last week in Kokomo, Ind.”

The lies and cheating around this already hot button issue are probably the single biggest motivator for the first rejection of a UAW bargaining team recommended national contract in 33 years. Supplemented by greatly increased automation, Tier 2 has dramatically reduced Big Three labor costs—especially at Chrysler. The Center for Automotive Research estimates the average labor cost of a Chrysler vehicle built in the USA to be 1,771 dollars—down from 4,167 in 2007. This makes them competitive with the non-union foreign owned transplants.

Of course, labor costs are even more attractive in NAFTA neighbor Mexico. The OECD says Mexican workers toil 450 more hours a year for about twenty percent of the wages of their U.S. counterparts. The Big Three have steadily shifted both parts and assembly work south of the border for more than thirty years and it’s still, to use an archaic phrase, pedal to the metal. Last year all automakers—including transplants—approved 18.25 billion in new investment in NAFTA countries. 10.5 went to plants in the USA, 7 billion to Mexico, and Canada only one new project worth a measly 750 million. Since 2008, jobs in the Mexican auto plants have grown forty percent, now at 600,000. Over the same period, U.S. plants employment grew only 15 percent, now 900,000.

The goal of the Detroit car makers is to eventually shift all car production offshore, only building highly profitable, gas-guzzling pickups, vans, and SUVs in the homeland. Ford will move all Focus production to Mexico and the rejected Chrysler deal blessed sending the Dodge Dart and Chrysler 200 to sunnier climate as well. The UAW’s give-back strategy to save jobs just keeps on giving.

The Free-Press talked to Thomas Geoghegan, a prominent labor lawyer and author, about the blend of angst and anger palpable among Tier 2 workers,

“’A two-tier wage structure is like running up a white flag that younger workers are going to be abandoned,’ Geoghegan said. ‘What’s happening with the UAW may dramatize how much the problem of wage stagnation is a reflection of the drop in income of younger Americans. That is what’s leading younger people to get involved in the Fight For 15 and other minimum wage movements.'”

Of course, the Tier 1 workers haven’t prospered at the expense of Tier 2. The rejected TA would have given them the first general wage increase in nearly a decade—three percent in two of the four years covered. There would be lump sum payments of four percent for some workers in the other two years. As with with bonuses and profit sharing in recent years, these lump sums don’t get folded in to wage rates that would normally compound. While still much better off than Tier 2 the top tier is losing ground along with most of the rest of the working class. The lop-sided defeat of the deal demonstrates a substantial number of top tier workers voted no—including a big majority of skilled trades.

Everybody expected a lot more from the first contract negotiated since the expiration of the ban on economic strikes imposed by the Obama administration during bankruptcy at Chrysler and GM. Especially recently, Big Three sales have been robust. And workers know Sergio Marchionne is the best compensated auto industry CEO in the world. He scored a 61 percent raise last year to 72 million—dollars, not lira. But Sergio says there’s not one penny more available for the Chrysler contract.

Of course, that’s what the bosses almost always say regardless of whether they are prepared to take a strike. But complicating the situation is the position of Dennis Williams. Following the strategy of his recent predecessors, Williams doesn’t want to win much more from his amico Sergio. The UAW brass consider themselves partners with the employer and want to act responsibly to assure the bosses live long and prosper. If that means accepting Sergio “earning” the equivalent of 1500 Tier 2 UAW members then c’est la vie.

My friend Larry told me that if the contract was rejected by a wide margin “that’s when it will get very interesting.” Brother, you said a mouthful. The majority of the present Chrysler workforce has never been involved in a major strike. But there is always a first time for any struggle worth fighting. We should closely follow the fight for a just contract at Chrysler, and what it may mean at GM and Ford as well, being prepared to offer solidarity if requested.

In Brief…

* A Socialist Action article by Christine Marie opens, “On Tuesday, Sept. 29, women in at least 90 cities around the United States demonstrated in defense of the health provider Planned Parenthood. ‘Pink Out Day,’ the organizers state, provided the opportunity to say: ‘Listen to over a million Americans who are sick and tired of the relentless attacks on reproductive health care. Listen to the one in five American women who has received care at a Planned Parenthood health center … Tell anti-abortion extremists and politicians that we are everywhere and we will not let them use fraud and deception to shut down the health centers so many women rely on for care. … We’re not backing down, not today, not ever.’”
* The BLS September employment situation report drew less than rave reviews. Pundits used terms such as “dreadful,” “grim,” and “body blow.” And, as if last month wasn’t bad enough, figures for August were also revised downward. Not yet included is the layoff of 450 workers at the corporate headquarters of the world’s biggest private employer—Walmart, in the job rich town of Bentonville, Arkansas. Sprint, headquartered in a suburb of my home town, announced they have to make cuts of 2 billion dollars but haven’t yet specified how many jobs will be axed.
* An AP dispatch from Seattle reports, “After protests and questions about whether the University of Washington would be required to follow Seattle’s $15 minimum wage law, the university has decided to boost pay for all affected workers. After raising all campus wages to at least $11 an hour in April, UW announced Monday it would increase its minimum wage to $13 in January and $15 at the beginning of 2017. This decision applies to all workers on campus, including students and follows the law’s rules for large employers. The new wage agreement will affect about 5,500 people, including 3,500 student workers. The university estimates the cost for raising all workers to at least $13 an hour in 2016 will be $3.2 million. Students disrupted an April regents meeting, demanding higher wages. The university announced a few days later that it was increasing the minimum pay for student workers to $11 an hour.”
* From the Minneapolis Star-Tribune, “Teachers unions are strong, but in St. Paul, muscle is being flexed in new ways. Rather than simply work on behalf of candidates, the St. Paul Federation of Teachers teamed with parents this year to coordinate and bankroll a Caucus for Change movement that challenged incumbents and lifted four political newcomers to prized DFL Party endorsements. Now, contract talks are underway between the teachers and the school district, and as candidates enter the final weeks of the election, the union could soon find itself with maximum leverage: a new majority on the seven-member board already endorsing its contract pursuits.”

That’s all for this week.
Subscription options for the WIR include:
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You can follow Bill Onasch on Google+

Check out our digest of news stories about working class and climate issues, posted Monday-Friday by 9AM Central. on our companion Labor Advocate blog.

Our sole source of operating income is reader contributions. If you can help please visit the KC Labor Donate page.

Bill Onasch is a paid up NWU member

Bill Onasch is a paid up NWU member