When it comes to the United Auto Workers, opinions are typically bipolar: You either love 'em or you hate 'em. Lovers would include the old New Deal coalition, plus anyone who's benefited from the union's dogged efforts to preserve the pensions and benefits of middle-class Midwestern workers. The haters would be (at times) the Big Three, the GOP, libertarians, and other usual suspects on the free-market right. But this tidy dichotomy is about to be shaken up.
A "UAW for the 21st century"
For the first time since 2007 -- pre-financial crisis, mind you -- the domestic carmakers and the UAW are heading into contract negotiations. You can't summarize the position of the union any better that what its leader did for Reuters:
UAW President Bob King, 64, now in his second year at the helm of the union, has promised a collaborative "UAW for the 21st Century" approach to negotiation aimed at making the U.S. automakers competitive and suggested he is open to bonus-type payments.More on bonuses in a minute. First, let's examine the current negotiation situation. The UAW has lost a massive number of members over the past few decades (with a 42 percent drop since 2004 alone), but it still wields plenty of clout, given that Detroit can't build cars without it.
That said, as Detroit's fortunes have fallen, the UAW has seen its bargaining power erode. Heading into this new round of contract talks, the automakers actually have a slight advantage: in a stalled recovery, the resurgence of the U.S. auto industry is one of the few lights at the end of the tunnel.
The brave new world of compromise
The burly old UAW is a thing of the past. The new UAW is all about compromise. Will it instruct its members to go on strike if negotiations break down? Unlikely, given that President Obama -- who to be perfectly frank has got the UAW's back -- is heading into an election year.
The key point of struggle is wages. The Big Three can now hire new workers according to a two-tiered system. Again, Reuters:
[By] hiring new workers at $15 per hour, the UAW has allowed GM, Ford and Chrysler to close the gap with Japanese competitors operating factories in the United States. That was a point that Republican critics of the bailout had insisted on early in the 2008 bailout debate. The Detroit automakers now have an average all-in labor cost of about $49 an hour for Chrysler, $58 per hour for Ford and a reported $60 for GM, compared with between $50 and $55 per hour for Toyota's U.S. plants.No more hard lines
Normally, the UAW would look at the Big Three's newly minted profits and angle for the membership to get theirs. But given that two of the Big Three almost went out of business in 2009, that's not going to happen -- at least not in the conventional way it happened in the past. And the public perception of Ford (F) is that it heroically resisted government bailouts, so there's no opportunity for hardball there.
Instead, the UAW and the automakers will try to find common ground on limited bonus payments, as a reward to workers for making concessions to enable the Great Recovery. (This has already happened, to a degree, in the form of profit-sharing checks the automakers cut to workers this year.)
Of course, this kind of incentive-based payment is anathema to UAW workers, who just want their damn raise, thank you very much.
The solution to the impasse will be very, very gray: perhaps an initial acceptance of a bonus structure, with promises of annual raises if certain goals are met. It's going to be uncomfortable for the UAW to accept. But the once-mighty union doesn't have much of a choice.