The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

United States:
Auto Contracts:
The UAW Leads the Way Up ... and Down

Feb 7, 1997

Last November, after a week of striking just two of GM's 149 plants, the UAW settled on a new three-year company-wide contract with GM, essentially the same contract which the UAW had already negotiated with Ford and Chrysler without a strike. All told, 390,000 workers at 264 plants are covered under this latest agreement between the UAW and the "Big 3."

For the first time in its history, the UAW had agreed to a permanent "two-tier" wage agreement. This contract made it possible for Ford, GM and Chrysler workers doing essentially the same type of work to work under significantly different wage rates.

There was no important organized opposition to the contracts. At Ford and GM, the contracts passed overwhelmingly, with yes-votes of 90 and 85%, respectively. At Chrysler, even though the contract passed, the yes-vote was lower, just over 70%. This was the second lowest yes-vote ever by Chrysler workers. The lowest came in 1982 when workers, angered by the fact that Chrysler had recovered but their wages had not, voted down the contract. Their resentment over what they gave up still echoed in the 1996 vote at Chrysler, especially given Chrysler's record high profits in recent years. But Chrysler workers also expressed the fear that by accepting the permanent two-tier wage for new workers, they would break down the solidarity needed to protect their own wages and later on, even, their pensions. That fear had also been expressed by some workers at Ford and GM.

But whatever fears workers at these giant companies may have had, nowhere did they seem ready to fight for something different. One Ford worker, who voted for the contract, was quoted as saying, "It's a lousy contract, but look at what's happening today. We're not the only ones to get two- tier."

That's true. The IUE (International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers), which is the union recognized in a few GM parts plants, last spring accepted a 17-year contract which allows GM to hire new workers at only half the wage of current workers. Eventually, they can work their way up to full rate, but eventually means...the full 17 years of the contract.

The Same Wage for Everyone

The commitment to the same wage for everyone dates back to the period when the UAW and, with it, the CIO were organized. The idea that everyone should get the same pay reflected the drive of the workers in mass industry to organize in one big industrial union.

In general, most of the industrial unions were committed to the idea that people doing the same job should get the same pay. But the UAW took that commitment further.

The wage differentials which did exist inside the three big auto companies were significantly less than what existed in other industries. In steel, for example, the highest paid workers in one company might earn almost three times what the bottom ranks of the pay scale earned. In Big 3 plants, the difference between assemblers and skilled trades, between which there is the biggest gap, is much less. For example, the base rate, including COLA, at the end of the last contract was $19.00 for an assembler and $22.14 for tool & die. Other differentials were significantly less. Classifications demanding a little more skill than the assembler's job, such as repair or utility, might earn 50" an hour more. Easier jobs, like janitors, might earn 50" an hour less. Undesirable shifts and more dangerous or heavier work, such as in foundries or forges, carry a 5 or 10% supplement. But overall, there was little variation in wage scales and, effectively, no variation for people doing the same work. For decades, even newly hired workers attained full rate quickly, within 90 days.

Several times before the 1996 contract, the UAW had agreed to some major, if temporary, incursions on this commitment. When Chrysler pled near bankruptcy in 1979-80, the UAW agreed to give up cost-of-living protection, automatic three percent yearly pay increases and nine yearly holidays for Chrysler workers, putting them behind Ford and GM workers. The differences were eventually overcome, but not for 10 years. (Of course, the differences were overcome, in part, only because Ford and GM workers had also given up their automatic three percent yearly increase, and the nine holidays.)

In 1982, the UAW agreed to let new hires work for a year and a half before they got up to full rate and to lower their starting wage to only 85% of base wage rate. In 1993, it extended the waiting period to three full years and reduced the starting rate to 70%. These differentials were large enough that many workers already talked about a two-tier wage system. But, at least, the two-tiers were only temporary.

How to Save Jobs – Cut Wages

The wage differentials negotiated in the 1996 contract, however, are considered permanent. The UAW agreed to let the three auto companies open new parts factories which would pay significantly lower wages than what the three companies pay in their existing parts plants. These new wages are supposed to be competitive with wages existing in a particular area for a particular type of work done at the unionized non-Big 3 suppliers. On average, those wages run between half to three-quarters of Big 3 wages.

In exchange, the auto companies pledged not to cut their current employment levels more than five percent over the next three years.

Not only did the UAW leadership agree to this proposal, apparently this WAS THEIR proposal. They justified it by saying that not only would it stop the drain of work from Big 3 parts plants to the Independents; it would actually bring work back into the Big 3 and thus help reinforce the union.

A Guarantee that Jobs Will Be Lost

The guarantee that no more than five percent of Big 3 jobs will be cut over the next three years means obviously that jobs WILL be cut. IF the companies adhere to the five percent it's true the job cuts would be carried out more slowly. But just as with all the previous "guarantees," this one contains so many "exceptions" that five percent can soon turn to 10% ... or more.

At the point when it seemed that GM might not accept the UAW's offer, UAW President Yokich complained, in a burst of pique, that if GM had bothered to examine the UAW offer, it would have discovered that nothing in that offer would prevent GM from "doing what it wanted to do."

GM, apparently reassured, agreed to the contract. And then, to reassure Wall Street, GM announced that it expects to shrink its workforce by 5.5%, not over three years, but 5.5% each year for the next three years. Its executives went over provisions of the contract proving to Wall Street firms just exactly how this could be done. Wall Street pronounced itself well satisfied.

Ever since 1982, UAW-Big 3 contracts have included guarantees which have been sold as preventing the loss of jobs. But those guarantees haven't prevented jobs from being lost, and at a very high rate. Since 1978, the Big 3 have reduced their unionized work force from about 765,000 to 390,000. This latest guarantee will do what all previous such guarantees have done: protect jobs when the companies don't want to cut them, offer no protection when the companies decide to cut.

One thing is certain, however: the 1996 contract will let GM, Ford and Chrysler pay lower wages in the new parts plants if they want. And after that, why not their old parts plants? And then....?

For now, the Big 3 may not bother to set up their own lower-wage plants. This contract may just be a club the Big 3 wants want to hold over the heads of the Independents: "If you don't lower the prices you charge us, we will do the work ourselves, 'in-house.'" Obviously, the Independents can use this threat to lower the already low wages they pay in their plants.

What the UAW has initiated with this contract is not an increase of jobs, but the beginning of another downward wage spiral.

A Low-Paid, Non-Union Work Force

There has been a real flood of jobs moving out of the higher-paid Big 3 plants into the so-called "Independents." For years, the Big 3 had been increasing the proportion of "in-house" parts work, buying up independent companies, enrolling most of the workers so affected in the main UAW-Big 3 contracts. But, starting in the mid-70s, that began to turn around rapidly. Today, Chrysler farms out over 70% of its parts production; Ford, more than 50%; even GM farms out almost 40% today.

While these plants nominally, and in some cases really, are independent, their recent growth was carried out under the aegis of GM, Ford and Chrysler. When the three companies first began to farm out the stamping of parts, for example, they often sent the dies and even the presses from their own plants over to an "independent" stamping plant opened up just in time to receive the machinery. During the period when the auto companies were eliminating their own plants producing seats, Johnson Controls, which today produces seats for the three auto companies, underwent a startling expansion. In less than ten years time, it went from 5 to 30 plants inside the U.S. Today, Lear Seating, which builds seats for GM, does so in a factory sitting on GM property in Lordstown.

For years, over 80% of independent parts plant workers were organized, the vast majority by the UAW. That began to change in the 1970s, during the same period when the Big 3 were shipping more work out to them. By 1979, only 60% of workers at the Independents were in a union. Within ten years time, that number had gone down to only 23%.

The decrease in unionization reflects, in part, the fact that many new independent parts plants have been built, and they open as non-union. But the union has lost ground not only relatively, but also in absolute terms. In 1978, 155,000 of these workers were in the UAW; by 1993, only 85,000 were.

Even while the Independents were opening new plants, they were also closing down a number of plants, and they closed disproportionately the ones which were union organized. Dana, a big auto supplier, has closed 37 plants since 1980, of which 24 were unionized. During this same period, it set up over a dozen new plants, every single one of which is today non-union.

How to Drive Workers Away from the Union

If some of the work the Independents are doing is shipped back to the new, lower-wage Big Three parts plants, the UAW expects that the workers in these new plants will almost automatically become part of the union. As at other Big 3 plants, their dues will be deducted by the company from their wages and transferred to the union.

Whatever jobs the UAW might "save" at the Big 3 will be lost at the Independents. This clearly pits one group of workers against another, in competition for the same jobs, leaving both groups of workers in a more vulnerable position. It certainly is not apt to predispose the 250,000 non-union workers at the Independents to look favorably on the UAW. If anything, this contract will antagonize the workers at the small parts plants, reinforcing the idea held by many of them that the UAW is only concerned about Big 3 workers.

When the UAW agrees, in advance, not to defend the interests of some workers under the pretext that it will be allowed to organize them, it is first of all a contradiction. What is the point for workers to join a union if they aren't to be defended? But it is also a way for the UAW to cut off the branch on which the union itself sits. What is the purpose of a union which gives up carrying out its task?

Maybe the Boss Will Help Us Out!

Facing a shrinking influence in the parts plants, the UAW has nonetheless put little effort into organizing them. It has devoted a very small proportion of its budget to organizing, much less than most unions do. It has petitioned for very few elections, and of the ones which did take place, it won less than half.

Obviously, it is not easy to organize in an industry where the average plant size is less than 150 workers. And for unions who consider the problem from the view point of their "balance sheet," their return for their money spent is meager.

The UAW seems to have developed a way around this financial problem: it has been pushing Ford and the other two companies to help it organize the Independents!

In 1993, it first got a letter from Ford, then from the other two companies, committing each company to "tell its suppliers of the positive aspects of its relationship with the UAW"; and to "urge its suppliers to treat their employees in a good, fair, and equitable manner and to avoid conduct which violates national or state labor and employment laws."

With what meager results we can see.

The major victory which the UAW can claim, as the result of this promise, came at two of Johnson Controls' plants, which make seats for Ford. Most of the workers had already signed cards of intent, and the union petitioned for a union recognition election. At that point, Ford publicly told Johnson Controls about its "wonderful relationship" with the UAW. It may even have twisted some Johnson arms privately. When the vote came, the union won overwhelmingly. Of course, the other 26 of Johnson Controls' non-union plants, many of which also produce for Ford, remain non-union. In other words, if the workers have already done something, Ford is ready to offer its good wishes. Period. Ford's glowing testimonial to the UAW did not prevent Johnson Controls from unilaterally cutting wage rates at the two plants almost as soon as the union had won the election. Is this what Ford has led Johnson Controls to understand by "a good, fair and equitable manner"?

Leading the Way Up

The UAW had long been considered the pacesetter in the American union movement.

Its contracts were the envy of workers in practically every other industry. From the end of World War II up through 1976, each new contract added another protection for workers covered under a Big 3 contract: 1946-47, call-in pay, paid vacations and paid holidays; 1948, automatic cost of living raises and automatic yearly wage increases; 1950, pensions supplementing Social Security; right to recall to own plant from layoffs; life, sickness, accident, hospitalization insurance; 1955, unemployment coverage supplementing state unemployment payments; 1958, right to transfer to other plants when on lay-off; 1961, payment of hours less than 40 when plant is down; 1964, permanent disability pensions, medical insurance for retirees, prescription drugs, payment of tuition for college courses; 1967, what Reuther called Guaranteed Annual Income, that is close to full pay for one year on lay-off; 1970, retirement after 30 years of work and 55 years of age, ten days off at Christmas-New Years holidays; 1973, dental insurance, six personal holidays, and full retirement after 30 years, regardless of age; 1976, vision and hearing coverage.

Each new UAW-Big 3 contract set a benchmark toward which other unions strived. Of course, the UAW didn't originate every new program, but in general it pointed the way. And many of the gains it made opened the door for other unions.

For at least three decades, the UAW pulled other parts of organized labor after it, simply by the example of what it had been able to gain. But it did not pull other unions with it consciously, nor collectively. Nor did it consider it necessary to do so.

The UAW acted as though it were enough to act to improve the situation of its own members through its own union contract and the rest would follow more or less automatically.

The pact the unions, led by the UAW, signed with the big bourgeoisie was a pact based on the assumption that the workers could do well because their own bosses did well.

Of course, the bosses didn't automatically give something just because the unions asked for it. Occasionally, the unions were required to carry out some hard strikes in order to get what they wanted. In 1945-46, the UAW had to strike GM for 113 days just to get a partial catch up for what had been lost to the war-time inflation; in 1950, it had to carry out a 104-day strike to establish pensions at Chrysler. In 1967, it took a 67-day strike at Ford to establish Reuther's Guaranteed Annual Wage. In 1970, it took a 67-day strike at GM to establish the right of Big 3 workers to retire before age 65.

Some of the strikes were certainly difficult, and relations sometimes were acrimonious between the companies and the UAW. But overall, for several decades, the UAW seemed able to forge real protection for its members, as did some other unions which followed behind it.

The unions were able to defend the interests of their membership, but they were able to do so only for a limited time, the several decades after World War II, when American imperialism needed their help. At the end of the war, American imperialism stood alone as the one predominant power in the world. Its industrial base was intact, Europe's and Japan's had in great measure been destroyed, and their hold over their colonies was breaking down, if not already broken. U.S. industry stood poised to move into the rest of the world. But to defend this far flung corporate empire, the U.S. had to carry on a number of wars, some of them major, above all, in Korea and Viet Nam.

American imperialism needed labor peace at home, so it could pacify the rest of the world. In order to send its troops around the world, American imperialism fed crumbs to one part of the working class through unions like the UAW. The contractual gains made by the UAW, expensive as they might seem, were well within the means of the American bourgeoisie to swallow, all the more so given that the unions, following the lead of the UAW, raised their demands in the most narrow, corporatist fashion possible.

Most of the working class did not benefit from what the UAW and a few other unions were winning. Certainly some large corporations inscribed some of these same features in their employee handbooks – especially those, like IBM or GE, which were intent on keeping unions out. But most of unorganized labor did not enjoy the same level of benefits. Some never had the right even to a pension or to employer-paid medical care.

And Leading the Way Back Down

The auto companies took the offensive, starting in 1979, demanding one concession after another from the workers. Having tied the workers to "their" bosses, the UAW saw no alternative but to agree to make sacrifices for "its" companies. Threatening to shut down completely, Chrysler brutally closed down a number of plants in quick succession. After the UAW agreed to help bail Chrysler out, Ford and GM stepped up, also demanding concessions. All three began to cut jobs drastically. From 1979 through 1990, the work force in auto got smaller – and older. For 11 years, there was no hiring, only the hemorrhage of jobs being lost. As workers quit, were fired, retired or died, no one took their place. Work was farmed out. But the speed of work was intensified. Throughout the 80s and into the 90s, the Big 3 enjoyed a six to seven percent increase in productivity every year.

Just as the UAW had pulled other unions behind them on the way up, it now set the skids for everyone on the way down.

At the beginning, all the corporations may have pled poverty. They may have talked about bad economic times. Today, they don't even bother. They go from year to year, announcing ever higher profits. But still they come back, asking for more. Big 3 profits hit an astounding 43 billion dollars over the last four years. Nonetheless the UAW, felt it had no choice in 1996 but to accept lower wages for some plants, thus opening the door for lower wages in others.

The UAW may have been successful for decades, as far as its own members were concerned, but that success was measured more in comparison with what other workers didn't get, and not in comparison with the wealth the American bourgeoisie continued to exploit from the working class.

In a period of prosperity, when the bourgeoisie can afford to make concessions to the workers, of course it's easy to get something for a few workers, much easier than getting that same thing for the whole working class. To really have extended its gains would have required the UAW to assume the leadership of organizing the rest of the working class, unionized and non- unionized, to fight for these same gains.

Instead, the UAW continued to work with its own bosses to get better contracts for its own workers. The UAW often bragged about the difference between its contracts and the wages of non-unionized workers. But it was exactly the isolation from the rest of the working class implied by these contracts which left the UAW vulnerable.

When the American bourgeoisie decided it no longer needed to make concessions, certainly not to the whole working class, but not even to the autoworkers, the autoworkers alone did not have the strength enough to fight back, not even just for themselves. Only the whole working class, using all its forces, has the strength to oppose the concessions being demanded today. But the policy of the UAW had always led it to turn its back on trying to mobilize the rest of the working class to make a fight. The corporatist policy which the UAW has led over the decades and is still leading today ends in disaster.