News Analysis

United Auto Workers President Ron Gettelfinger says the union is not entering the upcoming contract talks with Detroit automakers with givebacks in mind. “We’re not going into negotiations in a concessionary mode, I’ll tell you that,” Gettelfinger said July 11 after speaking at the NAACP national convention in Detroit.

The Big Three automakers (GM, Ford and Chrysler), not waiting for official talks to begin on July 20, have already started to negotiate in the press. They claim they have to trim their labor costs by 30 percent because of competition from the Japanese, primarily Toyota.

Wall Street analysts say “the Street” wants to see a landmark deal to offload $70 billion in retiree health care liabilities to the union. Second, they want a two-tier wage structure that will pay new hires a fraction of what current workers make and offer them fewer benefits. Third, they want to eliminate the union-backed “job bank,” which they see as a “pay for no work” scheme.

Wall Street kingpins are so excited about their wish list that they are operating as if the workers and their union will have little or nothing to say about it. They hope that concessions made by the UAW in their recent contract with Delphi, the auto parts maker, will carry over to the Big Three.

Wall Street trading results show the effect. Shares in former Delphi parent GM are up 23 percent since June 1 to $37.54, and Fitch Ratings this week removed GM from its “negative watch.” Ford shares surged more than 15 percent to $9.64 by July 2.

Many people question industry statements about how much in distress the Big Three find themselves.

Only July 16, Ford announced plans to spend $1.37 billion developing a former Daewoo car factory in Romania into a major facility for its vehicle and engine production requirements.

A week earlier, Ford announced that it will spend $100 million to expand capacity at its factory in St. Petersburg, Russia, where it plans to increase production from 72,000 to 125,000 vehicles by 2009.

Doing well on Wall Street, GM seems to be on a mission to grab money wherever and however it can. The European Commission has launched an investigation into $17 million in aid given to Vauxhall, a GM subsidiary, by the British government. The money was supposed to be used by GM to train workers to keep a plant near Liverpool viable.

However, GM had apparently already begun the training and was in no need of a financial incentive to do so. Neelie Kroes, the European Union’s competition commissioner, said “public funds are not supposed to provide windfall profits to companies.”

U.S. automakers, of course, have a history of doing almost anything and everything to make profits. Observers note that the bankrupt Delphi auto parts manufacturer was a spin-off from GM, which dumped a less profitable part of its business to wring concessions from its workers. GM is now using the concessions won at Delphi to pressure for similar takebacks in the rest of the industry.

Chrysler put a two-tier wage system into effect in its assembly plant in Belvidere, Ill., where equal work for unequal pay is now the rule. Workers who make $18 an hour work alongside others who make $40 an hour, plus benefits. The company argued that the two-tier wage system at Belvidere makes the plant viable and that the unique arrangement between Chrysler and the United Auto Workers paved the way for a third shift.

But the system has caused demoralization and arguments on the plant floor, and has generated a federal lawsuit by the “enhanced temporary workers,” as the lower-tier workers are called. The Belvidere situation gives a good picture of what life will be like for U.S. autoworkers if the companies have their way in the upcoming negotiations.

Although Belvidere is the only auto assembly plant where this has happened, two-tier systems are already in place at several parts suppliers, including Delphi.

The UAW and autoworkers say the companies, worth many billions, cannot expect the workers to make more sacrifices.

Because autoworker pay and benefits help set the standard for all workers, the labor movement sees this battle as crucial. A resolution recently adopted by a United Steelworkers sub-district in the Chicago area reads in part, “‘If only we had stopped them at PATCO’ is a cry heard too often,” referring to President Reagan’s attack on the air traffic controllers in 1981. “Let’s not have to say, ‘If only we had stopped the attack on the autoworkers in 2007.’ We support the UAW and the autoworkers. Their fight is our fight.”