American labor has faced its share of challenges over recent years, but the president of the United Auto Workers can’t be accused of hiding his head in the gearbox. Ron Gettelfinger has relegated past labor-management struggles to the history books in favor of cooperation meant to save the jobs still left in the struggling U.S. auto industry.
UAW membership has dropped from a high of 1.5 million in 1979 to 600,000 last year, and Gettelfinger issued a somber report as the proud union opened its convention Monday in Las Vegas. “The kind of challenges we face aren’t the kind that can be ridden out. They’re structural challenges, and they require new and farsighted solutions,” he warned UAW officials from across the U.S.
Gettelfinger noted the UAW last year agreed that active workers at General Motors and Ford would divert $1 an hour to a health fund that would have gone to wage increases. Union members must brace for more such painful choices, including paying more for health care, he said. He added that the Detroit automakers need help from the U.S. government to withstand the grueling competition from overseas.
The UAW has been an organized labor success story, improving wages and benefits with every round of negotiations since 1947. Looking ahead, however, the union may have to accept actual cuts in contracts to be negotiated with Detroit-based automakers next year. That’s because analysts now put labor costs at UAW-represented companies at $65 an hour – 25 percent above the $48 an hour paid by such largely non-union rivals as Toyota Motor Corp.
Toyota enjoys those lower overall labor costs even though its hourly wage, including a bonus tied to corporate performance, is now $30, topping the $28.50 for UAW workers at GM, Ford and DaimlerChrysler. The difference is that Toyota doesn’t have to absorb the “legacy costs” for pensions and health care benefits for hundreds of thousands of retired workers. In 2005, pension and retiree health costs totaled $1,047 per vehicle at Ford and $1,683 at GM.
That’s why the UAW has cooperated with GM in a program of buyouts and early retirement bonuses that has enticed 29,062 UAW workers – or about one in five – to agree to walk away from GM and bankrupt Delphi Corp., GM’s biggest supplier.
Over the last year, Ford, GM and Chrysler had 52.9 percent of U.S. sales, down from 57.6 percent in May 2005. It can’t go on without decimating the workforce. Thus, the union’s cooperative effort is both wise and timely. Meanwhile, the industry’s plight underscores anew the need for comprehensive health care reform in the United States.
