Detroit automakers worry about UAW money struggles

United Auto Workers’ main source of income is down sharply, and its ranks are a fraction of what they were just six years ago.
Associated Press
Feb 22, 2014

The United Auto Workers' membership and dues are down sharply from just six years ago. In another sign of weakness, the union suffered a stunning defeat this month when it tried to organize a Tennessee factory run by labor-friendly Volkswagen.

The rejection, by a close vote, was a major setback in the union's effort to expand in the South, where non-union, foreign companies such as VW, Nissan and Hyundai are rapidly growing.

But instead of relief, Detroit's three automakers — Ford, Chrysler and General Motors — are increasingly anxious about the 78-year old union's future.

For them, it's a "devil you know" situation. They worry that the 382,000-member UAW could be absorbed by a more hostile union. Such a merger could disrupt a decade of labor-management peace that has helped America's auto industry survive the financial crisis and emerge much stronger, according to a person with knowledge of executive discussions.

Another union might not be as willing to keep labor costs competitive with overseas automakers, says the person, who asked not to be identified because the discussions are confidential.

Despite talk of a union merger, Gary Chaison, a labor relations professor at Clark University in Worcester, Mass., says he doesn't see the UAW giving up its identity and history by combining with another organization.

"It's something that the employers always fear," he says.

Spokesmen for Ford, GM and Chrysler declined comment, and a top UAW official says the automakers' worries are unfounded.

Even as it struggles, the UAW remains the wealthiest union in the nation, with assets of more than $1 billion at the end of 2012. Officials point to a revived U.S. auto industry and more hiring at UAW-represented factories, moves that have stabilized membership dues that have been falling since 2006.

Still, the union's loss at the VW plant in Chattanooga, Tenn., heightened concerns about how it can grow.

Annual dues collected were down more than 40 percent to $115 million from 2006 to 2012, as the union's ranks fell by 30 percent. Thousands of members took buyouts and early retirement as Detroit's auto industry lost billions during the financial crisis and worst economic downturn since the Great Depression. Membership has risen slightly since 2009, but dues collected continue to decline.

The union had hoped VW would give it a foothold in the South and help revive its fortunes. Even though the Detroit Three have hired thousands in the past four years as auto sales have recovered, union membership is nowhere near a 1979 peak of 1.5 million. And the new hires are paid only two-thirds of what veteran workers get, keeping dues revenue down. The union agreed to the lower wages and became more cooperative seven years ago to help the companies survive the recession.

As it struggles to reverse declines, the union has been forced to tighten its belt. It cut spending 15 percent from 2006-2012, but still had to sell more than $300 million worth of assets, mainly securities and other investments, to pay operating expenses. Last year alone, the UAW raised more than $47 million by selling assets to balance its budget. The union may even raise dues this year for the first time in 47 years.

"That right there tells you it's fairly dire," says Mike Smith, director of the Walter P. Reuther library, an archive of union history at Wayne State University in Detroit.

A weaker UAW is worrisome for American automakers who only recently reached a labor peace with the union after decades of fighting. The peace resulted in lower wages for new hires and in health care concessions that nearly erased a $1,500 difference in production costs per car between U.S. and Japanese automakers.

A more radical union could bring a return to strife-filled days, when UAW strikes cost automakers dearly. The last major strike, in 1998 at a GM factory in Flint, Mich., cost the company about $2 billion in profits.

The UAW isn't alone in its struggles. The decline in membership is consistent with unions overall in the U.S., where only 11 percent of workers were unionized nationwide last year. That's down from 20 percent in 1983, the Labor Department says.

For the UAW, dues won't rise by much without an influx of fresh recruits in the South, where most of the auto industry's growth is occurring.

Bob King, the UAW's president, has said the union has no long-term future if it can't organize southern foreign-car plants. Automakers from Japan, Korea and Germany have 14 assembly plants in the region, including eight built in the last 10 years, a time when Detroit was closing factories.

Yet Dennis Williams, the UAW's secretary-treasurer and likely its next president, says the companies' worries about the union's demise are off-base. He says dues and membership are now on the rise from new hiring by Detroit automakers and recruitment in areas such as casino workers and heavy truck assembly.

More spending cuts also are coming, and the union plans to balance its budget and stop selling assets in the next 2 ½ to 3 years, Williams says. He knows of no talks to merge with another union.

"The UAW can survive a long time," Williams says. "They'll be here far after you and I pass away."

Williams says the UAW will show higher dues revenue when it files a 2013 report with the Labor Department next month.

Still, the union can't fully replace dues paid by longtime workers who retired at $28 or more per hour, says Art Wheaton, an industry expert at the Worker Institute at Cornell University. Lower-tier workers for the UAW start at $15 per hour, although recent raises can make over $19.

"What you're getting per hour to deal blackjack is nowhere near what you're getting per hour as a skilled tradesman at General Motors or Ford," Wheaton says.

There have been merger talks in the past between the UAW and the Steelworkers and Machinists unions, but nothing came of them, Wheaton says.

Spokesmen for both unions say there are no current discussions.

Williams is not giving up on organizing a southern auto plant, saying that the union recently signed up parts-supply and truck-building factories in the region.

And the union on Friday challenged the recent VW vote in Tennessee. In an appeal filed with the National Labor Relations Board, it asserted that "interference by politicians and outside special interest groups" swayed the vote.

The challenge comes days after the top labor representative on VW's supervisory board suggested that the anti-union atmosphere fostered by some southern politicians could lead the company to make future investments elsewhere.

Even without an expansion in the South or into other industries, the UAW is trying to boost its ranks and revenues now that the financial crisis is over and the industry is strong again.

Williams says the union wants more pay for the new hires, and will work with automakers to figure out how to get there while keeping the companies competitive.

But higher pay presents a quandary. If new hires at Ford, GM and Chrysler make more than workers at southern factories, Detroit's cars and trucks will be more expensive and they won't be as competitive. That could threaten union jobs.

In Detroit, workers aren't worried about the VW loss in Tennessee, or the financial pressures on the UAW, says George McGregor, president of a local union office at a factory that makes the Chevrolet Volt electric car. He thinks workers will approve the dues increase, which amounts to about one-half hour of pay per month. And he says the union will be back for another vote at VW.

"We'll try again another day," McGregor says. "It's not going to break the UAW."

Comments

The Hero Zone's picture
The Hero Zone

I'll play 19th century dressup: To save workers from bloated "fatcats" who are socially and economically disassociated from them and support candidates/laws they may not? The same entities that "take" the money brought home from the workers through their labors?

If my costume isn't up to snuff you can correct me but more to the point that was my allusion above. You have the floor.

The Big Dog's back

Oh boy.

The Hero Zone's picture
The Hero Zone

Your lack of anything different means I hit the nail on the head, right?

The Big Dog's back

No, it just confirms you are clueless. But I already knew that.

The Hero Zone's picture
The Hero Zone

Ahem. I am trying to draw out a point with all this. Can you at least "correct" me before deriding my response, not making a counter-point, and walking away feeling like you somehow are victor over a conversation never had?

The Big Dog's back

Victor? Is that what you think this is about? If you don't want to take the time to find out what the union movement was about, why should I tell you?

The Hero Zone's picture
The Hero Zone

Haha you did it! You actually said it! Wow haha.

Anyway I am not interested in what the resources I have ready access to to be regurgitated. I want YOUR own thoughts and opinions, which you can't produce?

But with this reservation the point I made earlier continues to unfortunately stand. It isn't just with unions but so much more in life!

The Big Dog's back

Therein lies the problem. It's not what you or I think happened, it's actually what happened. My opinion or yours doesn't matter as to why it happened. You or I can have an opinion as to whether their reasoning was right or wrong, but we can't change the facts.

Stop It

Non answers from you all the way. You can't debate so you name call and deride all the while throwing out non answers to simple questions. Just a s*!t stirrer.

The Hero Zone's picture
The Hero Zone

Opinion does matter and I realize that going into it right or wrong they are ones we hold. What I was trying to tie this into is that in the context of this discussion unions (at least the "big" ones like the UAW) have a problem with public opinion and perception. As much as they may claim X, Y is seen with no attempt to counteract Y.

My original post was neutral to helpful of the UAW by trying to indicate this and draw out a discussion to prove the point.

The Big Dog's back

IUOC Local 18 has not stayed out of politics. I guess if you support Repubs, it is staying out of politics.

grumpy

As stated they can't use dues to donate to either politicians or parties. The money has to be donated into a bundler for a party or candidate using a separate personal donation. As long as it is not money from the Union (dues)I don't care that some folks in the union wants to bundle their money for a politician or party. Link below shows how much money gets bundled and to who. Pretty well spread out across various candidates and parties. Oh yeah more to repubes than to dims, probably not a Union you would like piddle puppy. But there you have to be able to preform the work.

The donations cover 2004 to 2012, eight years, $295,000 from various members of the union, not from the Union. Not much when you look at how many members and it being over 8 years. But you can see for yourself from the information linked below.

http://www.followthemoney.org/da...

Re: " I guess if you support Repubs, it is staying out of politics."

If you look at the charts in the provided link you will see what little money is donated, more goes to repubes. So I guess you are barking out of your a$$ again, piddle puppy, but it is so little donated considering that it is $295,000 over 8 years over the whole state, it is rather meaningless. 15,000+ total membership in Ohio. Last few years SE Ohio has been hot with pipelines and pumping stations.

The Big Dog's back

So which unions force their members to donate? And don't say UAW either.

grumpy

I haven't stated what other unions do or don't do with their money. Dues or any other money they have. I only said that the union I was a member of can't do with dues, s orry piddles.

The Big Dog's back

IUOE operates the Engineers Political Education Committee (IUOE/EPEC). EPEC Voluntary is the federal political action committee of the International Union of Operating Engineers in the United States, which raises money through voluntary contributions from its members and their families. IUOE then uses these funds to elect candidates and incumbents who will support IUOE members’ interests on key issues in the United States House of Representatives, the United States Senate, and the White House.

grumpy

Re: "raises money through voluntary contributions from its members and their families"

As I have stated every time I write about the Union I am a member of. I also have linked to the amount and candidates and parties They donate to. I have never stated otherwise. The Union CAN'T use dues or the money collected by the union. It has to be separate donations from individual members and their families, and then bundled. Show me where I mis-stated something about 18's political donations. Every time I write about the union I was a member of I state that. This time I even linked to how much and to whom it went to. The Union doesn't do politics, the members voluntarily donate to both parties candidates who they feel support their interests, not Union money, members money. Goes to both parties and various candidates in all parties.

The Big Dog's back

This is part of what you wrote:
"This is how a modern union looks, The old unions have to get with the 21st century and quit trying to live in the 1920's-1940's, the time has left them behind. they need to modernize and enter the 21'st century. Do what the members want, not the wingnut politicians, union goons and union bosses want. Times change and the unions need to do the same."
You state as part of your whine that your union doesn't use dues. Once again, which union does? Which union does those things you complain about? Quit blowing smoke and come up with solid facts.

grumpy

I have not said what any union other than the one I was a member does with their dues. I have stated that mine does the apprenticeship, journeyman training, certification, takes care of benefits, insurance, retirement, safety, and so forth. They also stay out of politics. If you wish to make claims what other unions do be my guest, you have the floor. I can only speak to what the union I was in did. They did what the membership voted for them to do.

Re: "You state as part of your whine that your union doesn't use dues."

BTW I never stated that my union doesn't use dues. I have stated that they CAN'T use dues to donate to politicians or political parties or anything political. I have stated some of the things our dues went for, the Apprenticeship training, safety, retirement, insurance, and other such things.

The Big Dog's back

Semantics. So how can you say other unions haven't "evolved"?
"I can only speak to what the union I was in did."

grumpy

Re: "Semantics."

Hardly, you try to make it out that when I say the union can't donate to anything political that it is semantics, it is truth as I have shown using your copy and paste of what the union I was in does. They have to get separate donations, bundle them to donate them to political things, and try to call that semantics? It is EXACTLY what I said they did.

Contango

The REAL issue is the financial one with public unions and Detroit also helps to clearly illustrate that problem as well.

The private sector increasingly can no longer afford to support the legacy costs associated with the rich health and welfare retirement benefits that the liberal politicos promised their campaign-contributing friends in the public sector.

"Detroit bankruptcy plan includes deep pension cuts"

http://www.latimes.com/nation/la...

DEATHnTAXES

With the horror stories I'm hearing coming out of the KBI and Ventra plants about lack of good union representation, there may not be a need for unions at either plant.

kURTje

Like you know anything about work pooh. America in general is broke & there are a plethora of valid reasons why. (bye-bye SSI)

Contango

Re: "America in general is broke,"

“Thanks for my government check/military.”

- kURtje,10/23/2013

Why then do you receive taxpayer money for doin' nothing?

How are YOU not part of the problem, kookie?

Contango

Re: "bye-bye SSI"

According to 'good' liberals like you, SSA will be able to pay benefits until 2078 and reduced ones thereafter.

Answer the question: So why do you get a govt. check?

Pete

Maybe they should sell the resort and actually use that money for their members:

http://www.reuters.com/article/2...

But where would the UAW Elite summer at?

looking around

All of this anti union rant. Would someone like to paint a picture of what this country would look like if the unions were never established and continue to represent American labor? Start with your little backyard of Sandusky and surrounding areas. Tell us what life would be for the average worker trying to support a family, better his children's education and support a tax base to grow a community.

Tell me about the type of business that would flourish and also support the community.

Tell me about what are school systems would be like, our roads and infrastructure.

You folks that hate unions so much have no idea of what your own miserable lives would be like if they had not been here for us all for years members or not.

Yes, unions are made up of both left and right thinking members, all whom may vote in any manner they wish and donate their personal money to whom ever they wish for political gain. Perhaps they have strong feelings on gun control and a candidate that shares their views, but how does that candidate feel about the issues that allow them representation for fair wages and benefits?

Why shouldn't a portion of member dues go to candidates that support the overall views shared by union labor?

I wish every business owner that is so anti union, even that their little venture has nothing to do with unions would post a sign in their window, ad or business card so I could readily identify them and forgo any business with them! They would soon see how unions had previously benefited their lives.

Now that I've had MY morning rant, I'll get back to my fishing rod! Thank god I was a union member and can enjoy my senior years in relative comfort and in good health. To the folks that I shared my income with and supported them in their own endeavors both in my working years and in retirement, I wish them the same happiness and good health.

Contango

Re: "Thank god I was a union member and can enjoy my senior years in relative comfort and in good health."

So in what and where are those union pension assets that support your health and welfare benefits invested?

looking around

Again you have no answer, you only offer another question. But I will answer you, Unions have always invested funds that they are responsible for disbursements in investment portfolios approved made up of several types. Why shouldn't they invest money in the many factions that they have represented workers in? These workers have helped to make these profitable. Unions are not against business, they promote fair and equitable wages and benefits for labor provided.

I as a union worker purchased many shares in company stock over the many years I worked not only in my company of employment, but also many others.

After many workers lost their retirement benefits due to corporate raiding and other unscrupulous acts, the PBGC was formed to insure that workers would not be stolen from again if they were in a defined pension program.

Today my retirement is composite of the PBGC (supported by investment and employer contribution), Social Security and investments.

So now tell me what your miserable life would have been like if the unions had never existed? That has nothing to do with where my retirement comes from or how those funds are invested.

You seem to be simply hung up on the fact that I and my union counterparts receive our due pensions and benefits as negotiated by our union.

Contango

Re: "PBGC"

So your union's pension trust became insolvent.

The PBGC is 'technically' bankrupt and has a line of credit with the Fed. govt.

Good luck!

BTW: Union pension trusts invest with hedge funds, private equity firms and in foreign cos.

Hypocrites one and all.

If one doesn't ask questions, how does one learn?

Also: The term is defined "benefit" pension plan (DB).

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