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

looking around

No my company claimed insolvency due to their own mismanagement of business and profits.

My union has no problem providing me my health care benefits as well as many others.

Line of credit? you better go learn what the PBGC is.

And you still have not answered my question about how your miserable life would be had the unions not existed?

FISH ON!!!!!!

Contango

Re: "My union has no problem providing me my health care benefits as well as many others."

And with whom and where are those assets invested?

"PBGC also has a $100 million line of credit with the Treasury."

http://books.google.com/books?id...$100+million+line+of+credit+with+the+Treasury.%22&source=bl&ots=0mqXgo8Ipp&sig=XrKDS0sUNB-FT5wxhKrEXtArvAI&hl=en&sa=X&ei=YnYLU62_JYfx2wX08YHQAg&ved=0CEQQ6AEwBg#v=onepage&q=PBGC%20also%20has%20a%20%24100%20million%20line%20of%20credit%20with%20the%20Treasury.%22&f=false

Like I wrote: Good luck!

looking around

Still no answers to the questions I asked of you? Good Day. Typical of your rant.

Contango

Re: "Still (snip)"

And still no facts from you, just typical ignorance & nonsense.

The Big Dog's back

pooh, always answers a question with a question.

Contango

Re: "always,"

And you NEVER answer an asked question PERIOD or just spew nonsense, lil' fella.

looking around

Sounds like Contango is not feeling well today, maybe off his meds, has resorted to attacking and name calling. Typical of what his reaction when he has run out of anything to say.

Contango

Re: "Sounds (snip)"

You're hearing "sounds"? lol

You ask and answer your own questions; why bother?

Unlike you, I deal in facts. Hence the need with types like you for questions.

You questioned the Treasury line of credit to the PBGC - proved you wrong.

So you don't know where your union pension plan assets are invested?

They give you an annual summary plan description. Do you read it?

looking around

You need to read your link a little more carefully. The PBGC has never used the credit line, it is a stop gap measure put in place to make certain that pensioners do not lose the pensions which were earned. I don't see what your problem is with where my pension assets are invested? Unions invest in many businesses that they have represented members working. Asset investment is closely monitored and regulated, hence the annual summary.

Again YOU have not answered a single question, all you do is blather and froth at the mouth!

Contango

Re: "The PBGC has never used the credit line,"

True and the FDIC has never used theirs, but why are life vests required on cruise ships?

Read what I wrote: I wrote that they HAD a line of credit.

Better check out the financial solvency of the PBGC. And like I wrote:

Good luck!

Why I prefer defined contribution (DC) plans - MY MONEY! Not relying on 'someone's' promise.

----------------------

Re: "Unions invest in many businesses that they have represented members working."

Better read your summary plan description again.

Union employee pensions tend to invest their assets for the greatest return, so they invest with hedge funds, private equity firms and in foreign cos., et. al.

You think that your union bros. are working there? lol

As I wrote: You're a smart guy; you asked and answered your own questions. Why bother?

looking around

My my my...the red phone must ring when I post...LOL! So when are you going to answer my question " What would your miserable life be like if unions had not existed" Don't be afraid to describe your community as well.....let's see how smart of a guy you are?

Contango

Re: "What would your miserable life be like if unions had not existed"

I would of had more money in my pocket from not paying worthless union dues.

Don't worry about your future retirement income and health benefits; the govt. and the union fat cats have your back. LMAO!!!

looking around

Sounds to me like a case of jealousy! You can't even admit that the union created a better standard of life for people, members or not and are responsible for building community's where business flourished and family's enjoy a middle class lifestyle and higher education for their children just to mention a few things which evolved from better wages and benefits along with common sense regulation.

Contango

Re: "union created a better standard."

Can't help but notice that you wrote in the past tense.

And the Rust Belt is the museum of that unsustainable fiction.

Did you even read the above article, Sport; or just refuse to accept reality?

grumpy

Re: "So now tell me what your miserable life would have been like if the unions had never existed? "

I will do so when you inform me how to go back in time and change the past so that unions never happened. Till then I will simply live my retired life, using my pension SS, paid part time job that happens to be one of my hobbies, and other investments and savings.

I have no idea what would have happened if unions had never happened. I can guess but what good would that do? Guesses about what would happen if only... happened instead is a child's game.

looking around

Well a guess would be a step forward, at least it shows a bit of imagination and recognition of what the problems of the past were before union representation. It's not hard to imagine that the working class would never have risen to the life styles we now enjoy. We would have little if any protection by regulations pertaining to labor laws and work place safety among a few topics that I can think of.

Also for a moment think of what your municipality would be like without the tax base of well paid work forces that pay taxes directly out of payroll and are taxed on most purchases. Imagine not having that tax base for community infrastructure. Let's not leave out expendable income pumped into the local economy supporting the many non union type workers.

Think of the Beatles tune "Imagine" it's really not very hard to see.

I'm glad that at least you gave it some albeit brief thought, however the question was directed at your pal contango.....certainly he should be able to answer for himself.

grumpy

Last I checked guesses aren't answers. Are guesses, answers in your mind? I live in the real world. I prefer facts to imagination.

I can imagine a world where we were out of Iraq and Afganistan within a year of obama taking office, gitmo was closed, obamacare allowed you to keep your policy if you liked it, along with keeping your doctor if you like him, that a family of 4 will save an average of $2500 buckks a year, that buying a policy will be like using Amazon. I have all kinds of imagination. It just doesn't seem to come true when I imagine what will happen if only. Using imagination just doesn't seem to come true very often, as is shown above.

Contango

Re: "Think of the Beatles tune 'Imagine'."

John Lennon, NOT The Beatles.

You're livin' in a past, union paradise fantasy land, Sport.

Today, their greed is helping to bankrupt the private sector - see Detroit, Chicago, et. al.

looking around

Your living in your own little world sport! Your tunnel vision, hate mongering, and general ignorance has muddled your mind.

Contango

Re: "Your,"

And when the jobs go away, so do the union rank and file goons.

Keep living in your once-upon-a-time fantasy land.

grumpy

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

I can only speak for what the union I was/am a member of. The membership voted not to allow dues to be donated to anything with politics. Perhaps you missed that part of what I wrote. They also voted to allow individuals to bundle their donations in assocation with the union and give that to political things. It was what the membership wanted. The union is there to serve the membership.

looking around

" The union is there to serve the membership"

I would say that in supporting candidates or sitting political figures that share the interests of the union membership, that they are serving them very well.

Contango

Re: "they are serving them very well."

Unions are campaign slush funds for the Democrat kleptocrats.

looking around

And corporations don't provide "slush funds" for Republican pukes?

Contango

Corps. donate A LOT to Dems too. lol

https://www.opensecrets.org/orgs...

Quit believing the propaganda and open your eyes.

grumpy

Perhaps you missed yet again where I said the membership VOTED not to allow dues to be donated for anything political? Do you think the union leaders should be able to overule the membership on how money is to be spent?

You are welcome to your opinion but the membership of the union has the say, or should have the say in how dues are spent.

The Big Dog's back

Nobody missed what you said. Now for the umpteenth time, tell which unions haven't evolved. Your words, not mine.

grumpy

Poor piddles wants answers ti his question. I'll tell you what, if you answer the next half dozen questions either I or Hero Zone ( I like many of his questions and he posts more than I do) ask you I will answer yours again. I have answered many of your questions in the past while not getting any answers from you. When you start answering I will also. In life it is give and take, not all take, I am tired of giving answers to you and getting none in return.

The New World Czar

Democrats + UAW = Detroit's Demise...simple math.

looking around

Republicans + attack on the middle class = America's Demise.....simple math.

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