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

What's the middle class and why do you separate people into classes in our country? This is a compulsion I can't seem to understand.

KURTje

Looking around is right. The new America almost always mandates both husband & wife work out of need. It wasn't like that Hero Zone. (that was pre-Obama too)

The Hero Zone's picture
The Hero Zone

Not sure I follow you. Could you clarify? (<--neutrally said)

The Big Dog's back

sappy, do you do any research on anything? Or do you just rely on what's in your head and what you think it should be?

The Hero Zone's picture
The Hero Zone

I do plenty of research, but it is because of that I have found that most people who say "middle class" have very different meanings/intentions of it. That makes its use all but irrelevant, let alone its derogatory to "classify" people as if they were an insect, mineral, asset or the like.

The Big Dog's back

You classify Liberal and Conservatives. Dems and Repubs.

The Hero Zone's picture
The Hero Zone

I'll describe, but not classify. Classification implies that "that is it". You can't be anything else at all unless an overwhelming system and groupthink change that FOR you.

I will describe people as having some property or another, but that "label" is relevant only between me and it/them. You describe yourself as a Democrat. I do the same. But could that change by your own actions at any point in time? Yup! I don't know if I can call you a liberal in the classic sense. You are far too authoritarian for that.

But then again, that is just my description of you.

Dr. Information

Here are the ungrateful federal workers we have in this nation. While most people and many middle class workers have taken a hit, here is the response your federal workers give about their 1% Obama raise:
Federal labor unions are crying foul over President Obama's proposal to raise federal employee pay by 1 percent next year, arguing the increase is inadequate.

David Cox, president of the American Federation of Government Employees, the nation's largest federal employee union, said Monday that the 1 percent increase is "pitiful" and fails to compensate for sacrifice by government workers.

“Federal employees have endured years of pay freezes and cuts in retirement benefits,” Cox said in a statement. “Federal employees deserve a meaningful pay raise, not a token increase that will be more than eaten up by rising living costs, including higher retirement and healthcare costs.”

The increase would mark the second year in a row that civilian federal workers would get a 1 percent hike after three straight years of pay freezes.

So while its okay for everyone else to have to work more hours, do more with less, have their insurance premiums increase due to Obamacare and have their benefits slashed, its not okay for federal workers to experience the same things.

They are better than you, so they think.

Contango

According to Consumer Reports vehicles to avoid include:

Chrysler, Ford and GM

http://www.usatoday.com/story/mo...

Love that union-made quality.

@ looking around: What make of vehicle(s) do you own?

looking around

All GM !07 Chevy truck has over 100 thousand trouble free miles, changed brakes and tires at 65K change oil every 3K still looks and drives like the day I bought it.

2013 Caddy, the finest automobile ever made in my book! Love that car! Not a single service call yet!

Unsurpassed quality and American craftsmanship that I'm proud to own and drive!

I've purchased over forty new cars in my lifetime all American made and most GM!

Hows your foreign ride sport!

Contango

GM? Good for you!

Good to see that you put your money where your ideologically misdirected mind is.

How are those "union" shops in China doin'?

BTW: At the time of their bankrupcy, GM China was the only profitable division.

Re: "forty new cars"?

Little wonder that you have to rely on the PBGC and a union for health and welfare bennies and have little savings; you bought the loss.

’12 Nissan, Altima 3.5SR V6 & a ’04 LaSabre here.

looking around

RE:Little wonder that you have to rely on the PBGC and a union for health and welfare bennies and have little savings; you bought the loss. [snip]

I'd match my net-worth to yours any day! Don't you worry your little head about the security in my retirement, I do just fine thank you and will continue to prosper until the day I'm planted.

You can only hope one day to do as well!

Incidentally, I'm not on any "welfare bennies" all my benefits are earned.

Your the one looking out the window at snow with nothing better to do than blog......I'm sitting on the back of my boat about twelve miles off shore watching my fishing pole and enjoying a sunny day!

Contango

Re: "welfare,"

It's a IRS & DOL term. If you knew anything about pensions or retirement planning you would know that.

I'm doin' just fine. And I didn't need union goons to help me do it.

Assume away pal.

Investible liquid assets are all that really counts anyway.

Reads like you sunk your money in depreciable ones.

looking around

So if your doing fine, then why are you so worried about unions and the fact that they have benefited others?

Your use of the term "welfare" always seems to indicate that you feel others that have earned benefits are getting welfare because that is your misunderstood perspective of it.

My investment assets are divided between moderate and safe risk, I have plenty of liquid assets to enjoy my toys of which I have many, if that is what you are referring to as depreciable. With 60 percent of my life behind me, I plan on enjoying the remaining 40 percent and according to my financial consultant I won't need to worry about a backwards slide, in fact he tells me that I'm ultra conservative in how I spend for fun! Plenty left to take care of me in my old age and leave a little behind for my family.

Limited out for the day...time to put her back in the rack! Worst day of fishing is better than the best day of work!

Contango

Re: "unions and the fact that they have benefited others?"

"Benefited"?

Again: Your use of the past tense.

Other than the public ee. unions which are bankrupting the private sector, they're thankfully dying.

"Financial planner"? LMAO!

Good luck with having a shyster stealing from you.

looking around

You misquoted me I said "financial consultant"

KURTje

Looking around he does not know the meaning of happiness or joy.

looking around

Good thing he has that 04 Buick, he needs a dependable car in those harsh Ohio winters!

Contango

Re: "Good thing,"

My last Goverment Motors car.

Contango

Re: "Looking (snip),"

lol

Are you happier with free taxpayer money, kookie?

“Thanks for my government check/military.”

- kURtje,10/23/2013

looking around

FISH ON!!!!!!!

Contango

Re: "FISH ON!!!!!!!"

More in keeping with your mental acuity.

looking around

The thing about fishing is you have to be a little bit smarter than the fish, I take it that's why you don't enjoy it?

Contango

Re: "little bit smarter than the fish,"

I do my fishing at the seafood counter - smarter.

looking around

RE: "I do my fishing at the seafood counter"

Not near as much fun!

KURTje

hahahaha Joy is a good thing.

Contango

Yes, it is kookie. It must be h*ll being a taker like you.

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