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

jacksonbrowne

Ooooopppppsss, what will Obama and the democraps do?

holysee

Take a vacation to Colorado!

The Hero Zone's picture
The Hero Zone

Sounds like a problem of their perceived/actual image or actions. Perhaps they can spend some of their billion on a PR campaign to have people see they aren't a [fill in the blank with what you think they are]? Removing themselves from politics would probably do MUCH to help that image as I don't hear nearly as many grumbles about various other trade/safety unions than I do about ones like this or the Teamsters.

That old style, in my opinion as a union outsider, is part of what antiquates big unions like that. Whether that is the case or not there is an ingrained image of that. If everyone in Sandusky thought I sold devil-summoning rituals (you know, Pokemon cards) that is an image I have to fight despite me proving that that isn't the case.

Sure, the minority of people who already come to my store know that I don't seek guidance from a diabolic tutor (Big Dog's presumption I watch "Faux News" religiously aside), but I already have their confidence and economic activity. If I need to expand I need to overcome perceptions. If I am to be a locust, which is how some could label unions, I need to plead the case that locusts are actually quite delicious covered with chocolate or boiled in vegetable stock.

Donegan

"devil you know"
Devils are evil you know. 383,000 members are a minority dictating how the government deals with labor (All the unions are just 12% of the population) So how does that work out for those Bama supporters who claim the majority makes the rules? Yeah we already know, There hypocrites and don't care.

CAST THE FIRST STONE

like

Contango

Re: "UAW could be absorbed by a more hostile union."

I found the UAW to be hostile enough.

Some time ago, I was out of work, jobs were hard to come by and I 'finally' found one at a stamping plant that was UAW.

I was paid piecework rates and given the crappiest jobs.

After a certain time period I was required to join the UAW, pay dues PLUS a $1,000 initiation fee.

I was hardly making ANY money and the union goons wanted $1K????

Read like extortion to me. I left after 2 wks.

Yea, protecting workers rights - BS.

WhatTheHeck

BS! No where are the initiation dues $1000. If you're gonna lie, make it believable!

Contango

Re: "And the union on Friday challenged the recent VW vote in Tennessee."

As most of their plants world-wide ARE unionized, VW encouraged and promoted the UAW to succeed in TN!

Bunch of whiners.

looking around

RE: Union vote in Tennessee, Republicans had no business interfering in Union/Company affairs.

Why does the GOP oppose unionization?

Unionization raises wages, increases and boosts the economy because it puts more money in the pockets of American worker but all of that happens at the cost of some of their employer's profits and for many of those employers that is completely unacceptable if it can be avoided.

Anti-union business leaders have a misguided zeal for low wages at all cost and short term profits -- ignoring the impact on their own workers, their firms' productivity, their own long-term profits or the broader economy.

The relative stagnation of wages over the last few decades -- due in large part to effective unionbusting aimed at keeping labor costs low -- helped bring on the economic meltdown because too many low-income workers were suckered into mortgages they really couldn't afford. Those mortgages were in turn bundled into the "toxic assets" derivatives -- those various nearly-worthless investment vehicles -- that weakened the world's financial systems and brought on the super-recession.

If private business (vs. public service) unionization rates today were the same as they were in 1983, an additional $49 billion could be pumped into the economy by workers represented by unions.

By 2008, that portion declined to 13.7 percent. Workers in unions earn 30% higher than non-union workers. That means an additinal $49 billion pumped into the working economy through wages.

A union job transforms a low-wage job into a pathway to the middle-class which fuels the rest of the economy as workers walk into showrooms, real estate offices, auto dealerships and stores and buy.

Even the Heritage Foundation's much-hyped index of "economic freedom" in countries around the world pointed to economies with the highest rates of unionization in the workforce.

As for the right-wing's favorite whipping boys, the auto industry and the UAW, analysts says that the blame for the auto crisis of 2008-2009 should fall on the executives' poor manufacturing decisions -- not the 10 percent of a car's cost made up by labor costs. And, despite the demonization of the UAW, the American auto-industry workers' wages are now roughly comparable to those in non-unionized Japanese factories, but it's the added costs of health care and pensions for union retirees over the decades that have actually raised costs. In addition, as the latest restructuring and cost-cutting plans show, the UAW has been willing to compromise -- after giving up important gains in negotiations in earlier years.

Bottom line: Unions drive negotiations toward higher wages and better benefits; they give workers a stronger voice in the political arena where business PACS and Lobbies represent their interests; they stand in opposition to regulations and treaties that could hurt the working man. To get the backing of big money, the GOP has to oppose this.

No wonder the GOP hates them.

Contango

Re: "Union vote in Tennessee (snip)"

Nice copy and paste job.

Without quotation marks it's plagiarism.

You can simplistically post someone else's lefty fruitcake opinion; so what does it all mean?

http://www.huffingtonpost.com/ar...

looking around

Who's whining now?

Contango

Re: "Who's (snip)"

Again: Got a REAL opinion or do you just know how to copy and paste?

looking around

The troll boss makes you work on Sunday? I hope your in a union and get double time! I have offered my opinion on many occasions and on many topics. Just happened to feel these statements to be very appropriate and spot on! Sometimes a simple copy paste makes it easier for others to benefit the read rather than a link.

I obviously gave you something you really have no response to.

Have a nice day, I must get back to tending my fishing pole. A little slow action this morning on the Gulf.

Contango

Re: "I obviously gave you something (snip)"

So other than copy and paste you "obviously" have no idea or opinion on what it means?

You're here, that author is not.

Other than childish trash talk ya got nuthin' huh?

SamAdams

Many people believe that a large part of the decline in American auto manufacturing was due to greed. They're right. But only part of it was CORPORATE greed. The rest? All union.

Nobody wants unsafe workplaces. Nobody wants companies that abuse their employees. But OSHA and various anti-discrimination laws picked up that slack. In fairness, unions were instrumental in pointing out those problems and in ensuring they got solved. But after things were better, unions wanted to stay alive and shifted into politics in a major way.

Now unions are more likely to get publicity for protecting unworthy employees (look no further than the Sandusky Police Department for recent examples), or their own pocketbooks (frequently causing serious hardship, or even bankruptcy, for the company they claim to work for -- Hostess, anybody?). Unions were also instrumental in pushing Obamacare through; now most are exempt from it after they learned the hard way it wasn't good for ANYbody, including them.

The hypocrisy, the past (and still occasionally present) greed, the political wheeling and dealing, and the strong-arm tactics have given plenty of people a bad impression of unions. I was delighted to see VW vote down the union. It's just too bad the UAW won't likely give up any time soon.

The Hero Zone's picture
The Hero Zone

I agree with your second paragraph for sure. It's not a whine (necessarily) against government but a pointing-out that as government continues to expand it makes organizations like unions increasingly irrelevant to their members as their taxes pay for redundant services the government provides while also paying dues to the union. The irony is that as I see the trend of public opinion, the candidates most unions support with their millions/billions only (if inadvertently) advance the planned obsolescence of the very same organization funding them.

That may be the reason of the perceived scramble to expand their influence, relevance, income, and such. That is what most "middle-managers" feel especially in lean times or in a workplace that has advanced beyond their original cause and purpose. In a way it's kind of like the "institutionalization" that was seen in The Shawshank Redemption.

But, the question is will they go the way of Brooks or Red?

sorryhog

The Union Big Shots in Detroit will screw the retirees in the end, to keep on living high, on the hog!

BabyMomma

Keep calm and outlaw unions.

Contango

Re: "outlaw unions."

The ONLY union I want is a 'taxpayers union' to help protect us from the (bleepin') govt. kleptocrats.

Strike! Strike! Strike!

BabyMomma

Absolutely. A government for the government. <----that's just dumb!

Contango

In my life, I've belonged to four unions.

Three were mandatory and essentially USELESS. The fourth was one that I joined voluntarily in order to help lobby for legislation that I believed in due to my self-employment.

Dr. Information

Wow who would have thought, Unions, Detroit and money trouble all in the same sentence.

The Big Dog's back

Our resident haters are all on this morning. They won't be happy until the middle class is gone.

Contango

Re: "Our (snip)"

Belong to a union where you work? If not, why not?

anthras

Re.Belong to a union where you work? If not, why not?

Dues is one reason for why not. Read in the above article wages around $19.00 per hour. Read also VW wages around $19.00. Both groups receive about the same pay one group has dues deducted from their pay.

If VW would join the union would the union then get them more money which might then put them above the big three I hardly doubt it so why offer to pay union dues when it seems it would not be necessary?

grumpy

Piddle Puppy hates when I write about the Union I was in... But to rub his nose in it one more time...

When I first went in as an apprentice it was like many others in the 70's. In 80 the membership voted to not donate money, from dues, to any politician or party. That was the beginning of making it more for the membership instead of for the union bosses and politicians. If you wish to donate to politicians or parties through the union bundle, you have to write a separate check to do so. They have backed candidates from both parties, as example they weren't happy with Strickland for not being good for expansion in construction, and are happy with Kasich because he is. They normally prefer the d's but will look at what they actually do. I like that.

In our union you will be fired, or more accurately laid off if you can't run the equipment you were hired out on. You can be gotten rid of for being late, many things. You get training from the union for free for running various equipment and have to get certified for some equipment, more every year so the contractors aren't hiring blind if you haven't worked for them before.

This union does what the members want and have voted for. Do the benifits, insurance, collective barginning, and still let the member negoiate a better deal if they can, do training, and certification, apprenticeship, safety checks, hiring hall, and such while staying out of politics. Just what the members wanted and voted for. It is a "good" union. There are right wakko's in it as well as left wakko's who push for changes that never happen cause most of the members vote those things down. Many of us think this is what the future of Unions should be, Keep the work quality standards high in the trade, teack new members the trade, deal with the insurance and retirement, banking, safety, and collective bargining, and stay the he77 out of politics.

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.

SamAdams

You're right: THAT'S what a union should be! Unfortunately, too many are not. They use threats and coercion on the membership and the employer alike. And the union goons and union bosses (as you put it) make out like bandits -- which seems a fair description since "bandits" are effectively what they are.

I won't argue against a union like the one you describe. In fact, I'd be inclined to support it. Most, however, AREN'T like that. They deserve to go the way of the dodo, and preferably BEFORE they do more damage!

grumpy

That is why I say the unions need to evolve into the 21st century instead of trying to stay in the 1920's-1940's. Some/many unions need to evolve from what was needed in the early 1900's into the 21st century. There are some things a union can do but most try to do the same as the early 1900's. Depends on the industry and the needs of the membership. It ain't cookie cutter, same for everyone type deal anymore. Much like federal gov't it is not one size fits all. The closer to the member, the better for unions. For gov't the closer to the people (state, local government) the better. unions and gov't both need to evolve. closer to the people the better.

The Hero Zone's picture
The Hero Zone

It would seem that the non-modern unions have become that which they were established to fight?

The Big Dog's back

Why were they established?

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