UAW prepares to head to bargaining table Union must choose which of Big Three to deal with first

It happens with the same certainty of seasons changing, only three years apart: protracted, and often fractious, negotiations between the United Auto Workers and the Big Three car manufacturers.

In the end, the UAW likely will walk away with new three-year contracts covering more than 400,000 workers at Ford Motor Co., Chrysler Corp. and General Motors Corp., including 3,100 ,, employees at GM's van assembly plant in Southeast Baltimore.


The first step in the monthslong process will occur this week when the UAW announces its so-called strike target -- the company the union will negotiate with first.

Union officials have given no hint of which company they will select. "We'll make that announcement on the 22nd," said Reg McGhee, a spokesman for the international. But most industry leaders believe it will be either GM or Chrysler, with most predicting GM.


Historically, the first contract has set the general parameters for the talks with the two other auto manufacturers -- pattern bargaining, they call it. But this year may be different, according to many in the industry.

There is such diversity among the Big Three companies -- particularly on the key issue of outsourcing, the industry's term for buying parts from outside suppliers -- that it's unlikely one agreement would fit all.

That is the reason, many believe, that that all of the automakers have volunteered to be the strike target.

"It is obvious that each of the Big Three would like to be the target," said Michael L. Braig, an auto analyst with A.G. Edwards & Sons Inc. "For their own reasons, each would like to have a clean slate when it takes its shot at the UAW."

None of them, Braig said, want to be burdened by terms already accepted by a competitor. And the best way to avoid that is by going first.

"There has been a lot of talk about pattern bargaining," said Michael Flynn, associate director of the University of Michigan's Office for the Study of Automotive Transportation. "If there ever was a real pattern it will be broken this time. If the union goes to Chrysler and gets a good outsourcing agreement, it will carry no weight in the GM talks. They will have to negotiate a separate contract with GM."

Unlike some negotiations, issues such as wages and health care benefits are expected to be far down on the priority list, Braig said, and few anticipate a long, crippling strike.

"I think the likelihood of a long strike is extremely low. Perhaps 10 percent or less," said David Healy, an auto analyst with Burnham Securities. "But I wouldn't be surprised if one of the companies is shut down for a week or two, or there are a series of local strikes involving individual plants."


Contentious issues

Braig added: "The issues are so confrontational, so difficult and so bitter that I can't believe that either side wants to force them to the level of a strike or a lockout."

The last national strike was in 1985. It was against Chrysler and lasted 12 days.

No issues will be more important to either side than outsourcing and job security. They "will be the deal maker or breaker this time around," Flynn said.

Outsourcing is so critical that some have suggested that the UAW, in a surprising departure, might even target the Delphi automotive parts division of GM as the one to negotiate with first. Most industry leaders, however, consider that prospect a long shot.

"If you are the union, you want to make Delphi so successful that it is selling more parts and components to Chrysler, Ford, Toyota, Honda and Volkswagen," Flynn said. "That's a way of achieving job security and keeping plants from closing."


Outsourcing was at the center of the 17-day strike in March at two GM brake plants in Dayton, Ohio. The strike, by 2,700 members of UAW Local 696, eventually halted all of GM's car and truck production in the United States and Canada, costing the company $870 million in earnings.

The walkout was sparked by GM's decision to buy anti-lock braking systems for its 1998 Chevrolet Camaro and Pontiac Firebird sport coupes from Robert Bosch GmbH, a German company that has a parts plant in Charleston, S.C.

Bosch could offer GM the product less expensively because it pays its workers about $17 an hour, including fringe benefits -- about $26 an hour less than GM's labor cost at the Dayton plant.

Dispute on outsourcing The companies view outsourcing as necessary to reduce costs and become more competitive. But the UAW sees outsourcing as something that can only reduce the already shrinking work force, and is expected to vigorously ,, press GM, and the others, to protect union-covered plants and the jobs of its members.

The way things stand now, outsourcing has put GM at the greatest disadvantage in competing with Ford and Chrysler.

"In rough numbers, GM makes 70 percent of its parts in-house and buys 30 percent on the outside," said Healy, the Burnham Securities analyst. "This is just the opposite at Chrysler. They buy 70 percent form outside suppliers. Ford is roughly 50-50."


While outsourcing is seen as a contentious hurdle, there are other important matters confronting both sides as they seek to replace the current national labor agreement that expires on Sept. 14:

Mandatory overtime to meet product demand.

"Overtime is going to be a tough issue," said Flynn. "The companies like it. It is cheaper to pay overtime than to hire additional workers. The workers don't like it.

"The work force is aging. They are in pretty good financial shape and they don't want to work a lot of overtime. They want to take the money they have earned and enjoy that boat or snowmobile they bought. This can be a very contentious area."

The graying work force. A study by the University of Michigan earlier this year noted that more than 250,000 auto industry workers will retire by 2003.

Reducing work force


While the UAW wants those jobs filled with full-time employees, the companies want to hire as few as possible. If GM gets its way, said Flynn, it would not replace most of these people because it is still trying to reduce the size of its work force.

That "would be a tremendous loss for the union," he said. "If you are the union and you really want to stay a large union and be important in your industry and beyond your industry -- maybe even flex some political muscle -- then you have got to protect your front-line jobs."


Chrysler Corp.

Why Chrysler?

The reason the union might pick Chrysler as its strike target is the same as Willie Sutton's reason for robbing banks: That's where the money is. Chrysler has been very profitable in recent years -- and the union helped make it profitable. Contract concessions by the union were a big help when Chrysler nearly went belly up in the early 1980s. The union is in good position to say, "Hey, its time for us to get our fair share."


Why not pick Chrysler?

The key issue of outsourcing, the purchasing of parts from outside suppliers, is less a factor at Chrysler than at GM.

General Motors Corp.

Why pick GM?

Right now, GM is the most vertically integrated major auto manufacturer in the world. That means they do more in-house work than anybody else. The union wants to keep those good paying jobs for its members by curtailing the company's plans to close factories and buy more parts and components from less expensive outside suppliers. Outsourcing and its relationship to job security is perhaps the key issue in the negotiations and GM is at the center of the conflict.

Why not pick GM?


There are some members of GM's management who are viewed as hawkish. They may be even looking for a strike to show how tough they can be.

Ford Motor Co.

Why pick Ford?

It is a nice in-between choice. Ford does more outsourcing than Chrysler, but not as much as General Motors. Ford has been doing well financially, and historically the union has picked Ford when it wanted wage increases. Wage increases in recent contracts have not been as great as in the past, and the union might want to put more money in the pockets of its members to make up for whatever it might have to compromise on in terms of job security.

Why not pick Ford?

It's the in-between choice. The union might avoid massive problems, but it will not make major progress in the critical area of outsourcing as it might by confronting GM.


Pub Date: 8/21/96