Rejecting the Marchionne Solution

From the beginning, it was somewhat puzzling that UAW President Dennis Williams chose Chrysler as the negotiating target. Traditionally the first corporation chosen is the strongest, with the contract setting a pattern for the others. But Chrysler is the smallest and weakest of the Detroit Three, and fully 45 percent of the work force is second tier, making it the least likely to bend on tiered wages and demands for better working conditions.

CEO Sergio Marchionne, whose salary and benefits totaled $72 million last year, had criticized two-tiered wages as “almost offensive.” But his solution was regressive: eliminate the top tier.

Unveiling a five-year product plan in the spring of 2014, he commented:

I always have been of the view that the two-tier wage structures are unsustainable in the long term . . . The real problem here is we need to freeze the tier ones and make them a dying class. I don’t mean this literally.

We have to replace the tier two-wage structure with something that reflects the sharing of the economics of running this enterprise. I do see in some particular cases the tier twos should be able to make more than a tier one, but only in the event that the company is successful. I object violently to the notion of entitlement in the wage structure. That is something that is incredibly unwise.

When the tentative agreement was approved on September 15 by a majority of the UAW bargaining committee, Chrysler workers were outraged to learn that the proposal followed Marchionne’s lead. Instead of eliminating tiers, the proposal gradually increased the second-tier wage — currently between roughly $15 and $19 an hour, to a high of $25 — still leaving in place a wage gap between the first and second tier. As the veteran workers retired, so would their wage scale — the contract was “a bridge to nowhere.”

Rank-and-filers were also expecting to see confirmation — based on earlier agreements with the union and Chrysler — that after the 2011 contract expired, a cap would be instated limiting second-tier workers to 25 percent of the workforce. Many senior second-tier workers were counting on this agreement and had held onto their jobs in anticipation of moving to the higher wage under the new contract.

But the cap was nowhere to be found in the new proposal. When asked about it, UAW Chrysler Vice President Norwood Jewell denied the ceiling was ever a guarantee — even though workers could point to the commitment in the union’s previous contract summary. The lie was infuriating.

Breaking promises to rank-and-filers is nothing new for the UAW. Over the past two decades, the company–UAW International strategy to smooth things over with autoworkers — and get UAW contracts passed — has been to offer large signing bonuses. This time was no exception. The Chrysler agreement offered a $3,000 bonus to veteran workers and $2,000 to the second tier.

With that carrot, autoworkers were supposed to overlook the continued stress of Chrysler’s onerous Alternative Work Schedule, which condemns workers to odd schedules and cheats them out of overtime pay (first won at Chrysler in 1937). A draconian absentee policy and continued skilled trades consolidation would also remain in place.

The Cost-of-Living-Adjustment (COLA) — which pegs wages to inflation and which autoworkers first won in the aftermath of World War II — was suspended in 2009. Since then workers have been continuously told that it’s unrealistic to expect to win the wage adjustment back — that it’s time to get used to the “new normal.”

The proposal promised first-tier workers — who have been stuck at $28 an hour for a decade — two 3 percent wage increases and two 4 percent lump-sum bonuses. But unionized autoworkers have already lost $4 an hour since COLA was suspended. Accepting the proposal would mean continuing to accept lower real wages.

The agreement also proposed adopting a co-op model for health care. While officials gave scant details about it, UAW President Williams touted it, given skyrocketing health care costs, as a win-win for the Big Three and workers.

Certainly the idea of placing all autoworkers under one health plan makes sense. But autoworkers felt the plan was only acceptable if the corporations adequately funded it. With no concrete plan in sight, they opposed such a gamble.

Workers were also worried the co-op would be a repeat of the VEBA (Voluntary Employee Beneficiary Association), which the International agreed to in 2007 to take pressure off GM and Chrysler during their bankruptcy. The auto companies put a fixed amount of money into the VEBA fund to pay for retiree health; if it falls short, they have no obligation to make up the difference.

Chrysler tried to coax workers into signing the initial agreement by promising to invest $5.3 million in US plants. But the pledged capital would have yielded few additional jobs, especially considering the corporation has already announced it would like to move all small car production to Mexico (SUV and truck assembly would remain in the United States).

Workers knew the proposal was a rotten deal.

Denunciatory leaflets and petitions circulated in the plants, autoworkers wore “No Two Tier” t-shirts on the shop floor, conference calls were organized, and comments flooded Facebook and Twitter. After a UAW information meeting at Chrysler’s Jefferson North plant, some members marched on nearby Solidarity House, the UAW’s headquarters.

With FCA earning a 7.7 percent profit in the second quarter of 2015, rank-and-filers wanted “equal pay for equal work” — not more concessions. All but three locals voted the proposal down.

The Second Deal

The resounding “no” vote forced UAW officials to reopen negotiations. They returned with an improved, if flawed, proposal.

The biggest win for workers was the establishment of a path from second tier (now termed “in progression” workers) to first tier. While the agreement guaranteed workers would receive the veteran wage rate after eight years, many would get there by the end of the four-year contract. The deal also bumped up the signing bonus by $1,000 and dropped the change in health care.

Though the contract didn’t address issues such as COLA or the Alternative Work Schedule, the majority of Chrysler rank-and-filers felt the principle of equal pay for equal work had been reestablished.

There are worrying exceptions, however. Buried deep in the contract are provisions that set separate wage scales for FCA’s parts workers at Mopar and Chrysler’s axle plants. While current Mopar workers can reach parity with other FCA workers, new hires will be put on a separate scale, and their top wage will depend on their division (assembly, powertrain, stamping, etc.).

Restrictions on temporary work have also been loosened. Temporary work will no longer be limited to covering absences at the end of the week, and a ceiling will be placed on how much newly hired temps can earn.

In the seventies, temporary workers were used during the summer to cover for permanent workers on vacation. But with the introduction of lean production, the role of ostensibly temporary workers began to expand even as their job conditions deteriorated. First the union agreed to let temps fill in on weekends. Then the companies slowly increased the time it took for temps to secure permanent employment. In the past, temp employees would secure permanent employment after ninety days. Now Detroit automakers have “permanent” temporary workers with no job security.

But considering the company was the smallest of the Big Three, FCA workers concluded they had gotten about as much as they could. They signed off on the contract.

On to General Motors

Next up was GM. Going into negotiations the corporation said it intended to maintain its 10 percent profitability rate; no UAW official challenged the remark.

The tentative agreement included a moratorium on outsourcing and $1.9 billion in new investments on top of the $6.4 billion already announced, translating into 3,300 jobs at twelve different sites. (Of course, management can always renege on such promises.)

Mirroring the Chrysler deal, the agreement also vowed to move second-tier workers — 20 percent of GM’s 52,700 unionized work force — to the highest wage level after eight years. GM even sweetened the deal by raising their health care to match first-tier benefits. At GM temps are entitled to health care coverage after ninety days — and receive a whopping twenty-four hours of unpaid (yes, the contract specifies unpaid) annual vacation time.

As at Chrysler, GM offered additional enticements like bonuses and profit-sharing payouts. Veteran workers were to receive annual wage increases similar to the Chrysler agreement, and an $8,000 signing bonus was available to both first- and second-tier workers. Even temps who’d worked more than ninety days would receive $2,000.

Why were GM and Chrysler willing to throw such sums at workers? Because it’s cheaper than reinstating COLA, where the increase is embedded in the wage and compounds over time. In addition, while second-tier wages are being phased out, more tiers are being created. Workers in different GM plants will have different rates of pay, and temp pay levels depend on one’s hiring date. Additionally, due to “unique operations and competitive environments,” four GM parts plants are excluded from the master UAW-GM agreement.

The contract split workers. A full 58.3 percent of production workers voted “aye,” while 59.5 percent of skilled trades workers rejected the agreement. Tradespeople objected to GM’s continued drive to reclassify and degrade their craft, forcing them to perform multiple jobs without proper training, outsourcing their work, or sometimes forcing them to take production jobs. Many also felt GM was skimping on the apprenticeship program, which trains the next generation of skilled trades workers.

After a couple weeks, the UAW leadership announced that GM had agreed to protect certain core job classifications and seniority rights. However, skilled trades workers weren’t given the chance to vote on the amended language itself.

Ford Workers Vote

As the UAW consulted with GM skilled trades workers, union officials in bargaining with Ford released their own tentative agreement to the company’s 53,000 union members.

While Ford didn’t go through bankruptcy in 2009 like Chrysler and GM, Ford employees agreed to concessions in line with their counterparts’. Ford workers suspended their COLA, gave up several bonuses, and relinquished a minute of break for every hour of work. (Workers rejected additional givebacks, including the right to strike, in late 2009.)

Since 2009, the company has posted $48.36 billion in profits — including $6.8 billion in 2014 — and its profit margin, at over 11 percent, is the highest of the Detroit automakers. Nonetheless, the UAW/Ford agreement differed little from GM’s — just slightly more bonus money and the promise of a $9 billion investment.

Under the previous contract, whenever the second-tier workforce exceeded 28 percent, the most senior tier-two workers would immediately begin receiving first-tier wages. Earlier this year 808 second-tier workers were reclassified, and another 338 were set to move; under the new eight-year path 15,137 rank-and-filers will be eligible only with the long transition to first tier.

Similar to the GM deal, Ford parts plants were marked off as “exceptions,” meaning lower-wage scales, weakened temp rights, and attenuated solidarity. “This is part of the plan to keep us segregated,” said Scott Houldieson, vice president of UAW Local 551. “A segregated workforce doesn’t stand together in the face of intimidation. A segregated workforce won’t work together to fight wage suppression.”

The “no” votes at Ford ran at 53 percent until the very last day. But throughout the process, Jimmy Settles, UAW Ford Vice President, had made it clear that if the agreement was turned down, he could not (or would not) negotiate a better deal. (Settles has a history of intransigence: in 2011, he said that if workers turned the proposal down, the UAW would call a strike and Ford would call in scabs.)

Predicting the votes at the Ford Rouge complex would prove decisive, UAW officials dogged Rouge workers all week, roaming through the plants and singing the agreement’s praises. Their efforts paid off. With the support of enough workers at Dearborn Truck, Dearborn Engine, and Dearborn Diversified, the agreement was narrowly approved, 51 percent to 49 percent.

What’s Next?

Over the course of the nearly two-month ratification process, autoworkers flexed their power — forcing the UAW to return to the bargaining table at both Chrysler and GM — and got a better deal for it. By standing together and insisting that second-tier workers have a path to the traditional wage, they were able to defeat Sergio Marchionne’s alternative.

On the other hand, this round of bargaining saw the smallest and least profitable corporation set the basic pattern for the Big Three contracts. And it established a multi-tier wage system, while keeping COLA and working conditions off the table.

The media presented the passage of these agreements as an unequivocal victory for the country’s 145,000 unionized autoworkers — a conclusion based largely on the size of the signing bonuses — and focused mainly on the role of young workers in the negotiation process.

“Contracts show split between vets, newbies,” Alisa Priddle and Brent Snavely declared in a peculiar roundup for the Detroit Free Press. The pair attributed the rocky road to ratification to higher expectations by newer workers who actually didn’t have the numbers by themselves to vote the agreement down.

Priddle and Snavely’s assessment echoed a statement made by Jimmy Settles at a press conference just two days before balloting ended: “We hired a lot of people in a very short period of time. And for many of them, this is their first job. And they don’t understand the process.”

Settles’ arrogance is telling. Setting aside the obvious — the UAW does not do the hiring at Ford — the truth is that both first- and second-tier workers sought an end to the terrible inequity they experienced on the job, and felt that the industry could well afford it. Unity was key.

Contrary to the smug comments of people like labor scholar Arthur Wheaton — who saw rank-and-file demands to go back to the bargaining table as “a symptom of a misinformed and untrusting membership” — the history of wages, benefits, and working conditions in the US auto industry is not one of continuous steps forward, but constant, collective struggle to win new gains and protect old ones.

As Gary Walkowicz, bargaining committee-person at Dearborn Truck Plant, wrote in a leaflet, “[The contract] does not repay us for all the concessions we have given up. It does not even bring us back to the standard of living we were at before the concessions started.”

The post–World War II years of building on one contract after another are long gone. Autoworkers never recovered from the concessions agreed to in the 1979–1981 period, and today workers veer from major concessions in one contract to partial recovery in the next, never regaining lost ground.

Today automakers expect to keep wages low and reward workers with bonuses when the company is particularly flush; what they don’t want is workers to feel entitled to good wages and benefits. As a result, autoworkers feel less confident today. Even when they win a partial victory — as the Chrysler workers did against two-tier — they feel it’s the best they could have managed.

They’re supposed to ignore the major disadvantage workers are at given an eight-year process in the context of a four-year contract, and the strategy of pressing their advantage seems out of the question. That UAW officials at both the national and local level counsel caution at every turn makes them ill-equipped to strike a better bargain, even when the Detroit Three are rolling in profits.

It’s hard to imagine how a fight against these corporations could be waged by a leadership that feels workers should just be happy to have a job. But rebuilding a militant culture isn’t easy, even after the kinds of discussions that took place during these last negotiations. Will militants run in the next round of elections and begin to offer an alternative as they take office? A space has opened up, but will it be enough to transform the union into a more democratic body capable of tackling the harder questions of working conditions and equality on the shop floor?

There are also even deeper problems: given what we know about the role fossil fuels play in causing climate change, the annual production of 16 to 18 million US-made vehicles is not sustainable. These lines need to be rapidly phased out and replaced with an industry manufacturing buses, light rail, and some electric vehicles.

Clearly that’s not going to happen as long as capital drives the industry. Workers and communities need to be guiding the conversion, confident in the knowledge that there can be a just transition, that workers and the surrounding community won’t be sacrificed in the process. A revitalized UAW could help lead the way.