Auto Talks: Far From Over

Sep 20, 2011

There’s a great deal of celebration going on over the fact that General Motors and the United Auto Workers union have reached tentative agreement on a new, four-year contract.

In the old days, what this would have meant was speedy ratification, followed by a similar settlement with Chrysler within perhaps two weeks, and then Ford maybe a month later.

That was the era of pretty much one-size-fits all pattern bargaining agreements. But that was before the near-death and the resurrection of Chrysler and GM, and it’s now a different world.

I spent some time yesterday with one of the best industry analysts around -- Kristin Dziczek, who heads the labor and industry group at CAR, the non-profit Center for Automotive Research based in Ann Arbor. Dziczek knows the management spokesmen and the economists, and has friends and relatives who are in the UAW. She eats, breathes, and sleeps this stuff.

Like most observers, she expects this agreement to be ratified by the rank-and-file over the next couple weeks. But it isn’t necessarily a slam-dunk. Some of the workers were expecting their union would try to eliminate the now-infamous two-tier pay level system, in which new hires are paid only about half what long-ime workers make. Instead, they will get a gradual raise of about three dollars an hour over the life of the contract.

Ford is now allowed to have about twenty percent of their workers as these “second-class citizens.“ But there are no limits until 2015 on how many General Motors and Chrysler may have.

Other workers had hoped to get more, perhaps a performance bonus, now that these companies are profitable again. But as Dziczek told me, everybody knows how shaky and recent this new-won prosperity is. And this contract is a lot better than the last one.

This time, there are no new concessions and no more jobs being eliminated. There are reports that jobs will be added and that the old Saturn assembly plant in Tennessee will be reopened.

There’s something else going on here, too. GM and Chrysler workers gave up their right to strike this time, as part of the bankruptcy agreement with the government. If this contract is turned down, either side could seek binding arbitration. But Dziczek noted that nobody knows just how that would work; how long it would take or exactly what issues an arbitrator has jurisdiction over.

And even if GM workers do speedily ratify, this process may take longer than expected at the other automakers. Sergio Marchionne, CEO of both Chrysler and Fiat, sent a famous angry letter to the UAW last week. He has said that his company, the weakest sister of the once-big three, can’t afford what GM could.

And negotiations at Ford may be more tricky still. Ford, after all, was the only domestic automaker not to declare bankruptcy. The union could strike Ford, though few expect it will.

But Ford workers may feel they deserve more than those at the firms that couldn’t make it on their own. None of this, in other words, is over till its over. And even then it won’t really be over.

These companies and their workers are all still fighting for survival in what remains a perilous and uncertain world.