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A nightmare scenario for the auto industry.

Sep 14, 2015

Imagine going back half a century, and asking people which of these two things would be more likely fifty years in the future: A) The United States would have established a permanent colony on the moon; or, B) The United Auto Workers union would have chosen a foreign-owned automaker as its target company in contract negotiations.

Then imagine a world where most U.S. car sales are foreign and not domestic anyway, the union has less than a third of its peak membership, and newer auto workers are paid far less than those who have been there a while. And, oh yes – Michigan will have become a right-to-work state. If you’d asked that back then, virtually everyone would have guessed a moon colony would be far more likely than what would have seemed like a nightmare scenario for the auto industry.

Well, we’re in a new century now. Yesterday, the UAW announced Fiat Chrysler would indeed be the target company. The union’s contracts with all three automakers expire at midnight, and for the first time in eight years, the UAW can strike at Chrysler or General Motors, if it wants to. But nobody is talking about a strike at this point. They are talking about a contract that will position the Detroit Three, including Chrysler, to be competitive against a raft of invaders like Honda, Toyota and Hyundai. The union also needs to get something for its workers after years of givebacks.

Most of all, they really want to negotiate an end to the hated two-tier contract system that has workers hired in the last eight years paid only about two-thirds as much as longer-serving workers. And even the higher-paid workers haven’t had a raise--not even for inflation--in close to ten years. These haven’t been great times to be an auto worker.

The union does have some things going for it. Auto sales have been great the last few years. The car companies, which were once hemorrhaging billions, are now all richly profitable again. The UAW’s new chief, Dennis Williams, is a skilled and common-sense negotiator who seems stronger than his predecessor, Bob King.

Two months ago, I did a TV show on the approaching auto talks, and neither of the experts on with me predicted Fiat Chrysler would be the target company. But today, picking Chrysler seems to make a lot of sense. It has more second-tier workers than either Ford or GM.

And Chrysler, while again making money. is less profitable than the other two. The union operates under a principle of “pattern bargaining,” in which they try to get virtually the same contract with all three automakers. Financially, Chrysler’s somewhat weaker position means any agreement it can live with should also fly at GM or Ford.

The union has another big goal for these talks: Creating a health care cooperative for auto workers at all the companies that will reduce costs, but not cost the workers any more out of pocket or reduce their quality of care.

Getting to yes won’t be easy, but my guess is that it is doable – and urgent. Legally, Michigan autoworkers will soon be able to opt out of the union. The UAW’s long-term survival depends on the vast majority of them deciding not to leave.

Jack Lessenberry is Michigan Radio's political analyst. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.