Southern style UAW busting

Opinion: December 23, 2008 at 12:00a.m.

By BRUCE RAYNOR

The foreign nonunion auto companies in the South have a plan to reduce wages and benefits at their factories in the United States. And to do it, they need to destroy the United Auto Workers.

Last week, Senate Republicans from some Southern states went to work trying to do just that, on the foreign car companies’ behalf. Senate Minority Leader Mitch McConnell, R-Ky., Sen. Bob Corker, R-Tenn., and Sen. Richard C. Shelby, R-Ala. — representatives from states that subsidize companies such as Honda, Volkswagen, Toyota and Nissan — first tried to force the UAW to take reductions in wages and benefits as a condition for supporting the auto industry bailout bill. When the UAW refused, those senators torpedoed the bill.

They claimed that they couldn’t support the bill without specifics about how wages would be “restructured.” They didn’t, however, require such specificity when it came to bailing out the financial sector. Their grandstanding and the government’s generally lackluster response to the auto crisis highlight many of the problems that have caused our current economic mess: the lack of concern about manufacturing, the privileged way our government treats the financial sector, and political support given to companies that attempt to slash workers’ wages.

Comparing how the auto industry and the financial sector are being treated by Congress exposes a staggering double standard. According to the New York state comptroller, employee compensation accounted for more than 60 percent of 2007 revenues for the seven largest financial companies in New York.

At Goldman Sachs, for example, employee compensation made up 71 percent of total operating expenses in 2007. In the auto industry, by contrast, autoworker compensation makes up less than 10 percent of the cost of manufacturing a car. Hundreds of billions were given to the financial-services industry with barely a question about compensation; the auto bailout, however, stalled this issue alone.

Concessions made

UAW President Ron Gettelfinger realized that the existence of the union was under attack, which is why he refused to give in to the Senate Republicans’ demands that the UAW make further concessions. The union already has conceded a lot. Its 2007 contract introduced a two-tier contract to pay new hires $15 an hour (instead of $28) with no defined pension plan and dramatic cuts to their health insurance. In addition, the UAW agreed that health care benefits for existing retirees would be transferred from the auto companies to an independent trust. With the transferring of the health care costs, the labor cost gap between the Big Three and the foreign transplants will be almost eliminated by the end of the current contracts.

These concessions go some distance toward leveling the playing field (retiree costs are still a factor for the Big Three). But what the foreign car companies want is to level — which is to say, wipe out — the union. They currently discourage their work force from organizing by paying wages comparable to the Big Three’s UAW contracts. Toyota’s per-hour wages are actually above UAW wages.

However, an internal Toyota report, leaked to the Detroit Free Press last year, reveals that the company wants to slash $300 million out of its rising labor costs by 2011. The report indicated that Toyota no longer wants to “tie (itself) so closely to the U.S. auto industry.” Instead, the company intends to benchmark the prevailing manufacturing wage in the state in which a plant is located. The Free Press reported that in Kentucky, where the company is headquartered, this wage is $12.64 an hour, according to federal labor statistics, less than half Toyota’s $30-an-hour wage.

If the companies, with the support of their senators, can wipe out or cripple the UAW, they will be free to implement their plan.

Teh package approved by President George W. Bush’ is likely to keep the Big Three alive long enough for President-elect Barack Obama to construct a real solution. Democrats and even most Republicans understand that a nation that has already lost 2 million jobs this year cannot afford to put at risk 3 million more.

What the economy needs now is rising wages so the country can get on the path of wage-driven consumption growth. That means stronger unions. I believe eventually it will mean the unionization of the entire U.S. auto industry.

X Raynor is the general president of Unite Here, a union of 465,000 workers in the apparel, textile, laundry, food service, distribution, hotel and gaming industries.