Conflict of interest?

UAW has to look out for workers and companies

Associated Press

DETROIT

The United Auto Workers’ mission used to be simple — fight Detroit’s automakers for better pay and job security.

But things got more complex when the government bailed out General Motors and Chrysler two years ago in a deal that left the union with big chunks of stock in both companies. Now the UAW has to be both owner and worker advocate, essentially sitting on both sides of the bargaining table.

The tricky dual role is causing problems for union leaders, and in particular UAW president Bob King, as they prepare for contract talks later this year.

“That conflict of interest, I think, should probably be illegal,” says Nick Waun, who works at the GM plant in Lordstown and says King should put workers first.

In 2009, when GM and Chrysler nearly collapsed, the companies were allowed to use stock rather than cash to pay into UAW trust funds that cover health-care costs for about 800,000 retirees. With bankruptcy looming for the automakers, the union was faced with taking the stock or risking getting nothing.

The trusts now own about 13 percent of GM stock, which is publicly traded, and 65 percent of Chrysler, which is privately owned but could go public later this year. The trusts can sell the stock to help pay bills.

King, 64, contends union members will benefit if the companies’ stock prices go up. He has tried to position the union as a business partner rather than an adversary of Detroit’s car companies.

Angry union members say he’s more concerned about profits than winning back raises and benefits surrendered by the union the past six years. And if enough of them doubt his motives, they could reject any contract he brings back from the negotiating table and force up labor costs — just as General Motors Co. and Chrysler Group LLC are starting to recover from bankruptcy and gain ground against rivals.

That distrust also could create a more hard-line union once King’s tenure ends in 2014.

“The seeds are there for an insurrection within the union if it’s not handled correctly,” says Gary Chaison, a professor of industrial relations at Clark University in Worcester, Mass.

So far, the number of union workers voicing distrust is small. But discontent has spilled into the open.

Workers at a GM parts factory in Indianapolis recently voted down a King-backed deal that would have cut wages. In December, a King lieutenant was booed at a Chrysler factory near Detroit by workers upset about concessions. Ford workers embarrassed King in 2009 when they rejected some concessions on another contract, although the company later won a lot of the givebacks through plant-by-plant negotiations.

Ford will go through similar contract talks with the UAW this summer, but it never took government bailout money, and the union has no ownership stake.

Under the concessions, which began in 2005, autoworkers gave up cost-of-living pay raises and allowed rule changes so workers could do several jobs. The health-care trusts also were created to shift the cost and management of medical costs to the UAW, helping automakers shed billions in liabilities. In return, the companies promised them regular payments.

Gary Walkowicz, a Ford worker who ran against King for president last year, said the concessions are examples of a gullible union believing the company line. “If we continue to base everything on what the companies tell us, what their profits are, we have no place to go but down,” he said.

UAW membership has been shrinking for years. It’s down to 355,000 active workers from 1.5 million in 1979.

King recently agreed to wage cuts in a deal to build a subcompact Chevrolet at GM’s plant in Orion, Mich., near Detroit. The deal saved 1,500 jobs that would have gone to Mexico, but it lets GM pay up to 40 percent of the plant’s workers, mainly new hires, about $15 an hour, or half what senior UAW workers get.

Workers such as Waun and Walkowicz want concessions reversed now that GM is making money again — $4.2 billion in the first three quarters of last year. The UAW estimates that each hourly worker has given up more than $7,000 a year in pay and benefits.