The United Auto Workers union has an aggressive new President, a lot of cash, and friends at the National Labor Relations Board; a perfect storm to strong-arm companies into yielding to the UAW’s demands.
Just as the UAW membership declines, its desire and ability for confrontation increases. New UAW President Dennis Williams recently vowed, “No more concessions. We are tired of it. Enough is enough.” Later, he said, “We are committed to eliminating the two-tier system,” referring to a 2007 compromise where the union accepted a two-tiered wage system that established a $14 per hour starting wage for new hires with a peak of only $19 per hour compared to a top rate of $28 per hour for established workers performing the same job.
In the same 2007 compromise, knowing that its survival was at stake, the union agreed to a no-strike clause for the first time in history. For decades, the UAW had used the threat and reality of strikes to negotiate wage and benefit packages well exceeding the ability of employers to afford them. I anticipate the union will allow the current contract to expire forcing the automatic rescission of the no-strike clause.
In 2009, the Obama White House forced General Motors and Chrysler into bankruptcy and reorganized them as new corporations. The UAW members benefitted with this arrangement. They received a 17.5% and 55% equity stake in GM and Chrysler, respectively. Now that the companies are profitable again, the UAW profited handsomely. On top of equity cash, the UAW recently raised dues by 25% resulting in an anticipated $45 million bump annually.
Despite the UAW’s accumulation of wealth, its members have not received a base wage increase in nearly a decade. Big Three (Ford, GM, and Chrysler) contract renewal negotiations begin in 2015 and promise to be active if not controversial. Auto parts suppliers in Ohio, Michigan, and Indiana should closely monitor these negotiations and begin preparing to negotiate their next contract, since the UAW will seek to include much of the content of what is ultimately agreed to in the collective bargaining contracts of the Big Three in contracts with suppliers to the Big Three, as well.