UAW Trades Pay Cut for Neutrality

The UAW International has entered into an agreement with a fast-growing auto parts maker, Metaldyne, to remain neutral in union organizing drives. So far, so good. And in at least two of Metaldyne’s plants already represented by the UAW, the union has negotiated a wage of $16.21 an hour. That’s higher than many auto parts workers, though not in the top range. So far, pretty good again.

But in both these cases, $16.21 represents a wage cut. In one of the plants, a New Castle, Indiana machining facility, production workers have been making close to $26 an hour.

Those 1,200 New Castle workers are still employees, for now, of DaimlerChrysler. But after September 14, when the current UAW-DCX contract expires-and along with it a ban on plant sales-the factory will be sold to Metaldyne, which already owns 40% as of early this year.

Metaldyne has about 5-6,000 hourly workers in 26 small plants in the U.S., mostly in the Midwest. They are represented by the UAW, the Steelworkers (who were given a neutrality agreement in exchange for an investment in Metaldyne from the union’s pension fund), the United Electrical Workers, and an independent union, with ten plants still non-union.

CHANGE OF POLICY

In the recent past, in 1999 and 2000, when GM and Ford sold off their parts divisions, the UAW negotiated for the affected workers to continue to receive Big Three-level wages and benefits from their new companies, Delphi and Visteon. Many had over 20 years’ seniority and had expected to retire with a Big Three pension. The Metaldyne sale indicates a change of policy-apparently in exchange for the organizing neutrality agreement.

Workers at Metaldyne’s Fremont, Indiana machining plant took their wage cut to $16.21 in 2000. They had been at $17.01. According to Dan Hubble, president of UAW Local 371 at New Castle, and to Steve Shively, president of UAW Local 1395 at Fremont, the Fremont contract-now covering 95 workers--was the benchmark that Metaldyne and the UAW International used when negotiating for New Castle.

Hubble told Labor Notes, “Nobody here is happy with it. Most of the people quit other jobs to come here. They thought it was a future. Nobody wants to pull up stakes. They’re angry at everybody. They’re angry at the International for doing it to them, and at the local for not stopping it.”

Local 371 tried to stop Metaldyne’s purchase of an interest in the plant, taking two buses to picket Chrysler headquarters near Detroit last summer. And the local took a strike vote, but got only “72-74%,” Hubble says. “ It should have been more, but the members didn’t think [the sale] would happen.”

The Fremont workers get something out of the deal. When they voted for concessions in 2000, the trade-off was that the company would hire back the 30 employees on layoff. Instead, the owners (which were not Metaldyne but a predecessor company) continued to lay off, till the local was down to 55 people.

Shively explained, “With the New Castle buy, they kept saying they wanted a ‘Fremont-like agreement.’ We kept saying, ‘Why would people down there want a Fremont-like agreement?’ The International told [Metaldyne CEO Tim] Leuliette that if he wanted a Fremont-type agreement in New Castle, he would have to honor their commitment in Fremont to hire more people.

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“So they put new work in here.”

Shively is hopeful that the neutrality agreement will lead to a master agreement for Metaldyne workers, “so we’re all paying the same insurance and the main bennies.”

But neutrality has already failed to work at one Metaldyne plant, in Middleville, Michigan. In 2002, the company allowed the UAW into that plant for a meeting with employees and a card check. According to assembler Cathy Cole, only 20-25 of the plant’s 115 employees signed cards.

TRANSFER RIGHTS

As the UAW usually does in the case of plant closings and sales, the International negotiated a relatively soft landing for the New Castle workers. They will have the right to transfer to other Chrysler plants (the nearest is 60 miles away), and get help with moving costs. Those few who elect to stay in New Castle and work for Metaldyne at 37% less pay will get lump sum payments of up to $100,000, for those with ten years’ seniority.

UAW members have done the math and discovered that $100,000 represents only five years of lost wages. Local union officials estimate that around 400 will retire, some with special incentives, and that only 200-300 will opt to work at Metaldyne.

Unlike Chrysler workers, they will pay $46 a week for family health insurance. And they will work under what a Metaldyne spokesman calls “a significantly reduced number of job classifications. That makes the plant much simpler to manage.”

A BROADER NEUTRALITY DEAL

Top UAW officials and Big Three execs are holding quiet discussions about their four-year contracts that expire in September, in advance of official talks in July. One of the UAW’s chief goals is to get the Big Three to agree that they will discreetly encourage their suppliers to let the UAW in.

Sean Macalinden, an auto industry analyst at the University of Michigan’s Center for Automotive Research, has talked to both sides about their plans. Macalinden, who advocates a lower wage for newly-hired parts workers, believes that if the Big Three agree to encourage unionization of suppliers, the $16 pattern wage will be part and parcel of the understanding. “We have to set mini-patterns in parts markets,” Macalinden says.

Another analyst, Dan Luria of the Michigan Manufacturing Technology Center, notes that “in the first tier”-Detroit jargon for big suppliers who sell directly to the Big Three-“there’s not much competitive disadvantage to unionization. It wouldn't bother the Big Three much because their competitors in the U.S., the transplants [Japanese- and German-owned assemblers such as Mercedes and Toyota], will face the same prices from those Tier One suppliers.

“Unionization might mean it will cost GM $20 more per seat to get seats from Johnson Controls, because they pay a pattern wage of $15 instead of some plants at $10 and some at $14. But that same cost penalty will afflict the transplant customers of Johnson Controls also.” Johnson Controls reached a neutrality agreement with the UAW last year.