15 June 2010

King Inherits a UAW Seeking Payback for Concessions

Bloomberg Business Week

Bob King, the next United Auto Workers leader, inherits a union that gave up thousands of jobs and billions in benefits to save the U.S. auto industry. His legacy will rest on how workers are rewarded in the recovery.

King, 63, the nominee of the UAW bloc that has controlled the Detroit-based union since 1946, is slated to succeed two- term President Ron Gettelfinger, 65, in an election tomorrow. The electrician with a law degree, who rose through the ranks in 40 years at the UAW, is set to take over a union that has declined to 355,000 members from 1.5 million in 1979.

The UAW shift coincides with signs of recovery in the industry. General Motors Co. posted a net profit and Chrysler Group LLC made money on an operating basis in the first quarter, less than a year after each emerged from bankruptcy. The union helped convince President Barack Obama to provide an $85 billion taxpayer bailout to those automakers, taking concessions to put their labor costs on par with foreign automakers’ U.S. plants.

“Bob is facing a very, very difficult job because there will be tremendous pressure on him to roll back the concessions,” said Gary Chaison, a labor professor at Clark University in Worcester, Massachusetts. “He’s got to walk a very fine line to reverse some of what was lost and keep some in place for the promise of a brighter future.”

UAW workers have each given up $7,000 to $30,000 in concessions in the last five years, King said last month. The union surrendered raises, bonuses, cost-of-living adjustments and agreed to a two-tier wage system where new hires make about $14 an hour, half what hourly production workers are now paid.

Returning Benefits

As head of the union’s bargaining with Ford Motor Co., King filed a grievance in January after the automaker reinstated raises, 401(k) matches and tuition assistance for salaried workers. Dearborn, Michigan-based Ford has since restored tuition benefits for its 41,000 hourly workers and King is pressing for more.

“UAW members at GM, Ford and Chrysler and throughout the supplier sector have made the sacrifices to keep these companies viable,” King said at a Ford factory in Ypsilanti, Michigan, on May 24. He declined to be interviewed for this story.

UAW labor costs, including wages and benefits, have fallen from $75 an hour to about $55, equal to Toyota Motor Corp.’s U.S. workers. The union has about 113,000 members at Detroit- based GM, Ford and Chrysler, which is based in Auburn Hills, Michigan.

“Bob’s going to make sure our members are not forgotten as these companies rebound,” said UAW director Rory Gamble, who runs King’s former Detroit region and has known him 25 years. “But we’ve got to make sure these companies are viable, so there’s going to be a lot of caution in how we go after this.”

‘Vilified’ Union

Part of the caution will stem from managing the UAW’s public standing. “The current perception of the UAW is one of the lowest of any union in America,” said analyst David Cole of the Center for Automotive Research in Ann Arbor, Michigan.

A so-called jobs bank in which auto workers received almost full pay while on indefinite layoff “became the flag by which the union was vilified,” Cole said. The union doesn’t receive credit for giving up that jobs bank or other reforms, he said.

“Bob has to get out front and tell the world it’s a different union than it used to be,” Cole said. “Otherwise, it will continue to decay.”

King, the son of a former Ford industrial relations director, has been painted by challengers in the union as going too easy on the company. More than 70 percent of Ford workers rejected additional concessions in November that King endorsed. Ford earned $2.7 billion last year after three years of losses.

Critics in Union

“We can’t just take at face value when these companies cry poverty,” said Gary Walkowicz, a UAW official from King’s home factory in Dearborn, who is making a self-described symbolic run against him for president. “Workers really disagreed with giving up those concessions when Bob King asked them. It showed there’s a disconnect between the membership and the leadership.”

In the next round of contract bargaining in 2011, King has to work toward restoring raises while ensuring the automakers put new models into U.S. factories, said Sean McAlinden, economist at the Center for Automotive Research.

“As the market comes back, the automakers will be adding workers by the thousands,” McAlinden said. “If he holds the line on canceling too many concessions, he’ll get growth. Otherwise, the companies will say, ‘We’ll build up Mexico like you wouldn’t believe.’”

Business Case

King prepares business cases to show managers that hiring more workers at UAW plants can be profitable, said Bernie Ricke, president of UAW Local 600 in Dearborn, who has been at the Ford bargaining table beside King since 2003. “He’s usually very measured, though I’ve seen him pound the table a few times.”

Billionaire investor Wilbur Ross negotiated against King on a contract for his International Automotive Components Group, the world’s largest automotive carpet supplier. King studied IAC’s books and discussed findings with managers before bringing the information to union leaders and rank and file members. The new contract, which cut pay and benefits, passed by 80 percent.

“He’s the prototype for the kind of labor leader who is needed in this modern world,” Ross said in an interview. “His challenge is to preserve manufacturing in the United States at the same time maintaining a standard of living for the worker. It’s a delicate balance.”

King last year approached Ross for help in organizing auto suppliers to support the U.S. cash for clunkers program that funded government subsidies for vehicle trade-ins. They built a coalition of about 50 suppliers across the U.S., and the program eventually helped sell 677,081 cars.

From the Sickbed

King comes to the table with an “intense” work ethic, Gamble said. He’s been seen working two mobile phones at a time in Ann Arbor, where he lives with his wife and three children. (He also has two adult daughters from his first marriage). The night before stomach surgery last year, King called Gamble from his hospital bed at 11:30 p.m. to check on Ford’s plans to transfer workers among plants. After surgery King was right back on the phone, hoarse from a tube in his trachea, Gamble said.

“He could barely talk and I said, ‘Bob you need to get well, man,’” Gamble said. “He was relentless.”

He took a similar approach to his schooling. After studying religion and philosophy at College of the Holy Cross in Worcester, King graduated from the University of Michigan in 1968 with a degree in political science. He did a two-year tour in Korea with the U.S. Army and then went to work for Ford in 1970 at the Rouge factory complex in Dearborn that Henry Ford built in the 1920s. In 1972, King began an electrician apprenticeship while earning a law degree in his off-hours.

Rapid Rise

“While he was still an apprentice, the journeyman skilled tradesmen elected him as their union committeeman, which was unheard of,” Ricke said. “He had to work weekends to finish his apprenticeship.”

Raised Catholic, King draws a link between the labor movement’s mission and social justice. At a UAW convention in California in 1989, he bused reporters to a shanty town in Tijuana, Mexico, to show them the squalor surrounding U.S. companies’ border factories. He took a group of labor leaders to El Salvador in 1990 to monitor union elections.

King’s greatest challenge may be finding a way to build on his earlier efforts to increase the UAW’s ranks. While leading bargaining efforts a decade ago, he helped diversify the membership by organizing graduate students and casino workers.

Johnson Controls

King also led a strike at Johnson Controls Inc. in 2002 where he convinced the supplier to sign a neutrality agreement allowing the union to organize its other U.S. plants. Ford, one of JCI’s largest customers, also said it wouldn’t object to the UAW representing workers at the auto supplier. That set a precedent that enabled the UAW to sign up 25,000 auto parts workers that year, according to labor professor Harley Shaiken of the University of California at Berkeley.

“Bob King leveraged the good relationship the UAW had with Ford into a broader reach with its suppliers,” Shaiken said. “It was innovative and strategic.”

King also reaches out to other unions seeking new strategies for signing up members.

“He actually believes in grassroots organizing, which I think came from our organizing backgrounds,” said Leo Gerard, president of the United Steelworkers union, who consults with King on strategies for boosting membership and considers him soft-spoken but “tough as nails.”

About 350,000 of the 850,000 Steelworkers in the U.S., Canada and the Caribbean work on products that end up in autos.

The UAW can’t keep shrinking and expect to hold the clout that moved a president to rescue GM and Chrysler, Shaiken said.

“He’s facing an unprecedented crisis; the status quo is not tenable,” Shaiken said. “To survive the union has to go forward, and Bob needs to be a transformational leader.”

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