Tactics from 1970 don't fit '07 reality
Just when it looked like Detroit's auto industry was poised for a
breakthrough deal, the United Auto Workers strikes General Motors Corp.
and we're back to 1970 all over again.
But it's not 1970, except here in Michigan. GM doesn't dominate its home
market; foreign-owned rivals do. The UAW doesn't represent the growing
work forces at rivals operating down South -- and probably won't anytime
soon should this walkout become a recruiting poster for anti-UAW forces
from Alabama to Texas.
What happened? For most of the 10 days since the Sept. 14 contract
deadline, the signs pointed toward a contract in the most consequential
bargaining this industry has seen in two generations. UAW President Ron
Gettelfinger signaled the union's desire to avoid a costly walkout, even
as GM expressed optimism it would reach a deal to dramatically improve
its competitiveness without harming workers.
Not anymore. In one swift act, the UAW jumped from the small artillery
of local "bottleneck" strikes to nuclear weapons, sending all 73,000
UAW-GM members out on strike for the first time in 37 years. After this,
which began at 11 a.m. Monday, there is nothing left in the union's arsenal.
Short-lived? Or slow death?
The move sends two messages: First, that the union will not be pushed
into a concessionary contract it can neither swallow nor get its locals
to ratify. Nor will it accept one without recompense, namely guarantees
-- to the extent there can be guarantees in a dynamic global industry --
of new products and continued investment in U.S. plants.
Second, a national strike that lasts beyond a week or so would give
dues-paying members a taste of a life lived on $200 a week in strike pay
instead of a GM paycheck with GM benefits, arguably making them more
amenable to ratifying a distasteful, concessionary deal that ensures
"We believe the work stoppage will be short-lived and is being used by
the union's leadership as an instrument in preconditioning the
constituency to accept more concessions, not fewer," says Brett Hoselton
of KeyBanc Capital Markets.
We'll see. For union members in Michigan, with its 7.4 percent
unemployment rate, imploding state budget and all-but-certain rising tax
bills, the prospect of an extended walkout could be especially difficult
"It's a rotten time for a strike," says Sean McAlinden, chief economist
of the Center for Automotive Research in Ann Arbor. "The negotiations
will be more meaningful in the absence of production and paychecks. The
loss of pay will be felt more by workers than the loss of production by GM."
This is a bold, even risky, move by Gettelfinger & Co. In one stroke,
the union essentially puts all its muscle behind the push to get a deal
with GM; reduces the likelihood of a similar move at Ford Motor Co. and
Chrysler LLC; and imperils union organizing efforts in some parts of the
For Michigan, it couldn't come at a worse time. Facing the likelihood of
a state government shutdown and what that says about the dysfunction and
leadership vacuum in Lansing, the strike puts even more people out of
work, reinforces Michigan's image as a retrograde labor stronghold and
amounts to one more blow helping to bring a stumbling state to its knees.
'Heat, light' goes national
Welcome to uncharted territory for the UAW leadership. Not since the
mid-1970s, roughly a decade before Toyota Motor Corp. opened its first
U.S. assembly plant, has the union ordered a national strike against one
of Detroit's automakers.
In union parlance, this is the "heat-and-light show" writ large -- the
union turns up the heat until the company sees the light. Except that
this company, GM, and its crosstown rivals are less the Big Three of old
than they've ever been.
They're bleeding cash. Their market share is declining. Their debt is
rated "junk." They're growing overseas where they are unencumbered by
70-plus years of tradition, bargaining history and a crushing, backward
culture. They're selling assets so furiously that they look like
companies either preparing for a confrontation with labor or in partial
liquidation or both.
Most importantly, their competition isn't standing still. The Chinese
and the Indians are pushing the Koreans. The Koreans are pushing the
Japanese. The Japanese are pushing the Germans, French, Italians and
Denying or denouncing the competitive labor-cost imbalance of roughly
$20 an hour between Detroit and its Asian competitors operating in the
United States may make some feel better, but it won't make the numbers
any smaller or less consequential.
It's not about the past
Gettelfinger was right when he said Monday that his members had given a
lot over the past two years, that they had acquiesced to a deal on
retiree health care in '05, that they had accepted massive buyouts and
plant closings in '06, that they had reluctantly accepted the climb-down
in the settlement of the Delphi Corp. bankruptcy.
"It does seem odd to us that as much as workers do, they can't do
enough," Gettelfinger says, "and as much as executives get, they can't
But this strike and these ongoing negotiations aren't about the past,
who's to blame or the glory days of 1970. They're about whether GM and
the UAW can chart a future together in the United States that recognizes
what the market and economic reality are -- not what they want them to be.