As Detroit Is Remade, the U.A.W. Stands to Gain
By MICHELINE MAYNARD and NICK BUNKLEY
New York Times
April 30, 2009
DETROIT — In the devastating slump that has forced two of Detroit’s automakers to the brink of bankruptcy, the United Automobile Workers union stands to become one of the industry’s few winners.
According to restructuring plans proposed this week, the union will have more than half the stock in Chrysler and a third of General Motors, meaning it will have tremendous influence, with the government, in determining the future of the companies.
Officials at several chapters of the United Automobile Workers union said Wednesday that a majority of members were voting in favor of a cost-cutting deal with Chrysler. Voting was scheduled to end by late Wednesday.
At Local 140, for example, which represents 2,500 workers who build Dodge Ram pickup trucks in Warren, Mich., 68 percent of votes cast were in favor, said the president, Mark Taylor. Two locals in Ohio also said the deal passed by more than a four-to-one vote.
The prospect of a big ownership stake for the U.A.W. in G.M. has angered holders of billions of dollars in bonds, who stand to get only a fraction of the restructured company. As for Chrysler, the banks, hedge funds and others that lent it money have been promised only cash, not stock.
“We believe the offer to be a blatant disregard of fairness for the bondholders who have funded this company and amounts to using taxpayer money to show political favoritism of one creditor over another,” a group of G.M. bondholders said in a statement this week.
The U.A.W. members at both automakers stand to lose some of their pay and benefits, but the cuts are not as deep as those faced by airline and steel workers when their companies went bankrupt. Under proposed deals devised by the Treasury Department, U.A.W. pensions and retiree health care benefits would largely be protected.
The U.A.W. has derived its leverage in part from the support of a Democratic president and Congress. But it also results from a long-term strategy to build support in Washington that stretches back more than 60 years.
“We have to fight both in the economic and political fields, because what you win on the picket lines, they take away in Washington if you don’t fight on that front,” Walter P. Reuther, the union’s best known president, said in 1947.
Mr. Reuther and every succeeding U.A.W. president invested significant amounts of time and money to pursue that goal.
In the last 20 years, the U.A.W. has donated more than $25.4 million to federal candidates, 99 percent of it to Democrats, according to OpenSecrets.org, a Web site that tracks campaign contributions.
The union ranks No. 16 on the group’s list of top 100 political donors, known as “heavy hitters.” The U.A.W. was well ahead of G.M., which gave $10 million in that period, good for 73rd place. Chrysler and Ford Motor did not make the list.
The U.A.W.’s current president, Ron Gettelfinger, has also been an effective, steel-nerved leader, and has managed to maintain the union’s importance in recent negotiations, even though the U.A.W. has lost nearly 200,000 members since he took office in 2003.
Mr. Gettelfinger’s influence stems in part from the fact that the U.A.W. represents nearly all the auto workers at the Detroit companies. (Workers at a few plants are represented by the International Brotherhood of Electrical Workers.) By contrast, airline workers are represented by multiple unions.
“The U.A.W. is so overwhelmingly dominant,” said Duane Woerth, former president of the Air Line Pilots Association. “You’re only talking to one union and that gives them more power.”
Mr. Woerth, whose union was involved in 22 bankruptcy cases involving big and small airlines during his tenure as its president, said the pressure that bondholders and other investors might put on the U.A.W. has been mitigated by Democrats’ support.
For example, the union has yet to complete a deal with G.M., which laid out an offer to its bondholders this week that would pay them about 41 cents on the dollar. In order for the deal to succeed, 90 percent must accept it, which analysts say is unlikely given bondholders’ criticism of the offer.
Only this week did the U.A.W. come to terms at Chrysler, facing a Thursday deadline set by the administration.
The tactics have won admiration from others in the labor movement, even those forced to grant concessions to bankrupt companies.
Robert Roach Jr., a general vice president of the International Association of Machinists and Aerospace Workers, said a successful outcome for the U.A.W. and the auto companies would benefit the economy, and in the process help his 650,000 members at major airlines, aircraft makers and other companies.
“We’re all in this,” Mr. Roach said. “The corporations, the federal government, the taxpayer, the cities and the states. If we are able to save these auto companies, that will be good for everybody.”
But many of the U.A.W. members who voted Wednesday on the Chrysler proposal were struggling to see the benefits of the cuts they were agreeing to.
The deal suspends cost-of-living pay increases, limits overtime pay and reduces paid time off. It also eliminates dental and vision benefits for retirees.
“Either you vote for it or it’s bankruptcy,” said Bruce Clary, 58, who was an electrician at a Detroit engine plant until being laid off in January. “And it may be bankruptcy anyway.”
At Chrysler’s Jefferson North assembly plant nearby, the oldest auto plant still operating in Detroit, workers said the consequences of rejecting the deal would be far worse than the concessions that it would force.
“This was the best deal we could get,” said John Davis, who has worked at Chrysler for 33 years. “We did our part, and now the banks need to do their part.”
Copyright 2009 The New York Times Company
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