rssAuto Bailout Failure Sets Up Union Battle
Monday, December 15, 2008 at 1:11 pm
- 17 Comments
From left, United Auto Workers VP Bob King and Pres. Ron Gettelfinger and Ford Motor Company Exec. Chairman Bill Ford and CEO Alan Mulally after reaching an agreement last December. (Flickr: Ford Motor Company)
When Senate Republicans last week killed a $14-billion bailout of Detroit’s sputtering automakers, they reduced the debate to what they consider its essence: the power of organized labor.
Earlier sticking points involving oversight, emission standards and the source of the rescue money had all been resolved rather quietly. The deal killer came when Republicans demanded — and Democrats rejected — that members of the United Automobile Workers take a big pay and benefits cut next year.
Illustration by: Matt Mahurin
The Republicans’ insistence on union concessions is part of a larger GOP effort to diminish the role of organized labor across the nation, according to many labor experts, union leaders and Democrats. With Democratic congressional leaders vowing next year to take up contentious legislation to expand workers’ rights, Republicans are using the highly partisan battle over the UAW as a warm-up.
“After three weeks of hemming and hawing, it really became clear that this argument was about labor,” said Mark Brenner, director of Labor Notes, a Detroit-based labor-advocacy group. “It’s a fight about whether labor unions are a legitimate institution in the 21st century. … The mask fell off [last week].”
There is some evidence for Brenner’s suspicion. An email circulating among Senate Republicans last week urged them to vote against the auto bailout as a practice round for opposing the Employee Free Choice Act, referred to as the “card-check” bill, which would make it easier for workers to form unions. The bill would empower workers to form unions if a majority sign a petition, or card, indicating their support.
Democrats, who have long supported the card-check bill, are expected to take it up next year when they control the White House and larger majorities in the House and Senate — a scenario that business groups and anti-union Republicans are already girding for.
“This is a precursor to card-check and other items,” the email’s talking points stated. “Republicans should stand firm and take their first shot against organized labor instead of taking their first blow from it.”
This union fight ignites as the nation’s Big Three automakers are on the verge of collapse. On Wednesday, the House passed a bill that would have provided $14 billion in emergency loans to General Motors and Chrysler. The companies say they need the cash to avoid bankruptcy before the year’s end.
The legislation — a compromise between the White House and congressional Democrats — ran into stiff opposition from Senate Republicans who demanded that UAW wages and benefits be brought into line with those paid by Toyota, Honda and Nissan. Alternative legislation introduced by Sen. Bob Corker (R-Tenn.) called for achieving that wage parity in 2009.
The changes, on average, would have amounted to a roughly $20,000 cut in pay and benefits for each Big Three employee, according to an analysis by The New York Times.
The UAW, with the support of Democrats, balked at the wage-parity timetable, preferring that the changes come in 2011, when UAW’s contract expires. At an impasse, Democratic Senate leaders brought the House-passed bill to a vote late Thursday and fell seven votes shy of cloture. Ten Republicans supported the legislation, while three Democrats opposed it. Twelve senators were absent.
Afterward, the White House indicated it will step in to help the automakers.
For many Republicans, the Senate stalemate boiled down to just one issue.
“The UAW refused to make any real concessions,” Sen. Judd Gregg (R-N.H.) said in a statement explaining his “no” vote, “and this lone obstacle brought the whole deal down and made it clear that we’d simply be throwing good money after bad.”
The UAW points out that it has already made some concessions. Last year, it renegotiated its contracts with the Big Three and agreed to cuts in wages and in pension and health-care benefits for new employees. “Major concessions were made,” said Gary N. Chaison, a labor professor at Clark University in Worcester, Mass. “And the frustrating thing for labor is that those concessions have been forgotten [in the bailout debate].”
Still, as Chaison explained, the effects of the concessions aren’t that significant because the number of new hires remains small. To make a difference, he said the UAW would probably have to slash the wages of existing employees as part of any restructuring deal. And worse.
“Jobs are going to be lost, there’s no way of avoiding that,” Chaison said. “It’s just a question of when — and how many.”
Senate Republicans denied that their opposition to the Detroit bailout was rooted in anti-union sentiment. Explaining his “no” vote, Alabama Sen. Richard Shelby, the highest-ranking Republican on the Banking Committee, said the bill simply wouldn’t have worked.
“It will not make the Big Three competitive,” Shelby said. “It will not make them efficient. It will not make them compete in the marketplace.”
But some Democrats question such rationales. Sen. Christopher Dodd (D-Conn.), chairman of the Banking Committee, said at a news conference Friday that the Republicans’ insistence on more worker concessions “was only designed to create a political problem rather than solve an economic one.”
There were other factors besides ideology at play — like geography. Many of the Republicans who voted against the bailout proposal represent Southern states where foreign automakers have established a big manufacturing presence. Chaison said these GOP senators “were saying that the future of manufacturing in this country is going to be Southern and non-union.”
Appearing on CNBC on Friday, Shelby said as much. “You look at the South. You take — not just Mercedes in my hometown — but BMW, Honda and all of them. These companies are flourishing with American workers made in America.”
Not everyone was convinced that the bailout vote was a stand-in for broader union issues like the Employee Free Choice Act. Jim Walters, who represents employers for the Atlanta law firm Fisher & Phillips, said the dispute represented decades of disagreement between the two parties. The Employee Free Choice Act, he said, “really doesn’t have anything to do with it.”
Meanwhile, the Bush administration said Friday it was considering dipping into the $700-billion Wall Street bailout fund to help the automakers — a move the White House had previously rejected. Some Senate Republicans blasted the idea, arguing that the financial system bailout was never intended to save failing manufacturers. Some accused the president of caving to save his reputation.
“I don’t think President Bush is going to let anybody fail,” Shelby told CNBC. “He just wants to get out of town.”
The same could have been said of Congress last week. And indeed it was.
“Most parties,” said Chaison of Clark University, “want to get out of this without having to say that they worsened the recession.”
He paused before adding a final observation. “Sometimes,” Chaison said, “you get the feeling that no one knows what they’re talking about.”
17 Comments
Comment posted December 15, 2008 @ 11:18 am
“The quality of life for United Auto Workers should not be lowered; the standards of living of all Americans should be raised. With the way things have been setup by Republicans and Democrats throughout the years of sharing power, inflation is sucking the wealth and life out of this great nation and it's people. Through the years, the dollar loses more and more of it's purchasing power. The American dream has turned into a nightmare for many couples who cannot afford the basic necessities. Today both spouses have the need to work and even then, cannot make ends meet. Our children are being raised by strangers, television, and the state. It is no wonder that depression and suicides are on the rise while morals and family values are lost.”
http://www.theartdeptchronicles.blogspot.com
Comment posted December 15, 2008 @ 12:30 pm
Our brave Republican Senators have defended our foriegn automakers from lazy, greedy, fat cat american autoworkers. Senator Corket and Shelby know that stupid american workers are only tolerable when lead by superior German and Japanese management. America!, please dont allow TARP funds to be used for Detroit bailouts, or there will be less tax payer money available for hard working Wall Street Executives and their bonuses. This would be cruel punishment with the Christmas season upon us and it would be unfair to hold our executives responsible for the problems in the financial markets!
Comment posted December 15, 2008 @ 3:19 pm
I really don't understand Gettelfinger's argument that Senate Republicans are protecting foreign automakers by asking for a definite date for pay parity with auto workers of foreign brands. How would it help a foreign company if a US automaker is more viable or competitive? Pardon me, but that had to be the most stupid argument he has made yet.
Comment posted December 15, 2008 @ 3:26 pm
GOP for Nissan is right – There should be no relief for lazy/greedy/fat cat Americans. What Democrats and the UAW are saying is like saying “we don't care if we sell cars or not, just give us the paycheck”. It does not work this way in a private industry. Either you sell and make a profit , or you are gone. If you can make a profit only if you let go of 50% of your people and lower the salary of the remaining 50% – then you should be able to do it. If your current employees will go on strike if you do it – fire them all and bring new ones. That's life, that's business – though decisions in order to make a profit.
What the UAW SHOULD BE FIGHTING FOR is to lower the cost of health care. If cost of health care would have been 50% of what they are now, they could compete in Toyota and BMW even today.
If the White House will spend $14BB on the Auto makers then it is just a matter of time before they will be back for more.
Comment posted December 15, 2008 @ 4:19 pm
I agree you Southerners are stupid! Saying Japs and Nazis are superior managers proves it!
Comment posted December 15, 2008 @ 6:31 pm
The big three are doomed. They don't make a competitive product at a competitive price, due in part to their labor costs and work rules. I was in the steel industry in the early '80's and its a repeat of what happened then. I am not going to by a GM product solely to finance the UAW and I do NOT want my taxes to pay their oversized wages and benefits.
What are the big three (and the UAW) going to do when the Chinese start making cars with labor costs on the order of $5.00/hour?
SK
Comment posted December 15, 2008 @ 6:46 pm
Lynn Tilton (CEO of Patriarch Partners) was on CNBC Squawk Box on Friday…relevant insights to this discussion…Fixing the Financial Crisis: The truth of the situation can be ignored no longer (http://www.cnbc.com/id/15840232?video=960926779.)
This is the same woman who predicted the financial crisis on Bloomberg TV back in 2006 (http://www.blinkx.com/video/lynn-tilton-on-bloo…) so perhaps she’s worth listening to now.
She proposes direct lending to businesses through a new “Provisional Federal Bank (http://www.patriarchpartners.com/Lynn_Tilton_Wa… must be made available not solely to big banks where Treasury-injected capital has been amassed to fill the cavity left by gambling losses, but rather expressly to deserving American companies and their people who will reignite our sputtering economy. A provisional Federal Bank must be initiated to foster enterprise and to provide job opportunities for every American.”
Comment posted December 15, 2008 @ 10:27 pm
The UAW's Gettelfinger said the failure of the legislation showed that Congress should stay “away from the bargaining table.”
When Mr. Middlefinger is asking for taxpayer dollars, he is inviting congress to the table and the rest of us – the great unwashed that don't carry an elite UAW Membership Card.
From “American” (below):
“I really don't understand Gettelfinger's argument that Senate Republicans are protecting foreign automakers by asking for a definite date for pay parity with auto workers of foreign brands. How would it help a foreign company if a US automaker is more viable or competitive? Pardon me, but that had to be the most stupid argument he has made yet.” – EXACTLY
Comment posted December 16, 2008 @ 11:53 am
I can finally say hooray for the President.
I find playing politics with the future of 3 million HARD WORKING AMERICANS revolting. Congress needs to see what it is like to go without a paycheck.
I heard once about an idea where you paid the Doctor while you were well, and stopped paying him/her when you were sick. I think we should consider applying this idea to Congress.
Comment posted December 19, 2008 @ 9:01 am
We'll be talking about the auto bailout at 5 PM New York time today on News Talk Online on Paltalk.com.
Please go to http://www.garybaumgarten.com and click on the Join The Show link to participate.
Thanks,
Gary
Comment posted December 25, 2008 @ 10:24 am
I hope the 3 million folks that lose their jobs because the Senate chooses special interest over humanity are republicans. NOT because I have Ill will against republicans, but that if they are they will change to democrats.
Seriously is not a bail out so a man can keep his job and be a productive worker better than putting the man on the welfare roles to satisfy your political needs. Shame on Congress for politics before people.
Comment posted December 25, 2008 @ 10:33 am
SK
What are you going to do when the Chinese start to compete with your industry?
“I Stood by and did nothing when they came for my neighbor…”
There has to be a better solution than throwing 3 million people to the wolves. Many of them never had a say in what was built, how it was built, for what market it was built, what would happen if the economy went bad, and did not know the Gov would GIVE 350 Billion to the Banks and Investment community without a say in who got it, how much they got and without even being able to learn how they spent it
Comment posted December 25, 2008 @ 10:47 am
To all you “Its labor's fault folks”,
I hope your letters to the financial community that got 40+ times what the auto folks got are just as mean.
Comment posted April 13, 2009 @ 11:27 pm
It is depressing, GM’s status today. I hope everyone get better although GM made bad mistakes in the past.
Comment posted April 14, 2009 @ 6:27 am
It is depressing, GM’s status today. I hope everyone get better although GM made bad mistakes in the past.
Comment posted August 5, 2010 @ 5:05 pm
I really don't understand Gettelfinger's argument that Senate Republicans are protecting foreign automakers by asking for a definite date for pay parity with auto workers of foreign brands. How would it help a foreign company if a US automaker is more viable or competitive? Pardon me, but that had to be the most stupid argument he has made yet.”
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