United Auto Workers contract talks could reshape Midwest

Ford Motor Co. doesn't pull punches when it talks with its workers about the future.

"Change or die."

It's more than an internal slogan. It's an acknowledgment that the way Detroit has done business doesn't work anymore. If Ford, General Motors and Chrysler can't change their ways, they will continue to see their share of the U.S. market fall, continue to lag their competitors in fuel economy and technology and continue to shed plants and workers.

That's a tough backdrop for union contract talks.

The United Auto Workers' latest four-year contract will expire Friday, and union leaders, company executives and workers say more is at stake this time than in any previous negotiations.

How they settle their differences will determine not only the work of UAW members but also the state of our region's economy and the future of auto production in much of the Midwest.

Automakers want to drastically lower costs - from about $75 an hour in wages and benefits to closer to $50 an hour.

The lower figure is what economists estimate Toyota pays its workers in wages and benefits. While wages are typically close to UAW scale, benefits at Honda, Toyota and Nissan are much less generous.

In an age when foreign-owned competitors sell more than half the cars purchased in the United States each year, when Toyota outsold Ford for the first seven months of this year, Detroit's Big Three say costs have to come down.

The most contentious part of that fight will be the stellar health-care coverage the companies have traditionally offered their workers. Wages and work rules are also being discussed.

The union wants work. Contracts passed in the 1980s and '90s made it difficult to cut jobs, but those deals failed to keep UAW members employed. Over the past two years, Ford, GM and Chrysler have closed plants and cut tens of thousands of jobs.

Workers did receive generous buyouts, but, nevertheless, they lost their jobs.

To win over workers, the Big Three automakers would probably have to include specific investment promises in the new labor contracts, said Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Mich.

Workers at GM's plant in Lordstown, for example, would be more likely to approve concessions if they were guaranteed a new product line and a $200 million plant upgrade.

Despite offering concessions two years ago, workers have complained that new products are heading to Mexico and Canada. Several said they're willing to help their employers survive, but only if their employers make solid commitments to keeping plants open.

"I expect to be sold out," said Chris Kezer, a five-year employee of Ford's van plant in Avon Lake.

Kezer moved to Avon Lake when Ford's Lorain plant closed late last year. He plans on only five more years with the company.

Like many workers, he feels that concessions lead to only more concessions, and he has little faith left in Ford or the union.

For their part, the Big Three often talk about facing the same challenges - rising health-care costs, declining market share, excess capacity - but the differences between the companies are striking.

GM: The company is much more desperate to cut health-care expenses than are Ford and Chrysler.

GM pays comprehensive coverage for 4.6 retirees for each active worker. Ford has 2.1 retirees for each active worker; Chrysler has 1.6.

And that issue won't improve for GM any time soon. About two-thirds of its active workers are close to retirement age. At Ford and Chrysler, about 30 percent of workers will be able to retire within the next five years.

Labor experts and economists believe this is forcing GM to push harder than Ford and Chrysler to offload its retiree health benefits onto the union.

Patterned after deals with supplier Dana Corp. and tire maker Goodyear, such a deal would create a fund, run by the UAW, that would pay retiree costs.

Ford: The biggest issue here is active employee wages.

Ford has too many plants producing too few products. Some plants run on overtime while others go weeks without producing vehicles. The highly inefficient system means Ford takes more time to build a vehicle than GM and foreign-owned competitors such as Toyota.

A great deal for Ford would be across-the-board wage cuts, and it would probably be willing to offer benefits guarantees to achieve that goal, said McAlinden, the Center for Automotive Research economist.

Chrysler: The biggest issues at Chrysler are inside the plants, he said. That company is probably pushing for more flexibility to move workers between facilities and for work rules that allow skilled tradesmen to do other jobs, McAlinden said.

Using the threat of closing as a tool, Ford won similar deals from almost all of its local unions over the past two years.

One for all

In other industries, having different agendas wouldn't be a problem. But Detroit's Big Three have generally gotten the same labor deals, despite their differences. Typically, the union picks a target company, negotiates a deal with it and uses that contract as a rigid pattern that the two others must follow.

In other industries, having different agendas wouldn't be a problem. But Detroit's Big Three have generally gotten the same labor deals, despite their differences. Typically, the union picks a target company, negotiates a deal with it and uses that contract as a rigid pattern that the two others must follow.

UAW President Ron Gettelfinger has said he wants to continue to use "pattern bargaining" this year. Making that happen may be impossible.

"This is one year where the patterns really aren't going to hold," said Gary Chaison, an industrial-relations professor at Clark University in Worcester, Mass.

In the past, the UAW would have threatened a strike if GM didn't take Ford's deal. But with producers struggling to stay alive, a strike could lead to bankruptcy.

Chaison and others said neither the union nor the company would benefit from that, and the union knows it.

All UAW locals in Northeast Ohio have voted to strike if necessary, but Chaison and others don't believe a strike is likely.

And no one expects minor contract changes, as with the last contract.

The compensation gap between Ford and Toyota cost Ford $3.8 billion last year. It cost GM $6.1 billion. Even with major concessions, that is likely to grow as Toyota continues to cut its costs, most recently by canceling free health coverage for workers' spouses.

That gap means less money to develop new products and less money to invest in plant improvements. If Detroit's Big Three continue to fall behind in those areas, sales could continue to slide and more workers could lose their jobs.

Several workers said they're willing to make changes if negotiators in Detroit say there are no better options.

Don Bowlin, a Ford nomad who has worked for the company over the past decade in Indianapolis, the Cincinnati area and the Ohio Assembly Plant in Avon Lake, said he trusts the negotiators.

Representatives include Chris Viscomi, chairman of skilled trades at Avon Lake's UAW Local 2000, and Tim Levandusky, president of UAW Local 1250 in Brook Park.

During his time at Ford, Bowlin has seen the changes that people in other industries have faced with wages and health care.

His wife's insurance premiums grew much faster than her wages, pushing her overall compensation down until she dropped coverage and moved to his plan.

"She'd been there eight years, and she never really got a raise. They'd give it, then they'd take it back" in insurance premium increases, Bowlin said.

Still, he's not willing to dig his heels in too far on concessions. "We've got to be flexible enough to not negotiate ourselves right out of a job."

To reach this Plain Dealer reporter: rschoenb@plaind.com, 216-999-4059