AFSCME 3357-HOF'S BLOG

FB3 (Formerly "Big 3") Shooting for 33% UAW Wage Reductions
Tough Times ahead for UAW Workers

UAW contracts with Chrysler, Ford and General Motors expire this fall. Though the automakers' situation didn't look good at the time of the last contract, now things look positively bleak. (Positively bleak? isn't that like "jumbo shrimp" or "the fashion store at Sears"?) Chrysler is in the process of being sold to a private equity fund, an equity fund that may have ideas of a piecemeal selloff. Ford has hocked all of its assets for working capital to survive two years. General Motors may be bankrupt on paper, has sold most of its marketable assets, and only has enough cash for two or three months if the income spigot gets shut down. Since the last contract, Toyota has become the largest automaker in the world, and may yet be #2 in the US. Passenger cars built by "transplant" automakers make up more than half of the market in the US. Near record gas prices threaten the truck market, the only profitable market niche remaining for the FB3.

News articles, including this one at the CNN Money site report that FB3 labor costs are $70-75 per hours vs. 40-45% per hour at the transplant factories. The manufacturers' goal in the forthcoming labor negotiations will be to reduce labor expenses by about a third to match the costs of the transplant firms.

As my fellow UAW-LSP lawyers are aware, the average autoworker doesn't have a third of his/her paycheck left when the next one comes. We're keeping plenty busy with bankruptcy cases, foreclosures and car repossessions as is. A rank & file autoworker may be inclined to think: "To hell with GM being bankrupt in a year without pay cuts, I won't last a month." UAW President, Ron Gettelfinger, will have his hands full trying to negotiate a contract that garners enough union member votes while still giving the automakers enough relief to make a difference. The one thing he has going for him is that buyouts over the last two years have resulted in the retirement of a lot of the crusty old hands that stood in the way of concessions in the past. The younger workers are more likely to realize that there are no other gravy train jobs out there if the FB3 go bust, and that $18/hr with health insurance is better than $7 and no health insurance at Walmart.

Where does all this put UAW Legal Services? It's too early to tell. The one thing we have going for us is that we are very cheap. On the other hand, we provide a benefit that most workers do without completely. Ultimately, Ron G and company know that when times are tough, that's when the legal services benefit is the most useful. Times are bound to be tough after the next contract, one way or another.