Letter from the US: Much depends on Canadian auto workers' strike

Wednesday, October 16, 1996

Letter from the US. By Barry Sheppard

Much depends on Canadian auto workers' strike

Much depends on Canadian auto workers' strike

Automobile workers in the United States and Canada are presently struggling with the Big Three — General Motors, Chrysler and Ford — over the terms of new three-year contracts.

As of October 10, a strike by the Canadian Automobile Workers against GM has entered its second week and promises to be a major test of strength. The Canadian strike has already begun to affect GM production in the US. The majority of its assembly plants in the US depend on Canada for at least some parts. Some plants in the US have begun to shut down, and more will follow.

The major issue confronting auto workers is "downsizing" and "outsourcing". These are two sides of the same coin, as the owners try to cut back on their work force in part by buying parts from non-union "outside" companies that pay half or less the wages the workers in the Big Three get, and by selling off factories so they become "outside" firms.

The Canadian union reached agreement with Chrysler on downsizing and outsourcing, largely because Chrysler Canada did not plan to sell factories or buy more parts from outside suppliers anyway.

But GM has decided to take on the CAW on this issue. Dean W. Munger, vice president for GM in Canada, said the union's proposed limits on downsizing and outsourcing "are in conflict with what we as a corporation need to be able to do."

In the US, auto workers are in the United Automobile Workers (UAW). The CAW broke away from the UAW a decade ago in disagreement with the UAW leadership's policy of agreeing to concessions to the Big Three.

While not attempting to prettify the CAW leadership, its greater militancy has meant that Canadian auto workers do not suffer from as many give-backs to the corporations as UAW members do. For example, the UAW has accepted the "two-tier" system, where new employees get 70% of full wages to start with, while the Canadian workers are not saddled with this divisive scheme.

The two-tier arrangement has been made even worse in the contract the UAW has recently negotiated with Ford and Chrysler.

The UAW-Ford pact was the model for the Chrysler agreement. While winning some economic gains for present employees and retired workers, the UAW leadership has made an agreement that allows Ford and Chrysler not only to take on new workers at a much lower wage, but to consign these new UAW members to a permanently lower wage.

Before, workers hired into UAW-organised plants had a lower starting wage than other employees, but after three years came up to the "first tier". This is still the case in assembly plants.

The new concession would apply to workers hired by Ford to produce parts that the company isn't making now. They would be in the UAW but would earn the "prevailing average wage" in their "industry segment or geographic area", as determined by an independent consultant. This could be less than half of the Big Three rate (now $19 per hour for assemblers).

For example, the contract would encourage Ford to set up a new parts plant in Detroit's "empowerment zone". One non-union auto parts maker already there, Mexican Industries, starts in the $6 per hour range.

Why was Ford ready to give current workers and retirees some real economic gains in return for including such language in the contract?

The Big Three's drive to outsource as much work as possible to low-wage, mainly non-union suppliers has been quite successful; Ford maintains tight control over suppliers' quality and prices.

What the new concession amounts to is the further entrenchment of the two-tier principle, and a tacit agreement by the UAW leadership that it will not seriously attempt to organise the non-union parts plants.

Why would anyone in these non-union shops want to join a union that has already promised to keep their wages low?

No wonder that an article on the Ford agreement in Business Week is entitled "Sweet Deal" and shows a smiling Ford chairman Alexander J. Trotman shaking hands with UAW president Stephen P. Yokich. The article says, "Trotman looks like the cat who had just swallowed the canary". Another Ford spokesperson lauded Yokich for his "statesmanship".

Ford was willing to give current workers substantial economic gains in return for what amounts to agreement by the UAW to accede to the company's drive to outsource to low wage suppliers as much as possible. Each current worker will receive a $2000 cash bonus up front, plus 3% rises in 1997 and 1998. Retirees will get lump sum payments linked to the inflation rate — a step toward the cost-of-living on pensions union activists have demanded for over a decade. Ford will even pay tuition of up to $1000 a year for workers' kids to go to college.

The pact was sold to current workers with the promise that Ford would retain at least 95% of its current workers who have over a year's seniority. It turns out that even this promise is filled with loopholes.

What the UWA leadership in essence has agreed to is keeping its current dues-paying membership in return for selling out the future. "It's a contract on our kids", says Tom Laney, former president of a Ford truck local and member of the union 's New Direction caucus.

The direction the Big Three are going in was indicated in another article in Business Week about a new Volkswagen plant being set up in Brazil. This plant will "put VW in the vanguard of radical change roaring through the auto industry", the article states. "From Stuttgart to Detroit, carmakers are racing to squeeze cost from factories through ever closer partnerships with key parts makers. The [VW] plant makes the biggest leap yet: Seven main suppliers will make components in the plant using their own equipment, then their own workers will actually fasten the components together into finished trucks and busses."

Such an arrangement will make unionisation of these workers much harder, since they will not be employees of Volkswagen, but of seven separate companies.

The Canadian car workers are showing the way in resisting this trend. Their strike has held up the UAW's negotiations with GM. Yokich has already whined that he wishes the CAW had reached agreement with GM along the lines of the UAW's Ford contract, although he "supports" the CAW's strike.

A lot is at stake in the Canadian workers' strike, not only for them but for UAW workers, too. A victory by the CAW would put tremendous pressure on Yokich to come up with a contract with GM in the US that isn't too far behind what the Canadian workers achieve.