Howes: Reality, prosperity drive auto talks perception

Daniel Howes
The Detroit News

Prosperity isn’t the only thing bargainers from the United Auto Workers and Detroit’s Big Three automakers are managing. Perception is, too.

Behind the relative silence enveloping national contract talks less than four weeks before the current agreement expires Sept. 14, both sides understand the outcome of their wrangling will influence public images carefully crafted after bankruptcies, bailouts and the global financial meltdown.


Last month, UAW President Dennis Williams conducted a series of meetings with Wall Street investors. His aim: to share union priorities in advance of contract talks, including new proposals to control health care costs, and to gauge investors’ thoughts on the UAW and its role in helping keep competitive General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV.

This month, the UAW-Ford is airing spots on NewsTalk-760 WJR reminding listeners that many of the markers of modern work-a-day life — the five-day work week and company-paid health care, among others — were first achieved in UAW-Big Three contracts.

“Before that, there was no such thing as a weekend,” narrates Paul W. Smith, WJR’s morning host. “Workplace safety regulations? Union. Health care and paid holidays? Yes, those too.”

In a second spot: “Fair wages, hours and working conditions, retirement health care and maternity leave — all hallmarks of a civilized society that were won by organized labor.”

The message is clear. A union forged in the confrontations of the 1930s, built in the post-war years, humbled by competition, entitlement and inept corporate management and seared by bankruptcy is positioning itself as an accomplished, mature partner attuned to the realities of competition at home and abroad.

That’s no coincidence. The PR push, and Williams’ quiet, business-like approach to bargaining, signal not just a determination to deliver for ratification what’s considered a fair contract. They’re an effort to bolster the union’s image as bargainers push for contracts that enrich members without undermining the automakers’ competitive edge.

This year’s contract talks are shaping up to be every bit as consequential as those in 2007: Automakers won the rights to establish a second-tier wage rate and to off-load retiree health care costs to a union-controlled trust, in a desperate bid to manage decline.

Times have changed, radically, powered by an expanding market, pent-up demand and lower break-even points that have combined to deliver record profitability and fairly stable market share.

In the four years of the contract expiring next month, the automakers have booked more than $70 billion in adjusted North American operating profit; union members have reaped hefty profit-sharing payouts, especially at GM and Ford; for the first time in some two generations, the rich U.S. market has re-emerged as the profit engine driving all three companies.

The result is raised expectations among the rank-and-file and heightened risks that one side (or both) could overplay its hand, culminating in a confrontation that would re-ignite charges that a “New Detroit” wise to competitive reality is no different and no more astute than what it allegedly replaced.

The challenge is striking a balance between improving aspects of the next contract without significantly raising fixed costs — even though labor constitutes roughly 7 percent of the cost of a finished vehicle — and improving the competitive position of automakers still reaping most of their profits from trucks and SUVs.

Members are expected soon to overwhelmingly approve strike authorizations, a routine move in contract talks. More significantly, the UAW is expected to present contract proposals to the automakers soon, perhaps as early as the end of this week.

It will not be easy. Fundamental tensions are pulling on both sides: the UAW wants base-wage increases for “legacy workers” and second-tier hires even as it pledges to keep the automakers competitive.

The automakers say they build where they sell. But Ford is moving production of its Focus compacts and C-Max hybrids to Mexico from Michigan Assembly in Wayne. GM is said to be mulling the possibility of producing a compact Buick crossover in China and exporting it to the U.S. market. And most of the full-size trucks assembled in Mexico by GM and FCA are exported back to the States.

Looking for flashpoints in the coming weeks? Those are it. UAW Vice President Cindy Estrada nailed it when she said this week that American taxpayers didn’t bail out GM and what became FCA so the companies could ship production overseas or import Chinese-built Buicks.

As unpopular as a UAW strike likely would be next month (and it would be, considering recent history), exporting production overseas amid the most profitable years since the 1960s likely would prove a similar PR headache for the automakers.

The next four weeks are about bridging the differences without, once again, tarnishing an image that has taken years to rehabilitate. If the new Detroit is real, this a chance to prove it.

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Daniel Howes’ column runs Tuesdays, Thursdays and Fridays and can be found at