Howes: Competition, corruption probe loom over UAW leaders
These should be good times for the United Auto Workers.
The Detroit automakers' continuing run of profitability is producing fat profit-sharing checks for their hourly workers. Rising demand for pickups and SUVs of all sizes, enabled by surging U.S. energy production, is keeping gas prices low and many assembly plants humming. And at least one automaker, Fiat Chrysler Automobiles NV, is planning to add a new plant in the union’s hometown to manage growth of its Jeep brand.
But as the UAW’s bargaining convention unwinds this week at Cobo Center, darker realities loom: the push for profitability, intensified amid competition from wealthy Silicon Valley rivals, is prodding automakers to drop marginal products — chiefly traditional sedans — at a quickening pace. General Motors Co., beset with too much plant capacity, is moving to idle two U.S. assembly plants, among others.
The GM cutbacks, delivered the Monday after Thanksgiving, all but assure a confrontation later this year with the union. It'd most likely come in a strike to protest the impending closings of Lordstown Assembly in northeast Ohio and Detroit-Hamtramck Assembly just a few miles north of GM's Renaissance Center headquarters.
That's one reason why the union used the first day of its bargaining confab Monday to raise strike pay to $250 a week from $200 and to confirm that its strike fund totaled $721 million at the end of last year, roughly $130 million shy of its $850 million goal. Going to war costs money — in wages lost, sales unmade, trust undermined.
And the industry's growth rate is slowing. Moody's Investors Service said it is changing its outlook on global auto manufacturing to negative from stable. It predicted sales "will not recover meaningfully in 2019 and 2020" after declining in the latter part of last year. "Transitioning from a growth phase to one of modest decline or stabilization could prove challenging for the sector."
Also looming is the continuing federal investigation into alleged corruption at the UAW’s joint training centers, as well as charities associated with the union’s top leadership. The feds claim the self-dealing, detailed in court papers, violates federal labor law and corrupts the bargaining process atop a union long considered to be "clean."
Not so much anymore. The federal criminal probe also confirms the worst suspicions of the rank-and-file: namely, that the union's leadership is more interested in enriching themselves than the dues-paying members who work assembly lines and bear the brunt and dislocation of cutbacks like the one GM plans to execute this year.
Federal investigators are questioning the use of almost $1 million in dues money spent on condos, booze and golf in California while UAW President Gary Jones headed the union's Region 5. The feds also are scrutinizing the building of a three-bedroom "cabin" for former President Dennis Williams at the UAW Black Lake Conference Center in northern lower Michigan.
Former Vice President Joe Ashton, head of the union's GM Department until his retirement in 2014, abruptly resigned his seat on GM's board of directors when The Detroit News reported that GM had launched an internal investigation after he became implicated in the widening federal probe.
Investigators also have expressed interest in Cindy Estrada, Ashton's successor heading the GM department, who last June assumed leadership of the union's FCA department. Her predecessor, Norwood Jewell, retired six months early after he became ensnared in the continuing investigation. And Secretary-Treasurer Gary Casteel, thought to be a potential candidate for the presidency, opted to retire instead of stand for another term.
The crisis of credibility atop the UAW likely would weaken even more should federal investigators bring more charges against more leaders, past and present. For months after the first charges were filed against the wife of a former union vice president, General Holiefield, and FCA's former labor chief, Alphons Iacobelli, union leaders insisted member dues were not implicated in the unfolding scandal.
Subsequent reporting by The News, citing sources familiar with the situation, found that not to be true. The UAW's own annual filings with the U.S. Department of Labor showed the union between 2014 and 2016 spent $953,692 on conferences in Palm Springs — apparently because there was nothing suitable in, say, Flint.
Can leaders distracted by the machinations of a federal investigation they do not control help their members navigate a quickly changing landscape turbocharged by internet-fueled competition and investor impatience? If their remarkably low public profile the past year is any indication, the answer is probably not.
"We need to appreciate that the labor market in 2019 is very different from the one the UAW bargained in during the height of the labor movement in the 1970s," the union said in its Special Bargaining Convention Rules Book. "Today we work in an environment where 'gig' jobs are becoming the norm, unionized workplaces are rare, corporations aren't expected to share profits with rank-and-file workers, and employers have pitted us against each other and against workers from around the world with global operations and sourcing."
Negotiating those conditions isn't easy in the best of times. To the traditional challenges of wages, health care and new investment, add the pressures to maximize profitability, to compete with richer, high-tech rivals, to parry a widening federal investigation. That's a handful.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.