Labor June 2010

Who’s the Boss?

The UAW’s stock holdings in the Big Three carmakers have caused some members to wonder whose side it’s on.
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Bill Pugliano/Getty Images

Outside the big auto show in Detroit this January, a dozen or so protesters marched in a loose circle, waving homemade placards like semaphores. The signs had slogans such as INVEST IN JOBS NOT WALL STREET and GREEN JOBS NOT PLANT CLOSINGS. As the next wave of hybrid and fully electric vehicles was being unveiled inside, these current and retired autoworkers were urging visitors to the downtown Cobo Center to join them on a “devastation tour” of Greater Detroit, where by some estimates unemployment was nearing 50 percent. Several of the protesters reminded me that auto plants had been retrofitted almost overnight in the 1940s to serve the war effort; couldn’t they now be repurposed as part of a new “green” economy? “Why don’t the auto companies open empty plants to build buses, light rail, and windmills?” asked Randy Sandusky, a member of the United Auto Workers union and a former employee at General Motors’ Detroit-Hamtramck assembly facility. But his frustration wasn’t directed only at the automakers. “With its so-called increased role in the car companies, why isn’t the UAW out here fighting for this?” Sandusky asked.

The rally had been organized not by the United Auto Workers but by a couple of small labor-advocacy groups. In the months since the auto industry’s near-collapse, the UAW has taken a far more companionable approach, even becoming a partner of sorts, to the Big Three—GM, Ford, and Chrysler. To help save the businesses that employ the largest share of its members, the UAW agreed last year to deep concessions, including the exchange of its retirees’ health funds for stock in the shaky companies. Those deals gave the union—through its Voluntary Employee Beneficiary Association, or VEBA—a 55 percent ownership share in Chrysler, an 18 percent stake in GM, and 11 percent in Ford. The union has tried to avoid any real or perceived conflict raised by this unusual relationship with management. At the end of March, it sold off its entire stake in Ford, generating a projected $1.8 billion for its retiree accounts from the company stock warrants, and it promises to shed its holdings in GM and Chrysler as soon as share prices allow.

But rank-and-file members are wondering at what point the UAW’s promotion of the car companies will mean the neglect of their own concerns. The union received a seat on the boards of GM and Chrysler as part of the VEBA arrangement, and the person who holds that seat at GM was recently named a vice chairman at the company. Gregg Shotwell, a retired GM worker and a co-founder of Soldiers of Solidarity, the largest of the UAW’s many splinter groups, sent me this news in an e-mail with the header “Can you say, ‘CONFLICT OF INTEREST!!!’” Shotwell believes the problems with the union’s ownership stakes are self-evident. As he told me, “What’s best for VEBA, what’s best for company stock, isn’t always best for the average worker.”

When I spoke to UAW President Ron Gettelfinger inside the Cobo Center, he sounded as boosterish about the car companies as did the industry executives who were pitching their new models in the adjoining showrooms. He had just finished addressing foreign press in a conference hall overlooking the Detroit River and the casinos on the opposite bank. He urged me to see an “inspiring” infomercial that Ford had aired on ABC the night before, and he predicted great things from a Fiat-led Chrysler. “Sergio has a way of building off his strengths,” he said of Fiat CEO Sergio Marchionne. Gettelfinger is retiring in June, after navigating the union through one of its most tumultuous periods. At the auto show, he summed up his attitude with a simple mantra: “If you’re not an optimist, you’re a pessimist.”

Gary Chaison, a professor of industrial relations at Clark University, explained that the UAW is now unlikely to take any action that might harm American car manufacturers. “The UAW sees GM as its future. You don’t argue with your future,” he explained.

The union did organize its own rally outside the auto show later that week. Its target was not GM or Ford, but Toyota. Ten workers from Toyota’s only unionized U.S. auto plant, a factory in Fremont, California, that had long operated as a joint venture with GM, were flown to Detroit to help lobby against the facility’s closure. Despite this protest and others, Toyota shuttered the plant in April. But last year, when GM abandoned the partnership, the UAW had remained silent, and it has done little to publicly oppose recent closings at dozens of Big Three factories.

Bob King is expected to be elected the union’s new president. He has already said that he intends to make the organization more transparent and improve its public image. With membership down to about 355,000, from a 1979 peak of 1.5 million, the UAW King inherits must also attempt to organize different sectors of the economy and form alliances with other unions. Additionally, it must overcome the growing distrust within its own ranks. As the UAW’s lead negotiator with Ford, King tried to persuade workers this past fall to accept concessions similar to those made at Chrysler and GM. Along with Gettelfinger, he argued that Ford was wallowing in debt and needed the concessions to remain competitive. But at the same time, the company was touting its return to profitability. The concessions were overwhelmingly voted down. When King stumped for the contract changes at a Dearborn, Michigan, truck plant, workers shouted him off the stage.

According to Joseph Blasi, a professor at the Rutgers School of Management and Labor Relations, the union’s biggest mistake during bankruptcy negotiations last year was not putting in place some form of stock-option plan for individual workers. With the automakers receiving billions in bailout money, favorable rulings in bankruptcy, and government funding for their electric vehicles, stock at these companies has new potential. As it is, retirees and soon-to-retire veterans will enjoy a short-term boost to the VEBA fund from the sales of stock; with individual stock options, however, all workers would have gained as the companies prospered, which also would have helped motivate the workforce.

The protesting autoworkers I spoke to outside the Detroit auto show were later joined, on a nearby roadway, by an assembly of Tea Party activists. An organizer from the National Taxpayers Union, a young man named Andrew Moylan, explained to me that they were awaiting the arrival of Nancy Pelosi, who was scheduled to tour the convention hall. Flanking Moylan’s outfit were several Lyndon LaRouche supporters, some hoisting signs depicting President Obama with a Hitler mustache and deriding him, bizarrely, as “a cracker.” Moylan assured me that his group, which focused on minimizing taxes and the role of government, didn’t share the views of the LaRouche contingent. He pointed to the nearby autoworkers, whose placards and chants bemoaned the federal bailouts. These workers were demanding that something be done about record levels of unemployment, a need that they thought seemed lost on Washington. They no longer trusted the government or their own leadership to represent them. “Actually,” Moylan said, “their message is not that different from ours.”

Ben Austen is a contributing editor at Harper’s.
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