How in the world did the United Auto Workers (UAW) boss Ron Gettelfinger think he could get his Chrysler members to ratify their proposed contract without providing job guarantees? Did he seriously believe a $3k signing bonus would convince his otherwise carrot-less union brothers and sisters to surrender their right to graduate into cushy “non core” jobs? Or was Gettelfinger blindsided by his own ego; figuring he could yell “roll over” and “play dead” at 45k well-paid autoworkers and make it so? Either way, the question must be asked: what the Hell is going on?
First, the latest point in our connect-the-dots sequence: a so-called “secret handshake” deal between the UAW and Chrysler. Reuters reports that UAW VP General Holiefield told Local leaders he made an unannounced pact with Chrysler to keep certain U.S. plants open if members ratify the new contract. Assuming Chrysler workers will believe Holiefield– a stretch given the rancor surrounding the po-faced contract– it’s a clever play. But is it true?
If Chrysler owner Cerberus offered their UAW members job guarantees, surely BOTH sides would want them in writing to ensure the new contract’s ratification. There are two possible reasons why the union would hide assurances of job security. Either the UAW knows that this alleged job security is highly selective (i.e. they realize that Chrysler’s about to shut plenty o’ plants) and therefore divisive, or there wasn’t any “secret” deal. It’s just a desperate UAW officer blowing smoke up his members’ collective asses.
No matter how you look at it, the UAW leadership has rolled onto its back doggie style, their members aren’t buying the new deal and the union brass are growing increasingly desperate. To wit: not only did the International approve the contract by voice vote, but they aren’t reporting ANY member voting totals. The Locals are playing fast and loose with the numbers as well. The Detroit News says that three quarters of their yes/no stats arrive as percentages, rather than precise numbers.
Could the UAW cheat their way to ratification? Sure. And if the subterfuge is discovered, there will be Hell to pay– within the UAW, relative to Chrysler and, lest we forget, over at Ford. And what will happen if the rank and file reject the contract? The key to this conundrum, indeed, the explanation for this incipient chaos, lies within the UAW’s six-hour strike with Chrysler.
It’s critical to note that the Chrysler strikette represented a split within the union, rather than a united push for more concessions. After the UAW walked out, they did not return to the bargaining table; they simply signaled Chrysler that they were ready to sign. Lead negotiator Bill Parker’s immediate and public opposition to the deal is proof positive that the UAW was of two minds. And the bit that said this is as good as it’s ever gonna get won.
Think of it this way: Union boss Ron Gettelfinger understands that Chrysler is a company staring down the barrel of Chapter 11. He also knows Cerberus stands ready, willing and able to let its 45k union employees go on strike– and break it. He must have figured it’s better to capitulate now and make it look like tough negotiation, rather than face Cerberus’ nuclear winter. And he may have been emboldened by his success at GM.
But there’s one thing Gettelfinger didn’t/doesn’t understand: his members’ ignorance and militancy.
The average Chrysler worker doesn't believe that his or her employer is about to go under. They don't appreciate the fact that Chrysler’s lack of a foreign sales safety net makes it especially vulnerable. They don't understand that one of the world’s richest private equity firms will hang the company out to dry in a New York minute if they think it’s an irredeemable money pit. All they know is that someone’s getting screwed and it’s us. As usual.
Gettelfinger’s mob forgot to sell union members on the idea that Cerberus holds all the cards. Saying that, how could they? Big Ron couldn’t risk calling a “real” strike to get his members in line– because they would have lost. And he couldn’t tell the truth about his position, because he would have been considered weak, and the members might not have bought it anyway. But the truth is neither Gettelfinger nor his members can avoid the truth.
If Chrysler workers are allowed to reject the contract, the UAW goes back to the bargaining table. Chances are nothing much will change. The leadership will re-present virtually the same contract and hope the members have “got it out of their system” and approve the deal (a la National Steel in the early ‘90’s). If Gettelfinger’s regime can’t withstand the fallout and/or gets caught cheating, the new leadership will call a strike. And lose.
[Interview with Greg Shotwell of the Soldiers of Solidarity below]
The unthinkable has happened, I actually feel a pang of sympathy for Gettelfinger.
I think you’re real near the truth RF, maybe spot on.
UAW rank and file-the Kegger is over. Not saying it is nice, but it’s reality.
Bunter
@Bunter1:
You’re exactly right. They can call it a union, but the minute these guys are pulling stuff to save themselves behind the backs of others, you know the whole thing is coming down.
This is the union leadership its members should trust with billions of dollars of VEBA dough? An unwritten agreement to keep plants open, if you the members approve the contract? You have got to be kidding. I wouldn’t even allow a janitorial service in my office without a written agreement. P.T.Barnum would laughing his arse off.
And what about the Chrysler announcement in July this year that will see cars made in China by the number 4 car maker there. At 1st sub compact cars in Europe in late 2008 and in North America in late 2009/early 2010.
Apparently SUV’s are in scope from China Production too. All are planned to bear the Dodge name.
http://www.msnbc.msn.com/id/19600285/
It’s also interesting that Magna was proposing to do the same thing…I can’t remember if they signed any deal though. Didn’t Mark Hogan defect from GM to Magna a few years ago. He was slated to replace Bob Lutz the product czar at GM unti lthe defection…..I’ll bet Mark, Frank and others are just itching to run a car company and have control over the parts manufacturing too.
Ah, the key thing I forgot was the price of the Dodge/Chery Chinese cars, they’re slated to completely rock the auto industry at below $10,000 US
If I were given the keys to the (crumbing Chrysler Kingdom) I’d grab a carving knife – stat – and work out a contract with ex-partner and current collaborator, Mitsubishi.
Chrysler would end up with only:
300 (diesel option added for the USA)
T&C (diesel option added for the USA)
Sebring convertible (ONLY) built in Michigan
and a “new” contract-built
Nassau (badged version of Mitsu Galant, V6 only, top of the line interior and ABS/ESC standard, with Australian front clip and Chrysler grill) to replace the horrid Sebring sedan until something else could be done (minimum of a three year contract with Mitsu’s Normal, Illinois plant to build the things) plus, a new
Newport (badged/regrilled version of Taiwanese Mitsubishi Lancer Fortis)(top of the line interiors, only)(minimum of a three year contract)
Dodge would end up with only:
Colt (Mexican assembled version of Mitsubishi-Japan sourced car, hey why not the cool little retractible convertible from Italian CKD kits as well?)(Minimum two year contract on these rigs) (add the diesel option, too, as seen in the Dutch built Colts).
Caliber (with upgraded interior)(add the diesel option for the US)
Journey (new)(add the diesel option for the US)
Avenger (WITH upgraded interior plastics STAT!) (and add the diesel option for the US)
Charger (with upgraded interior)(add the diesel option for the US)
Challenger (coming on stream soon/build only for 3 years – to keep the mystique – sorry for the car pun, Mercury fans)(are there any?)
Ram (offer the Cummins diesel in 1/2 tonners)
Viper (only if it makes a profit)
Jeep would end up with only:
Wranger (including a new longer wheelbase pickup truck version)(add the diesel option for the US)
Liberty (diesel option….)
Grand Cherokee (diesel option…)
All the other Chrysler/Dodge/Jeep products would die. Like, now.
Freightliner (owned by Mercedes) would retain Sprinter, and allow big-volume Dodge Sprinter dealers to sign up for a Freighliner franchise in order to keep selling the vans.
Chrysler, Dodge and Jeep would have far better line-ups, no overlap, and Mitsubishi would have additional work for awhile until they get on their feet again.
Down the road, after this temporary tie-up as contract supplier, Mitsubishi could consider merging with Suzuki and “disappearing” Mitsubishi into the Suzuki brand (just as Prince “disappeared” into Nissan/Datsun in 1967). Not much overlap between Suzuki and Mitsubishi in the US market, particularly. North American Mitsubishi car dealers could be offered Suzuki franchises instead, if they are in “open” areas, otherwise “sorry the make is dead, here’s a check.”
Suzuki would keep the Evolution name for sure, obviously also Lancer. GM has mostly divested itself from much ownership of Suzuki, it is only a couple of percentage points (because Suzuki acts as a parts supplier to GM in some markets).
Does anyone else sense a major implosion at the UAW?
Gettlefinger has really lost credibility in the eyes of the rank and file and the UAW, without job assurances) aren’t going to sign jack!
Does make me wonder whether Chrysler’s negoitators have something on Mr Gettlefinger in order to get him to present that laughable package to the rank and file? Maybe a seat on the board? Or am I really being harsh here……?
I totally agree with Mr Glenn126 for his idea of tying up with Mitsubishi (Also, thank you again for the driving tips for the States!). But there is one slight problem with his plan. Mitsubishi still aren’t at full power yet, so I wouldn’t think a tie up with them would be any time soon. I do know that Hyundai are having union troubles in South Korea and considering they did work together (many moons ago), there could be a policy of outsourcing production of Hyundai cars to Chrysler? I’m sure Chrysler would welcome the opportunity to put some of that excess capacity to work!
Failing that, a tie up with a European manufacturer would be good. FIAT are expanding and would love a chance at the US market again and Peugeot-Citroen would similarly like that opportunity also. Just stay away from the Germans!
For Chrysler to successfully expand into new markets (i.e India and China) and expand in markets with a small presence (i.e Europe) then they must create a small car. Which means, a tie up with Mitsubishi, FIAT or Peugeot-Citroen, might not just be an option, it might be their ONLY option………?
Ahhh, the beauty of private equity. The playing field has changed. RG and company need a new bag o’ tricks. Can they sell the value of their organization to both sides of the table?
Here’s a photo of the (quite up-market from the Japanese) Taiwanese variant of the Mitsu Lancer
http://www.globalautoindex.com/model.plt?no=6538&ass=#
You can see how a Chrysler grill would look right at home, and Chrysler would be able to market a 3-box, small, luxuriously appointed sedan to conservative Americans and Canadians looking to (once again, for Americans) down-size their cars.
I heard the price of gas is going up 20 cents a gallon within a week, in the US, BTW. A barrel of oil was exceeding $90 the other day, still is over $88.
Here’s a photo of the Australian Mitsu 380 (Galant) – you can see that once again, a Chrysler grill would look fine right there – as a temporary stop-gap. Certainly, the car would “at least” be a nicer looking vehicle than the Sebring sedan…. (but that is like saying it’s better to lose a fingernail than an arm)
http://www.globalautoindex.com/model.plt?no=5234&ass=
Click on the photos to make them bigger
Katie, I like your ideas. Perhaps it’s all being negotiated in “smoke filled rooms” now – can you imagine the tie-up of Chryserbrus, Nissan and Renault, Fiat, Mitsubishi and Suzuki? Now, that would be some tie-up. Some chance of future survival once the next recession comes along? (My prediction is that smaller companies will not survive – including about 75% of the Chinese outfits now in production).
It’d take “forever” to work out how to carve costs from vehicles unless the plan was to merge a couple of operations here, then there, then finally the whole enchelada together.
Whoops, maybe not…. that’s what lost us Studebaker and Packard!
The “original plan” was for Studebaker to be bought by Packard (it was), for Hudson to be bought by Nash (it was), then for Packard and Nash to merge (never happened). Mr. Mason, the force behind the entire plan, passed away and Mr. Romney (yep, the father of the guy running for Prez.) didn’t like his counterpart at Packard, so nixed the deal. (Though 1955 and 1956 Nash and Hudson “senior” cars used Packard V8 engines and Ultramatic automatic transmissions developed by Packard….)
I’m “semi-officially” going to be your friendly bloggerhood automotive historian, by the way, as I’ve sent off & joined the Society of Automotive Historians.
We have to face it. The US automotive market is no longer growing – actaually contracting. This means the market has matured and the players who cannot carve out a sustainable niche will disappear.
Hamstrung by bad management, much too powerful bean counters, yes man product czars and greedy unions has left Chrysler in dire straights…again. Add to the fact that union management is now looking out for their ownselvers rather than rank and file members – we have the exact same situation of why the workers unionized in the first place.
I think it’s high time the union’s back was broken and a equity firm backed Chrysler is the way to do it. Chrysler’s market share is dropping and product lines are almost dried up. Chrysler has for so long lived off of one hail mary pass to another. Unfortunately, you get only so many chances and I think Chrysler has used them all up.
As a Canadian auto worker its not my place to comment on my US brothers and sisters decisions.
Having said that , I can see where the rank and file at Chrysler would have some doubts. The GM-UAW was ratified,with “job security”Before the ink was dry G.M. dumped a shift at the Buick plant another at Pontiac-truck and a so called temp shift of the big Crossovers.
I do have a lot of respect for Ron G. I believe he is the right man, at the right time.I think its time to more upfront with the membership,tell it like it is and let the chips fall where they may.
“I do know that Hyundai are having union troubles in South Korea and considering they did work together (many moons ago), there could be a policy of outsourcing production of Hyundai cars to Chrysler? I’m sure Chrysler would welcome the opportunity to put some of that excess capacity to work!”
AAck! No! My next vehicle will be a Tucson, please, please don’t let Chrysler touch it! My peeling paint Dakota is enough!
John
Mikey: Being that you in the UAW, what is the feeling amoung the troops of your union having control of the billions of dollars in the VEBA?
Mikey is in the CAW, not the UAW.
Glenn126:
I agree with most of your ideas, except the idea of Mitsu disapearing into Suzuki. Suzuki Lancer Evolution just doesn’t have the same ring to it. Sure, the ‘Busa is pretty notch, and their other sport bikes kick ass, but something like the Evo? Nah, screw that.
Back room deals are a reality. Going back a ways to 1997, GM Canada and the CAW (during contract negotiations/plant occupation) did a nasty back room deal that sold the GM Oshawa North Plant (parts/fabrication) to Peregrine (A private U.S parts maker). Because the union leaders (Buzz Hargrove & Alan Loyst) allowed GM to sell the plant, the company gave job protection for the remaining Canadian workers. Boy oh boy were the workers at the sold plant very upset to find their leader sold them out. Workers were lining up to transfer (by seniority) into the other 4 plants in Oshawa (2 car, 1 truck & 1 battery). Many did not make it over to GM again.
example of how a union insider can betray members:
http://www.industrialrelationscentre.com/faculty/alan-loyst.htm
The average Chrysler worker doesn’t believe that his or her employer is about to go under. They don’t appreciate the fact that Chrysler’s lack of a foreign sales safety net makes it especially vulnerable. They don’t understand that one of the world’s richest private equity firms will hang the company out to dry in a New York minute if they think it’s an irredeemable money pit. All they know is that someone’s getting screwed and it’s us. As usual.
Gettelfinger’s mob forgot to sell union members on the idea that Cerberus holds all the cards. Saying that, how could they? Big Ron couldn’t risk calling a “real” strike to get his members in line– because they would have lost. And he couldn’t tell the truth about his position, because he would have been considered weak, and the members might not have bought it anyway. But the truth is neither Gettelfinger nor his members can avoid the truth.
Those are two powerful paragraphs.
Love those dots, Mr Farago.
glenn126, KatiePuckrik
I like your ideas, by a strange coincidence there an article about Ghosn who’s still interested for a tie-up with a US automaker. And I think Chrysler could be under the eyes of Ghosn and Jim Press might study what Renault offer. (Imagine the Logan sold as a “Dodge Dart” or “Dodge Rambler” as I mentionned in this blog)
I think a tie-up with Fiat or Peugeot-Citroen could be better but currently they both have a joint-venture with Ford-Europe (next-gen Ford Ka will be based on the Fiat 500 and Peugeot is on a joint-venture diesel with Ford). But then if a “CNR” (Chrylser-Nissan-Renault”) or a “CRN”(Chrysler-Renault-Nissan) attract Mitsubishi to the mold, things could get interesting. And the next question is if the FTA (Federal Trade commision) in the US and the COMP in Europe will allow this?
Then between Renault and the Chineses manufacturers, Renault seems to be the less evil of the 2.
What seems key is that UAW members at Chrysler are very different from those at GM. The (older) GM workers just want to ride into retirement over the next few years, while the (younger) Chrysler workers want to be around for a while. And so the 2-tier wage system makes a lot more sense for GM than for Chrysler. It’s okay to shoo current GM workers out the door and replace them with cheaper ones, but it’s apparently not okay to do that with Chrysler workers.
I think a solution would be to offer huge buyouts to Chrysler workers. Open that wallet, Cerberus!
Holy Cow! It is 1:00 am in the morning and here I am at my computer reading about how Chrysler workers don’t want to approve a contract that pays them $25 to $30 an hour with benefits when today I was offered a manufacturing job at $11.00 per hour. Health care additional after 90 days. If I survive the 90 day probation period they would be pleased to offer me $13.00 per hour.
Screw you UAW. I hope Chrysler goes under and every one of you greedy people has the opportunity to go thru what I have been going thru looking for a manufacturing job. You could all be good telemarketers at $9.00 per hour or you could go to a manufacturing job that might pay $10.00 to $11.00 per hour and the only job security is that you have a good chance of having a job tomorrow only if you show up today, keep your mouth shut, and work your shift.
When are you UAW people going to learn that nobody owes you nothing. Cerberus is in the business of strip anf flip. Sell off what they can make a profit at and dump the rest. All 45,000 of you UAW members definatly do not make a profit your are the part that will get dumped. There is probally 5 people who will line up at the door for each one of your jobs should they become available. Please, go on strike and let the company go into bankrupsy. I will be in that line looking for your job and may you enjoy $9.00 to be a telemarketer.
When Gettelfinger took Chrysler out on strike he was told, “See you in 2 weeks”. Realizing he had overplayed his hand he accepted the same deal that was offered earlier and ended the strike.
TJ,
Life is odd like that, isn’t it? I mean, I’m here with a college degree and working on my masters making just over sixteen bucks an hour. Meanwhile, just down the highway in Arlington, some guy is getting 60-70k a year screwing a dome light into a Silverado.
Benefits? What are those? I was introduced to our HR department, who said in another month I’ll be able to sign up for a 401k plan. I wish I got pension and a nice gold watch.
Age & loyalty are measurable. GM Canada’s best and most loyal plant was the former parts/fab plant that was sold off. They were loyal and worked hard because many of those workers knew 1st hand what a long strike was about and not being able to pay the bills. Ironically it was the younder ones from the South Oshawa plants that caused the ruckus during the actions in 1997 and came up and surrounded the North Plant (the parts/fab plant whose workers refused to wildcat). In the end the loyal ones got screwed big time. Bottom line is these are private sector companys who only have the shareholder in mind, and unless a very large government handout is offered, their decisions are made internally.
Also, those same loyal workers of the former parts/fab plant made that plant the most productive in Oshawa. Their average age was significantly higher, their sick/personal days were much lower, their number of union backed didsputes/grievances was far lower too. But in the end this is of little value to the employer it seems.
Yep, higher education is supposed to pay better. Not always the case. I could have skipped on my post-secondary education and got a factory job. I would have been substantially financially ahead of where I am 19 years later.
A quick reality check here on the union bashing…
unions have played an excellent role in holding up a certain level of standards that private (non-unionized) employers need to compete against. Without unions being a force to be reckoned with, even the $9-$15 per hour would rarely be offered, we may be working 60-80 hours per week, and yes, maybe even 13 year olds in factories again.
This was the way (up to the 1930’s/40’s)before unions organized the small guys with no voice against employers and government to have minimum standards, benefits and enjoy some of the lifestyle of the rich.
You could even say that unions created the middle class. The middle class has the most influence on money, standards etc because of their numbers in voting. We must be careful to not lose this power once again.
I think I am suffering from schadenfreude.
Somedays:
While we may be there today had it not been for the unions of the past, saying we could go back to that is a far far stretch. Even in my conservative, evil, money grubbing eyes, social conscious would have a massive public outcry against 13 year olds in factories. I can’t speak about going back to an 60-80 hour week, but then again, the only reason I odn’t work more than 40 hours a week is because I am on “contract” work for one of the Detroit 3. If I could work more and get more cash…hell yeah I would do it.
To answer the original question, the UAW bureaucracy is extremely smart. It maintains a massive semi-mafia organization called the “Administration Caucus” throughout the UAW, in every local. They make excellent calculations about what they can and can’t push through.
Mostly they play on fear, such as, “private equity will rape you forcibly if you don’t submit to rape peacefully.”
The ranks are kept unaware of such statements as that by George Meyers, former Pres & CEO of American Motors, reported in the Bloomberg business press: “The distrust is probably warranted,” he said. “It’s clear to me and clear to everybody that Cerberus is loaded. They can come up with whatever is necessary, and they don’t need concessions.”
A person really doesn’t understand the UAW until they have spent several years in the ranks, disputing with the “caucus” and their post-1980 company-union philosophy. LLC
Regarding the argument about Cerberus “holding all the cards,” their empire as I understand it is founded on leveraging assets — real property and its projected value.
The people in that “property,” currently peacefully producing vehicles, have been known in the past to be less than careful with that “property” when overly abused. Seems to me the empire has a vulnerable foundation. LLC
The ultimate bargaining power is the power to walk away.
Cerberus could close Chrysler, take a tax deduction and live to fight another day.
And Gettelfinger knows it.
Wouldn’t a lot of Feinberg’s leveraged debt collapse if he did that?
Sure it would. But any good investor is prepared to take a sooner but smaller loss in order to prevent a future but bigger loss.
I like that philosophy. I will recommend it to all my friends in the UAW.