LABOR RELATIONS IN THE UNIONIZED AUTOMOBILE ASSEMBLY INDUSTRY IN THE UNITED STATES: 1961-2006
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Transcript of LABOR RELATIONS IN THE UNIONIZED AUTOMOBILE ASSEMBLY INDUSTRY IN THE UNITED STATES: 1961-2006
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LABOR RELATIONS IN THE UNIONIZED AUTOMOBILE
ASSEMBLY INDUSTRY IN THE UNITED STATES: 1961-2006
Richard N. Block
School of Labor and Industrial Relations
Michigan State UniversityFor presentation at Una Agenda Legislativa Local para el CSIANN, Toluca, Mexico, 19-21 July 2006
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Three Time Periods
• 1946-79: Market Dominance and Prosperity
• 1980-2004: Response to Market Competition
• 2005-06: Response to Financial Distress
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1946-79• UAW had organized the industry• Major components of labor relations in autos
established – still exist today– Corporate control over business decisions
unrelated to terms and conditions of employment– Negotiated terms and conditions of employment
• Pattern Bargaining over wages and benefits at corporate level
– Minimized variations in labor costs among competitors
– Objective pay standard for union
• Plant/Local Level bargaining
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1946-79 (continued)• Wages through a formula
– Annual Improvement Factor – COLA
• Wage changes highly predictable• Fringe Benefits
– 11.1% of hourly compensation in 1948– 42% of hourly compensation 1982
• Health insurance• Pensions, “30 and Out”
• Business cycle-related downturns addressed through Supplemental Unemployment Benefits
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1946-79 (continued)• An era of economic dominance of the
automobile industry– All competitors organized– Big Three (GM, Ford, Chrysler) profitable– Wages and benefits of UAW-represented
workers growing
• Collective bargaining outcomes reflected this prosperity
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1980-2004
• Era marked by continuing loss of market share of Big Three unionized firms to non-union non-U.S. manufacturers– Currently stands at about 58%
• Employment drop 1978-1980– 1978 – 782,000– 1980 – 575,000
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U.S. Vehicle Sales, June, 2006
SOURCE: Automotive News
Jun-06 Jun-05 Pct. chng. 6 mos. 2006 6 mos. 2005 Pct. chng.BMW* 27,763 27,030 2.7% 157,414 145,029 8.5%DaimlerChrysler** 206,773 238,302 -13.2% 1,244,631 1,286,687 -3.3%Ford Motor Co. *** 267,862 288,356 -7.1% 1,542,823 1,609,059 -4.1%General Motors **** 407,513 550,829 -26.0% 2,036,037 2,320,621 -12.3%American Honda+ 126,449 126,416 0.0% 741,227 692,364 7.1%Hyundai Group++ 71,951 70,146 2.6% 380,613 367,523 3.6%Isuzu 745 1,289 -42.2% 4,718 7,599 -37.9%Mazda 23,727 22,063 7.5% 140,704 134,988 4.2%Mitsubishi 10,004 10,621 -5.8% 58,361 65,753 -11.2%Nissan+++ 75,154 92,781 -19.0% 511,768 542,724 -5.7%Porsche 2,871 2,551 12.5% 18,601 16,126 15.3%Subaru 18,476 17,946 3.0% 96,026 93,303 2.9%Suzuki 9,516 7,449 27.7% 56,959 42,014 35.6%Toyota^ 223,018 194,875 14.4% 1,223,542 1,114,070 9.8%VW^^ 28,430 26,500 7.3% 158,490 136,115 16.4%Other (estimate) 585 592 -1.2% 3,400 3,170 7.3%TOTAL 1,500,837 1,677,746 -10.5% 8,375,314 8,577,145 -2.4%
Big Three Sales 882,148 1,077,487 4,823,491 5,216,367Big Three Share 58.8% 64.2% 57.6% 60.8%Big Three sales change from '05 -18.1% -7.5%
GM and Ford Sales 675,375 839,185 3,578,860 3,929,680GM and Ford Share 45.0% 50.0% 42.7% 45.8%GM and Ford, Pct. Sales Change from '05 -19.5% -8.9%
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1980-2004 (continued)• Shift of UAW bargaining priorities
– From wage increases to employment security• Health Insurance• Pensions
• During the period 1982-99 UAW and “Big Three” consistently negotiated increasing employment protection for workers while moderating wage increases– Complete employment protection
• Employees not working went into a “Jobs Bank” (at GM) and paid from a fund
– Interplant transfer rights– Plant-level work practices
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1980-2004 (continued)• Employment Security Evolution
– 1982 • income protection and limits on plant closings
– 1984• employment security negotiated• GM and Ford monetary contributions to employment security funds
– 1987• guaranteed employment levels and increased monetary contributions
– 1990 – • 36-week limit on time laid off for sales volume• Increased monetary contributions
– 1996 – Chrysler covered– 1999
• adjustments in employment levels• Increased monetary contributions
– 2003• No changes
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1980-2004, Wage Moderation• Negotiated Wage Increases
– 1961–1980 mean annual increase = 7.2%– 1985-2004 mean annual increase = 3.6%– based on UAW data for GM and Ford
• Real Wage Changes – difference between negotiated wage and inflation rate– 1961-1980, mean annual difference = +.018– 1985-2004, mean annual difference = +.0062
• Employment security contributions to fund added about 4.0% - 4.5% to wages– UAW “purchased” an “employment insurance
policy” with about half their pre-1980’s wage increases
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1980-2004, Employment IssueFIGURE 1
Michigan Motor Vehicle Manufacturing Employment, 1990-2005 (in 1000's)
0
20
40
60
80
100
120
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Year
Em
plo
ym
en
t
S
Source: U.S. Bureau of Labor Statistics
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Motor Vehicle and Manufacturing Employment, Michigan and United States,
1980-2004 (in 1000’s)
Year MichiganUnited States
United States
Excluding Michigan
Percentage in
Michigan
1990 98.5 271.4 172.9 36.3%1991 85.1 258.4 173.3 32.9%1992 89.5 259.9 170.4 34.4%1993 84.4 263.7 179.3 32.0%1994 88.2 281.5 193.3 31.3%1995 88.0 294.7 206.7 29.9%1996 80.9 285.3 204.4 28.4%1997 84.7 286.8 202.1 29.5%1998 90.4 283.6 193.2 31.9%1999 90.7 291.3 200.6 31.1%2000 94.3 291.4 197.1 32.4%2001 89.0 278.7 189.7 31.9%2002 82.1 265.4 183.3 30.9%2003 75.4 264.6 189.2 28.5%2004 70.8 255.9 185.1 27.7%
Absolute Change, 1990-
2004 -27.7 -15.5 12.2Percentage
Change, 1990-2004 -28.1% -5.7% 7.1% -23.8%
SOURCE: United States Bureau of Labor Statistics
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2005-2006• Bargaining in Financial Distress
– Losses for U.S. companies in 2005• GM - US$10 billion• Ford – US$1.6 billion in North America• Delphi bankruptcy (employees may return to GM)
– Health Care – “Legacy Costs”• Active Employees at GM and Ford
– Foregoing wage increases
• Retirees– Increase cost sharing for retirees with higher pensions
• No legacy costs at nonunion firms
– Early Retirement at GM• Early retirement incentives of US$35,000 – US$140,000
– Accepted by 35,000 GM workers– Younger workers must sever relationship with GM
• No such agreement at Ford
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North American Free Trade Agreement (NAFTA)
• No evidence that problems of U.S.-based automakers are substantially due to NAFTA
• Employment security provisions have likely encouraged GM and Ford to invest in U.S. while creating wage moderation
• Non-U.S.-based manufacturers continuing to invest in U.S., but not in (unionized) Michigan
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Conclusions• Labor relations strategies and outcomes in
unionized sector of U.S. automotive assembly industry have changed as economic circumstances of product market and firms and representation needs of members have changed
• Flexible response of labor relations system• No reason to think that UAW and bargaining will
be an impediment to recovery of U.S. firms if companies appropriately involve UAW
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Lessons for Automotive Unions in Mexico
• Company wants right to make business decisions, but does not mean they will make good decisions– Union affected by those decisions– Wisdom of UAW leaving these decisions to company?
• Legal issues in U.S.
• Be aggressive in influencing government policy– Health care– Industrial policy
• Consider a European-style social partnership model