Friday, June 16, 2006

New UAW honchos should have hunch about difficult task

Friday, June 16, 2006
Daniel Howes
New UAW honchos should have hunch about difficult task

Memo to the new United Auto Workers leadership, back from Las Vegas for their first day of work:

Seventeen years ago, the fall of the Berlin Wall sparked a series of unprecedented political and economic change across Europe that culminated 25 months later in the dissolution of the Soviet Union, a realignment of the only global order most of us ever knew. China began to open its economy; India sloughed off the shackles of postwar socialism; and 3 billion new consumers entered the global economy.

Detroit's auto industry and the union that defines many of its weaknesses are roughly seven months into their own Berlin Wall transformation, a 23-month span framed by Delphi Corp.'s bankruptcy filing last Oct. 8 and the expiration in mid-September 2007 of the national contract between the UAW and Big Auto.

Bottom line: These companies and this union won't be anything like they are today when Christmas 2007 rolls around. They'll be smaller, their operations will be leaner and their contracts won't be as rich as they've been because they can't be -- no matter how loudly the UAW's hard-line members complain.

Tougher times ahead?

You, led by second-term President Ron Gettelfinger, face a historic opportunity to remake the union, a journey fraught with unsavory choices, or to lead the 71-year-old union into oblivion because the choices are simply too difficult. You're partly there, witness the historic buyout offers from Delphi and its former parent, General Motors Corp., but this is just the beginning.

Interest rates are rising, which makes financing new cars and trucks more expensive for consumers. Gas prices are eating deeper into disposable incomes, making Detroit's bread-and-butter light trucks less attractive to drive -- all ingredients, Deutsche Bank said Thursday, of an industry slowdown next year.

Rejiggering union contracts to ease financial pressure on GM, Ford Motor and Chrysler isn't coming to an end. Nor is the financial pressure on the international union itself, which voted this week to dip into its strike fund to pay operating expenses.

In business, they call that "burning cash." And that means, thanks to a mass exodus of dues-paying members eager to snag buyouts and slip into retirement, you'll probably be facing your own painful restructuring.

There are opportunities

GM and Ford are likely to emerge stronger from these wrenching workouts, even if there's no guarantee they can deliver the other side of the equation and woo more buyers than they already do. But make no mistake: GM's Rick Wagoner and Ford's Bill Ford need your help to dig out of this mess.

Ford is poised to give you a chance to get your foot in the door at the foreign-owned automakers. In exchange for a world-class contract with few job classifications and flexible work rules, Ford is prepared to put its "low-cost" plant down South near one of its Asian rivals, effectively giving you a new kind of platform to organize the so-far unorganizable.

That's too good to pass up because your tenure will be defined by what you do, not what you say.

Daniel Howes' column appears Mondays, Wednesdays and Fridays. He can be reached at (313) 222-2106 or Catch him Fridays with Paul W. Smith on NewsTalk 760-WJR.


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