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The Chrysler-UAW Deal

May 2 marked the third anniversary of the death of Harry Bernstein (who died in 2006, at age 83), the celebrated labor writer for the Los Angeles Times.  The Times hired Bernstein in 1962 to write a weekly column about labor union issues, the first such column in the fanatically pro-business newspaper’s long history.  The column ran, in the Business section, all the way until 1993.

Anyone who followed Harry’s career, and came to respect his eccentric but egalitarian pro-union slant, has to wonder what he would have thought of Chrysler’s Chapter 11 and the UAW’s soon-to-be substantial stake in the company.

Given how much of a “workplace democracy” booster Harry was (he was one of the first labor writers to promote the philosophy of Dr. Edwards Deming), it’s fair to surmise he would’ve welcomed it—albeit with a healthy list of qualifications.

I first encountered Harry in the summer of 1983, when, out of the blue, he phoned our AWPPW union hall, asking for details on the strike we had just called against the Kimberly-Clark Corporation.  With the hall in a state of near chaos, and no one officially assigned to man the desk or deal with the media, I just happened to be the person who picked up the telephone.

Things were incredibly tense.  Because the strike came as a surprise (it was the first shutdown in 20 years), the union hall was filling up with people who wanted to know what was going on, how long the strike would last, when strike benefits would kick in, how much the benefits would be, plus a hundred other questions.  Without air-conditioning, in the middle of July in Southern California—and with, literally, a hundred people crammed into it—this low-slung, cramped room was like bad real estate in Hell.

We’d been on the bricks, officially, for all of four hours (we shut down at noon, and it was now 4:00 PM), and yet the LA Times had already gotten the story and was sniffing around for more.  For reasons that I admit were totally irrational, the notion of a newspaper reporter aggressively invading our privacy, looking for an angle, infuriated me.  I accused him of having the same morbid fascination with our shutdown that sicko people had with gory traffic accidents.

Harry calmly replied that the labor beat was the way he made his living, and that he was simply trying to gather more information.  In his gentlemanly, North Carolina drawl, he respectfully suggested that if I was unable to handle the pressure, I might consider passing the baton to someone else (ouch).

I abruptly ended the discussion by rattling off the reasons we had called the strike (I’d been sitting at the negotiating table for four months and knew them by heart), and invited him to call back later in the week, which he did.  Despite this rocky start, we sort of became friends, and talked regularly over the next several years.

One of Harry’s sage (and often repeated) observations was that unions must distinguish between what they want and what they need.  Instead of looking for bosses who were wildly generous or enlightened or forgiving or easily intimidated, etc., labor unions should, instead, be looking for bosses who were smart—smart enough to keep the company afloat—because the one thing unions needed more than anything else was a reliable place to work.

Yes, a union is going to battle management over wages, benefits and working conditions—and Harry heartily approved of that militancy because he knew it was the only way workers could get what’s coming to them—but for that battle to be sustainable, they have to have a healthy enterprise.

Corporate hubris and arrogance were his favorite targets.  It angered and frustrated him that management didn’t trust their own workers enough to tap into their on-the-job expertise.  This Chrysler (and General Motors) debacle is a good example of that.

Already the long-knives are out, with everyone blaming everyone else for this Chrysler mess.  Business groups are blaming the union for having been too greedy, and the union is blaming management for poor planning and demonstrating an almost criminal case of myopia.  Although critics of the UAW are trying to make $28 per hour sound like a princely wage, when’s the last time you gushed when someone walked in the room and boasted of making $56,000 a year?

More to the point, those decent, $28 per hour jobs are dinosaurs.  The current entry rate at a UAW plant is $14 per hour.  That part of the American Dream—where the country’s factory workers were allowed to belong to the middle-class—is more or less over.

Not only has the UAW made extraordinary concessions in wages and benefits, but America’s manufacturing sector has had to listen for decades to insulting accusations that we can’t compete with foreigners because, alas, Americans simply “aren’t good enough workers.”  We’re too spoiled.

Of course, that myth of the “spoiled American worker” has been utterly destroyed by the fact that Toyota, Nissan, Honda, Mercedes, BMW, Volvo, Hyundai, and Kia have built manufacturing plants all over the American South, and getting huge subsidies from those state governments to do it.

If Toyota honestly believed the American worker couldn’t assemble a decent car, they wouldn’t have built several plants in this country.  In truth, what these foreign companies most love about Dixie (besides the billions of dollars in subsides) is the low wages, the lax pollution standards, and the anti-union bias.  Sort of reminiscent of what the U.S. likes about the Third World, no?

The way this Chrysler arrangement is structured, the UAW’s massive VEBA (Voluntary Employee Beneficiary Association) fund will control 55-percent of the equity in the company once it clears bankruptcy.  In addition to a majority share of the company, the UAW will be given a seat on the Chrysler board of directors.

While this is being hyped as a bold and dramatic move, it can also be argued that it’s largely a symbolic gesture.  After all, what will having one seat and one vote really matter? Granted, as a board member, you’ll be able to examine the books close up, just like the rest of the boys, but beyond that you’ll be all but ignored.

In 1980, a big deal was made of giving Douglas Fraser, then president of the UAW, a seat on Chrysler’s board of directors.  Big deal or not, nothing much came of it.  Even though Fraser was a bona fide board member, he was still a lone voice in the wilderness.  The measures passed the board by a vote of 19 to 1.  (“Thanks for your input, Doug.”)

For this Chrysler partnership to pan out, the automaker needs to be successful, because owning 55-percent of a failed enterprise is suspiciously close to owning 55-percent of nothing.  And even with the Fiat merger (and Fiat’s CEO’s brilliant track record), there is great cause for concern, as Chrysler’s sales in April dropped 48 per cent.  Clearly, they’ll be digging themselves out of a deep hole, with the union clinging to their backs.

Still, even with all the negatives, uncertainties and platitudes—and despite the UAW being called “sellouts” and “dupes”—the union had no choice but to go for this deal.  Their members’ pensions are protected by the Treasury Department, and their retiree medical benefits are well-funded.   It was a calculated move.

Was this Chrysler arrangement something the UAW hoped for?  Absolutely not.  Never.  Would they have predicted, in their wildest dreams, that something like this could ever happen?  Again, no.  But it’s the hand they were dealt, and they’re playing it the smartest way they know how.

DAVID MACARAY, a Los Angeles playwright (“Americana,” “Larva Boy”) and writer, was a former labor union rep.  He can be reached at dmacaray@earthlink.net

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David Macaray is a playwright and author. His newest book is How To Win Friends and Avoid Sacred Cows.  He can be reached at dmacaray@gmail.com

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