Many US employers break away from industrywide union pacts
Follow-the-leader may still be fun for children to play, but as an approach to labor negotiations it is falling out of favor rather rapidly. ``Instead of looking outward -- to industry patterns -- employers are looking inward, to profitability and to unit labor costs, to set their bargaining objectives,'' says Audrey Freedman, chief labor economist at the Conference Board in New York.
Moreover, the wage rigidity that had seemed so ``endemic'' during the 1970s, despite periods of high unemployment, seems to be disappearing; well into the third year of economic recovery, wage increases remain moderate, Ms. Freedman notes. ``Competition is breaking up patterns, and so is the weakening of union power.''
Let's consider the recent negotiations between the United Rubber Workers and the Big Four tiremakers. Over the past several days, Goodrich, Goodyear, Uniroyal, and Firestone have all announced tentative agreements.
Both Goodyear's agreement and Firestone's, which was announced just Sunday, have ``followed the leader,'' in this case Goodrich, as regards ``economic issues.'' All three accords allow for wage increases of 43 cents an hour over three years, plus a cost-of-living allowance expected to amount to around $1.89 an hour over three years.
(Uniroyal, already in the news because of a report of a takeover bid by the Ethyl Corporation of Richmond, Va., announced its tentative settlement Friday but gave no details.)
But unlike Goodrich, Goodyear is offering its union employees a 401(k) retirement savings program if they accept a health insurance plan requiring some deductibles and co-payments.
And Firestone, whose representatives went into negotiations a few weeks ago declaring, ``The days of rich pattern settlements are over,'' insists it is ``tailoring the pattern'' to its own needs. ``There are some noneconomic issues unique to Firestone -- regarding in-plant work rules and procedures,'' says Firestone spokesman Bob Troyer, on which his company will differ from the pattern. He declined to discuss these in detail until the union membership could be briefed.
Pattern settlements may be in the eye of the beholder, however. URW spokesman Curt Brown calls the Firestone accord ``an extremely good agreement'' and says the health care programs included are in harmony with the union's medical cost containment goals.
As for Firestone's comments on ``tailoring,'' he notes, ``Each company has things unique to it,'' but the pattern bargaining concept came through ``100 percent'' in these latest negotiations, he says.
Less ambiguous was the announcement late last week of the dissolution of the Steel Companies Coordinating Committee. The committee, made up of five major US steelmakers, had bargained in concert with the United Steelworkers of America for nearly three decades. The current USW contract runs through August 1986.
A spokesman for US Steel, one of the five companies of the committee, said there was ``no particular significance'' to the timing of the decision, but that it grew out of routine contact among the members.
He cited the changing structure of the steel market, the presence of imports, and the varying competitive positions of the different steelmakers as the reasons they no longer feel coordinated bargaining meets their needs.
``Twenty-five to 30 percent of steel in this country is imported. Some producers are sourcing semifinished steel offshore and finishing it here. Then there are joint ventures: the one between National Steel and a Japanese producer, for example, and Wheeling Pittsburgh has one of those too.''
Some producers, he adds, are benefited by their financial woes. ``The advantage can be with companies who are failing,'' says the spokesman, since Chapter 11 reorganization plans often allow a troubled company to throw its expensive labor accords out the window.
USW officials admit they generally have favored the committee system. But the decision to disband the committee is ``not viewed as a setback for our membership,'' said USW president Lynn Williams. ``We are well prepared to negotiate with each steel company in a coordinated fashion.''
Says Ms. Freedman, ``The pattern settlements of the past weren't so much the result of the bargaining skills of the unions as of the market power of the employers. They were able to absorb the cost of pattern settlements.''
The old industrial monoliths just aren't what they used to be. ``[Teamsters president] Jackie Presser, for example, still talks about the `nationwide contract,' . . . but it just isn't the same anymore,'' Ms. Freedman says.
Meatpacking, nonferrous metals, and retail trade are some other industries where pattern bargaining is diminishing in influence.
One important factor is that the current economic recovery has left the unions behind.
Echoing the comments from the US Steel spokesman quoted above, Freedman observes, ``You think of an industry like steel as being 100 percent unionized. But 20 percent of our steel is imported -- and so nonunion. And since cars are practically all steel, you've got to count imported cars as part of the nonunion sector of the steel market. And then there are the mini-mills,'' also nonunion.
Thus the ``solidly unionized'' steel industry is actually less than half unionized, Freedman says. ``Even an industry as sleepy as steel is competing with itself.''
The situation in other industries is even more intense. And other industries are even more competitive. Similar analyses are possible with other industries -- such as the Western timber industry.
Forest products hardly seems like a smokestack industry, but the major Northwestern timber producers face some of the same difficulties as the domestic steel producers: competition from low-cost nonunion plants, as high-wage operations are sold to smaller, independent companies, and pressure pressure from imports, in this case from Canada.
One major company, Louisiana-Pacific, based in Portland, Ore., decided in June 1983 not to bargain in concert with the Western States Wood Products Employers' Association. It endured a strike and decertification elections.
The remaining members of the group struck an agreement with the unions, but the troubled state of the forest products market has had them seeking some sort of midterm concessions over the past few months.
``But while they was no fundamental disagreement, they couldn't establish a uniform position'' on just what concessions to seek, says Lee Bjorklund, director of internal communications at the Weyerhaeuser Company in Federal Way, Wash.
Accordingly, the employers' association gave its members authority to negotiate independently with the unions.
Mr. Bjorklund added, ``I wouldn't even speculate about 1986 as to multiemployer bargaining.''