Automakers Start Contract Talks

IT'S 45 miles to work, but Sam Stodt doesn't mind the drive.

For the last eight years, Mr. Stodt has spent more time laid off than on the job. When he reports for work each day, he wonders if he will be getting another pink slip. But now the 47-year-old millwright says he thinks he is in line for a permanent assignment at the General Motors Corporation (GM) assembly plant here in Michigan's capital city.

On June 21, GM announced that it will transfer production of the Chevrolet Cavalier from a plant in Mexico to the Lansing line. The decision is the result of a deal with the United Autoworkers Union (UAW) that is designed to make the Michigan factory more cost competitive.

Employees will have to work harder and smarter, but it will create new work for nearly 1,000 laid-off workers.

"I've seen what happens to people when they lose their jobs: suicides, divorce," Stodt says. "In a competitive market like this, I'm willing to make some concessions. It's worth it to have a job."

Jobs. The overriding issue of last year's presidential race is likely to be the central theme this summer as the Big Three United States automakers go to the bargaining table with the UAW for their triennial contract talks.

Twenty years ago, the UAW counted 1.5 million members. Today, that figure is less than 800,000, and is still in steep decline. General Motors alone plans to cut 74,000 jobs in the next two years as it struggles to reverse recent multibillion-dollar losses.

Fittingly, this year's round of contract talks begin at GM June 23. The UAW wants the automaker to scale back the cutbacks. But GM President John Smith warns that there are only two ways to save jobs: an upturn in new-car sales and a more productive work force.

"If we get productive, hopefully we'll sell more cars, and then we'll need more workers," he says.

The agreement in Lansing is a positive sign. It suggests that union and management are working hard to overcome decades of mistrust. Since Mr. Smith was named to lead GM last year, "we have had more talk, more mutual agreements, more working together than we have had in our history," says UAW Vice President Stephen Yokich.

GM is actually playing catch-up. The Ford Motor Company helped usher in this new era of cooperation back in the early 1980s. The payoff is that Ford now operates some of the world's most efficient auto-assembly lines. The Chrysler Corporation is also opening its books to the union as it tries to reshape products and processes.

"The union is much more aware of the competitive situation," says David Cole, director of the University of Michigan's automotive studies department. "They know the companies have to be earning money to ensure union jobs."

Despite the progress both sides have made, the upcoming negotiations will not be easy. "Not everything is perfect," cautions the UAW's Mr. Yokich. "There are times we will disagree."

The carmakers are balking at demands for new job guarantees. GM has had to shell out more than $3 billion since 1990 to provide a "Guaranteed Income Stream" for laid-off workers.

And collectively, the Big Three want concessions from UAW workers at their component plants. Employees assembling wiring harnesses and bumpers collect wages and benefits totaling over $42 an hour. That is triple the labor costs of nonunion suppliers, and more than 10 times the wages paid workers in Mexico.

So far, the union has ruled out a "two tier" wage structure where component workers would earn less than those on the assembly line.

The UAW is also ready to fight proposed cuts in health-care benefits, which cover virtually every penny for medical, dental, and vision care. But the cost is high. Ford spends more each year on health care than on steel. On average, the automakers spend roughly $1,000 per car for health-care benefits. That is more than double what the Japanese shell out, and it has created a serious competitive disadvantage.

The health-care debate could be sidelined, however, if bargainers decide to wait for the Clinton administration program.

And if anything, suggests labor analyst Harley Shaiken, the two sides may try to find expedient ways to sidestep any issue they cannot resolve.

"My sense is that everybody will try to avoid a strike at this time," says Mr. Shaiken, a professor at the University of California at San Diego. Both labor and management, he says, realize that in today's competitive market, a strike only benefits the competition.