Contract Negotiations Are More Than One Issue
Itís wrong to assume that this yearís negotiations between the Big 3 and the UAW will be focused on one subject. Plant closings will be a major issue, and rightly so. But there are several other issues that also deserve attention.
Four years ago, when the Big 3 were coming off years of record sales and profits, they agreed to a contract with the UAW that essentially prevented the companies from closing any existing plants.
Over the length of the contract, Ford and DaimlerChrysler have seen a continuing erosion of sales and market share. The Big 3 have gone from days of record profits to, in some cases, record losses.
To their credit, GM, DaimlerChrysler and Ford also have gained in efficiency and productivity at many of their operations, and the UAW has played a major role in helping the companies improve their performance. As a result, they can produce more vehicles with fewer resources, and that includes fewer workers. But the no plant closing agreement has blocked the companies from dramatically bringing down costs and competing with their rivals on a more level playing field. Essentially, an agreement that was intended to save jobs instead is costing jobs by penalizing the companiesí cost competitiveness ó taking away dollars that could go to new products.
Job security has always been an issue with the labor unions. Obviously, preserving jobs is one of their main roles. The UAW has seen a steady decrease in its numbers at automotive plants. Nonetheless, capacity optimization is essential for the future of the companies ó and the union. Like it or not, some plants will have to be shuttered. Itís up to both sides to figure out a way to make a deal that will provide for the long-term benefit of both the Big 3 and the UAW.
The objective for both sides needs to be building great vehicles that will add volume and work, and offset any loss of jobs as competitiveness improves.
When the two sides do reach an agreement on plant closings, here are some other very important issues that also need to be addressed:Health care
ó In 2001, the Big 3 spent more than $8 billion on health care. And that was the year before 2002, when health-care costs soared an average of 12.7 percent ó or about six times the rate of inflation. The skyrocketing cost of health care is strangling not just the Big 3, but all American industry. But somehow, the two sides need to work together pressuring government officials, the pharmaceutical industry and health-care providers on ways to provide affordable health care to all, blue- and white-collar workers, retirees and their dependents.Absenteeism
Ė This issue seems to be the handicap that no one wants to talk about. But the Big 3ís absentee levels at some plants are at least twice as high as their competitors, a penalty cost of up to $300 per vehicle. Protecting people who donít come to work is like arguing against quality. Itís time both sides worked together to develop a tough, nononsense policy on absenteeism, even though it will mean reducing significant numbers of absentee replacements ó in other words, dues-paying union members.Work rules and labor classifications
ó Too many job classifications and work rules in Big 3 plants were designed simply to protect jobs. But in todayís environment, they are driving the elimination of jobs. Some of the best plants, or plants that are striving to become the best, already have eliminated many obsolete and unnecessary classifications and work rules. At the same time, management has not fully restocked skilled trades apprentice programs and many plants, with the reduction of headcount, now lack key skills. Union and management need to recognize that in order to be more competitive, plants need to be more flexible, and so do the workers who are helping companies improve their operations.
When UAW and Big 3 sit down for serious talks, officials undoubtedly will be trying to negotiate the best contract for their respective sides. After all, job security cannot be negotiated. But competitiveness not only will save jobs, it also will create new ones. Itís up to both sides to figure out a way to make a deal that will provide for the longterm benefit of both the Big 3 and the UAW. Ron Harbour is president of Harbour and Associates, manufacturing consultants in Troy, Mich. www.harbourinc.com