In the essay below, labor journalist Kim
Moody argues that the Chrysler bailout of 1979-1980 broke the system of pattern
bargaining in the core industrial sector. Pattern bargaining was based on the
union’s attempt to standardize wages in respective industries. It had been a
major accomplishment in core industries such as auto, packinghouse, steel and
various other industries in the period from 1945-1970. The breaking of the
pattern bargaining structure in the 1980s
touched off a wave of concessions and givebacks that weakened unions and
lowered wages. Initially, many unionists thought that such concessions were
mere temporary retreats designed to save jobs and help out hard-pressed
employers. Moody shows that, while relatively few jobs were saved, dozens of
employers demanded-and won-wage concessions of their own, regardless of the
financial health of their enterprises.
Modem business unionism in the United
States has never developed a method of dealing with large-scale business
failure. In the postwar period, companies came and went, but most of the
industries in which unions were based continued to provide jobs. If Packard
went under, it was probably because GM, Ford, or Chrysler beat it in the US
market. But as long as the US market grew and the players were US firms producing
for a domestic market, the failure of one firm probably meant more work at
another- minus the tolerated annual loss of jobs due to new technology and
higher productivity. Business unionists therefore didn't worry much about
corporate failures.
In the automobile industry, however, the
rules changed. For one thing, the number of passenger car producers dwindled to
four, meaning that any failure would have a significant impact. The growing
penetration of the US market by imports, particularly following the oil price
increases of 1973 and the recession of 1974-75, meant that the production lost
from a failure could be picked up by an overseas firm. US producers stuck with
big cars, so the Japanese and others took a larger piece of the market by introducing
smaller, more fuel-efficient products. By 1981 they had captured 29% of the
market. This might not have mattered if the US market had continued to expand
rapidly, but it didn't. The US and Canadian market shrank from 61% of total
world demand for cars in 1960 to 37% in 1980....
[New investment by US industrial firms
was increasingly financed by borrowing from banks rather than by using
internally generated funds. In auto, the Big Three all adopted the same growth
strategy: first, in the 1950s, expansion in the large, more profitable big-car
market; second, expansion abroad. GM was the leader in both strategies, with
Ford a close second. Chrysler, however, was in bad shape. . . . By mid-1979
Chrysler had a total debt of $1.5 billion and a payment schedule it could not
meet. In 1979 Chrysler unveiled its high-priced New Yorker and St. Regis
models, which had cost $57 million in retooling, just as OPEC announced another
oil price increase. In mid-1979 the company had 80,000 cars in unsold inventory
valued at $700 million.
Negotiations for a bailout had begun
even before the disaster of 1979. John Riccardo had been in close touch with
the forty or so banks that had held Chrysler's debt since 1976. Negotiations
with the Carter administration and the UAW [United Auto Workers) had been under
way during 1978 even before Lee Iacocca became president of the company in
November 1979. Indeed, by early 1979 Chrysler had worked out a $750 million
line of credit with domestic banks and another $400 million with Japanese
banks. On 9 August 1979, Secretary of the Treasury G. William Miller announced
that the US government would provide $750 million in loan guarantees. But the
banks wanted more than federal guarantees. . . . They wanted concessions from
the union as part of a plan to reorganize Chrysler.
... The wage and benefit concessions made
to the Chrysler Corporation in October 1979 were pushed through by the UAW
leadership as a sign of good faith to Chrysler's bankers and an incentive to
Congress to pass the Chrysler Loan Guarantee Act. Certainly no one thought a
six-month wage freeze, the surrender of six paid holidays, and the deferment of
pension increases would solve Chrysler's financial problems. But the bankers
were still hesitant about extending Chrysler's line of credit, President Carter
was not yet committed to the plan, and congressmen outside the Rust Belt states
were wondering how all this would look in the 1980 elections. The concessions
agreement was more a political act than an economic one.
The consequences of this political act,
however, were profoundly economic. One of the largest, most powerful industrial
unions in the US had demonstrated that wage and benefit bargaining was not a
one-way street. Congress got the message right away. In January 1980 it made
passage of the bill contingent on further concessions. The UAW accepted the
loss of seventeen paid holidays and the continued delay of all pay raises for
Chryser’s hourly workers. A year later, Lee Iacocca asked the union for additional
concessions package worth $673 million.
The Federal Loan Guarantee Board backed Iacocca. These concessions ...
put Chrysler workers about $3 an hour behind workers at Ford and GM,
introducing a economic element in Big Three bargaining. The pattern,
established decades earlier, was broken.
From the start, the UAW leadership
pushed hard to sell the cuts the members. At each stage, the UAW sent out
letters to all workers.... By 1981 the union had the concessions formula down
pat: ". . . without the sacrifices, there will be no loan for Chrysler and
jobs will go under along with the company."
UAW Vice President Mark Stepp, who was in
charge of selling 1981 agreement to the Chrysler Council (suborganization of
union’s bargaining team), tried to convince the union delegates that the
agreement was another one of the UAW's " precedent-setting breakthroughs.
He claimed that Chrysler had signed a letter of agreement granting "the
right for workers to have something to say about their destiny." What
Chrysler agreed to were joint union/management
committees that could discuss problems voiced by employees. Far from
being a new instrument of power, they were another step toward the surrender
autonomous union power....
Neither this fact nor the economic logic
of breaking the pattern lost on the other automakers. A Ford spokesman told the
Detroit Press, "You can bet we're watching Chrysler's efforts with
a good deal of interest. We haven't
done it [ask for concessions] yet, but we'll see happens on this go-around with
Chrysler." GM Chairman Roger Smith was even more to the point: "You
cannot have a two-tier industry." In other words, Chrysler now had a
competitive advantage. In February, Business Week carried an article
entitled "Pleas for Wage Relief Flood into the UAW." In the first
nine months of 1981 the UAW's Research Department assessed seventy-five
requests for concessions. The union's early plea that the Chrysler case was
exceptional went out the window.
The pressure mounted on the UAW all
through 1981, and in December the International Executive Board reversed its
previous refusal to reopen the Ford and GM contracts. In February 1982 the UAW
agreed to sweeping concessions at Ford. All paid personal holidays (a shorter
worktime program initiated in 1976 to help create jobs) were ended. The 3%
annual improvement factor, first negotiated in 1948, was dropped, and three
COLA [cost of living adjustments] and all pension increases were deferred. The
deal was estimated to be worth $1 billion to Ford. In April GM got the same
agreement, saving $3 billion over twenty-nine months....
The Chrysler concessions were not the
first such give-backs. Companies in rubber, aerospace, meatpacking and other
industries had demanded and sometimes received concessions. But the Chrysler
bailout was a highly visible public event. And the UAW contracts with the Big
Three were arguably the backbone of the entire pattern structure of industrial
collective bargaining. If the UAW, a strong union with a reputation for
militancy, could put bargaining based
on company performance and competitiveness ahead of the traditional pattern,
why not others?
The spread of concessionary bargaining
was rapid. Following the GM settlement, the seven corporations covered by the
Basic Steel Agreement asked the USW [United Steel Workers] to open the contract
and make concessions. This proposal was rejected by Steelworkers local union
pres- idents in 1982. But by the end of the year, major concessions had been
negotiated in airlines, meatpacking, agricultural implements, trucking,
grocery, rubber, among smaller steel firms, and in public employment. The years
1979 through 1982 might be termed the first round of concessionary bargaining.
These were recession years and a number of the industries in which give-backs
were made were experiencing financial or competitive problems. Labor, therefore
played down the importance of concessions, calling it a temporary
phenomenon....
But employers didn't see it that way. A
1982 survey of four hundred corporate executives (from both profitable and
ailing firms) by Business Week revealed that 19% of them said
that, "although we don't need concessions, we are taking advantage of the
bargaining climate to ask for them." Profitable firms that received
concessions during the first round included GM, Kroger, Iowa Beef, Gulf Oil,
Texaco, Caterpillar Tractor, and United Parcel Service. Furthermore, some of
the industries involved were not declining industries like auto or steel, but growing
ones like trucking, meat- packing, and even airlines. In these industries, the
specific problem was the growth of a nonunion, substandard sector within an
industry that had become competitive in the domestic market. The airline
unions, with their history of craft, company-by-company bargaining, were
unprepared for the competitive atmosphere that deregulation brought. In the
case of trucking (which was also deregulated) and meatpacking, the Teamsters
and United Food and Commercial Workers, respectively, adopted policies of
granting concessions-piecemeal in trucking, across the board in meatpacking-
which inevitably accelerated the employer drive for concessions.
The second round of concessions
bargaining, beginning in the economic recovery year of 1983 and going through
1985, opened with major concessions in the Basic Steel Agreement.... In
February 1983 the USW granted the seven major steel firms a $1.25-an-hour wage
cut, the loss of six COLA payments, reductions in vacation time, and the reduction
of Sunday pay to time and a quarter. The pact was said to be worth $3 billion
to the steelmakers. It specified that the wage cut would eventually be
restored, but future rounds of concessions negated that part of the agreement.
Phelps Dodge also took on members of the USW at its copper-mining facilities in
the Southwest. This led to a long, bitter and Ultimately unsuccessful strike,
with the company imposing deep cuts on a nonunion workforce. The Teamsters
signed the second National Master Freight Agreement to contain across-the-board
concessions, including a two-tier wage scale, loss of the COLA, and concessions
on production standards. The second round also saw profitable firms such as
Greyhound, the three major aerospace corporations, the major oil refiners,
Hormel, and growing service industries like the hotel industry demand
concessions with all the insistence of Chrysler or General Motors.
By the end of the second round of
concessions, the nation was in its third year of economic recovery. Concessionary
bargaining had crossed industry lines, and unions in some industries had made
their second set of give-backs. The notion that concessions were a temporary
phenomenon visited only on ailing industries and firms was no longer
tenable....
The impact of concessions goes beyond
wage rates, however. It has hit other benefits with increasing force. The
Bureau of Labor Statistics [BLS] publishes data on total compensation (wages
and benefits) only for new contracts covering 5,000 or more workers, but this
series reveals the same downward trend. The average first-year adjustment for
total wages and benefits fell from 10.2% in the private nonfarm economy in 1981
to 1.1% in 1986, indicating that declines in the larger bargaining units were
even greater than in the others. Cost-of-living clauses have been another major
casualty of concessionary bargaining. In 1979 about 600/o of all workers under
major contracts (covering 1,000 workers or more) were covered by COLAS.
According to the BLS's figures, only 50% of those covered by major contracts
had-COLAs by 1983; by 1986 the figure, had fallen to 31%.
In the face of worker impatience with
second and third rounds of demands for concessions, the employers looked for
new formulas that would induce employed workers to ratify concessionary
contracts. One such de- vice was the lump-sum or bonus payment-a one-shot
amount of money that would not be folded into the wage rate, but would be large
enough to produce ratification or cooperation for the moment. The effect of
lump- sum payments on worker income was substantial. According to the Wall Street
Journal, "While many corporate executives are promoting the bonus
programs as a tool to share the wealth and increase productivity, the plans
clearly mean less money for most workers." Because of the compounding
effect of regular annual increases in the wage rate, lump-sum payments over the
life of a contract can mean a lot less money. For example, a worker making
$8.00 an hour just before a new contract would gain about $2,000 over the
three-year life of the contract if his/her wage rate were increased 2% a year.
A 2% annual bonus, on the other hand, would produce only $1,000 in three years.
Further,
a lump-sum payment would mean that in the following bar- gaining round the wage
"platform" would be the same as it had been three years earlier. In
both these ways, bonuses perpetuated wage deceleration and avoided cost
increases in premium pay (overtime, weekends, holidays, and so on) or benefits
based on wage rates....
Another device that captured capital's
imagination for a period was the two-tier wage system. It allowed the employer
to hire new workers at wage rates below those of current employees. Short-term
"starting rates" were not new, but the two-tier plans of the 1980s
either created a permanent lower stratum of employees, at least until all the
higher paid workers retired, or a prolonged wage gap between the two groups of
workers. Since a two- tier system required no sacrifice from those currently employed,
it was often easier to sell than a straight wage cut or freeze. Of course, it
also undermined the potential solidarity of the workforce because two groups of
workers were performing the same work for different pay. These schemes became
popular in 1983, and 800,000 workers were covered by contracts with two-tier
structures by 1984. . . . The largest single contract to adopt two-tier pay was
the Teamsters' 1985 National Master Freight Agreement. The union that
negotiated the largest number of two-tier agreements was the United Food and
Commercial Workers, which signed 87 of the 261 two- tier agreements negotiated
in 1983-85, most of them in the retail grocery industry....
The first round of concessions had
focused on wages and benefits, but concessions on working conditions, work
rules, production standards and other aspects of the workplace regime became
increasingly common in the second and third rounds....
The significance of contract language
regulating working conditions through such means as job classifications, work
rules, and production standards is often seen by the public or even by
unaffected groups of workers as something anachronistic or irrational. In fact,
such regulations are necessary for the functioning of most systems of
production. Workers engaged in the collective production of goods or services
must know what they are doing, where their responsibilities begin and end, and
agree on a manageable rate of work so that the different operations are
properly coordinated. The more complex the operation, the greater the need for
universal rules. Otherwise, the result is simply chaos. Frederick Taylor and
the "scientific management" school recognized this principle as much
as any trade union. The difference, of course, was that management wants the
right to set these rules as it sees fit, while labor needs to shape the rules
to protect itself.
There is no greater efficiency
inherent in management's version of work regulation than labor's....
[Mlanagement's attempts to define work rules are shaped by its need to control
labor, not by any technically objective standard of efficiency. Indeed, the
literature of industrial relations under- lying such programs as Quality of
Work Life recognizes the inevitability of management inefficiency. This is
because the workers who collectively perform the complex operations of modern
industry have a better under- standing of what is really involved in their work
than do managers who have no hands-on experience. Management attempts to
increase efficiency often simply produce low-quality products or services. In
the end, all forms of workplace regulation reflect a large element of
subjective self-interest.
From the standpoint of labor, work
rules, job classifications and other methods by which the union attempts to
regulate the organization, pace, and quality of work are essential and rational
forms of protection. Management cannot arbitrarily load one individual or group
with more tasks, combine jobs to reduce the workforce, or deprive a worker of
the work he or she was hired to do. Union regulations are also important to
safety. Management's disregard for safety in large-scale operations is
well-known.
Workers can be endangered if they are
pushed to perform work they are not familiar with. The existence of clearly
defined jobs also provides some choice for workers with different abilities and
temperaments. It is a fact that workers often bid for jobs with no difference
in pay and will even take a pay cut if the work suits them better. Finally, the
existence of established rules gives the workplace union some power.
Work-to-rule is, of course, an important means of asserting union power-one
reason management would like to dump such rules.
In general, modern industrial unionism
preferred to leave the workplace regime to the control of management and its
modification to the local union. Job classifications are often spelled out in
national contracts for the purpose of establishing wage rates, but detailed
work rules are seldom a part of national agreements. Employer demands for
modifications in work rules during national negotiations usually take the form
of getting the international union's permission to bargain with locals for such
changes. Work-rule concessions at the plant and local union level accelerated
in the second half of the 1980s, further undermining pattern bargaining and the
trade union principle of common work standards....
Standard wages, benefits and
conditions are the economic foundation of unionism. They underwrite the
solidarity of the membership by establishing an egalitarian means of
determining wages and benefits in place of employer favoritism or external
economic criteria. But standardization is also the objective basis for both the
defense of living standards and for future improvements. In 1909 John R.
Commons noted that in order for any group of workers to raise their wages above
a given market level they would have to "take wages out of
competition." This meant standardizing wages throughout a particular labor
market regardless of the competitive pressures on the employers.
Except for rare cases of true monopoly
(for example, AT&T until very recently), all employers producing and
selling the same (or substitutable) goods or services are in competition in a
capitalist society. Labor, no matter how well organized, cannot eliminate the
competition among employers, but it can eliminate the competition among
workers. In Commons's time, most labor markets and unionized employers were
local or regional. The major exceptions were coal, firearms and rail transport.
The new basic industries such as steel were still nonunion. Most unions were
craft unions.. They attempted to "take wages out of competition" by
establishing a standard union rate and forcing employers to hire only from the
union. This involved either organizing all the workers in the same craft in a
given market or driving nonunion workers out of the market in one way or
another. In general, only the building trades unions were successful in this
effort, and their success was often based on ethnic exclusivity and racial
discrimination. This craft approach to suppressing competition among work- ers
was basic to the old business unionism of the American Federation of Labor.
Industrial unionism approached the question
of eliminating competition among workers in an entirely different way. Rather
than working to limit the labor market or exclude potentially competitive
workers, the industrial unions attempted to organize all the workers in the
industry. The industrial union approach was inclusive rather than exclusive,
national or even intemational rather than local or regional. The unions then
fought to standardize wages, benefits and conditions for all the workers.
Industrial unionism was egalitarian in that all workers performing similar work
received the same package of wages and benefit standardized through the
mechanism of pattern bargaining....
[Als long as the economy grew these
patterns functioned as a means of protecting and improving the living standards
of millions of workers. They provided a measure of protection not only for
those directly covered by the major industrial patterns, but for workers
performing similar or related work in the thousands of new plants built during
the three decades following 1950-at least those fortunate enough to be
organized into unions. Workers outside of manufacturing-for example, in
transportation and communications-also benefited from the first major patterns
as they established their own in the 1950s and 1960s. Eventually, after the
mid-1960s, even public employees were able to bargain on the basis of
"comparability," that is, the standards set in private industry for
similar work. There is even evidence that union pay levels and benefits have a
spillover effect on non- union employers in the same industry.
For this system of pattern bargaining
to work, the major patterns must remain intact. 'But ... the structure of the
patterns started to deteriorate in 1948, when the major industrial unions
ceased to present the same demands at the same time. Pattern bargaining then
became specific to each industry. Beginning in the 1960s, nonunion sectors
developed in most industries, slowly at first, then rapidly, putting increased
competitive pressure on the patterns. In the 1970s import competition in some
industries added to this pressure. The main effect here, however, was not to
put US workers into direct wage competition with overseas workers (a. situation
the employers could not have imposed due to the magnitude of the wage gap) but
to intensify domestic competition. The simultaneous crisis of profitability
gave the employers the incentive they needed to break the "social
compact" on which US labor relations were based. The rise of a
competitive, nonunion sector in one industry after another gave them the first
lever. Ultimately, however, it was the cooperative posture of business unionism
in accepting concessions that turned a crack in the patterns into a flood of
concessions.
In October 1979 the UAW's acquiescence to
concessions put Chrysler workers' wages into competition. Beneath all the
language about saving jobs, the UAW leadership demonstrated its willingness to
make wages, benefits and then working conditions subject to competitive
bargaining. The pattern in auto was broken, and the standard that upheld worker
solidarity eliminated. Naturally, the other US automakers moved to end
Chrysler's advantage by reducing the pay and fringe benefits of their own
workers. A degree of wage parity was reestablished in 1985, but by that time
the automakers had imposed bidding between plants (in which work rules were
bartered for alleged job security) and the dynamic of competition was out of
control.
In other industries, concessions were
made on a "pattern" basis-that 'is, all the firms covered by the
pattern agreement were given wage relief. This was the case in meatpacking in
1982 and 1984, steel in 1983, and trucking in 1982 and again in 1985. The
unions believed that this strategy would prevent the breakup of the patterns
because it preserved a standard. In fact, it simply opened the door to
competitive bargaining. The wage freeze granted major meatpackers by the United
Food and Commercial Workers [UFCWI was aimed at reducing pressure on the local
unions to grant concessions by giving the companies under the pattern a break
in relation to the lower wages of newer nonpattern firms, union and nonunion
alike. The Teamsters granted concessions to make union firms more competitive
with nonunion operators. The USWA gave the seven basic steel corporations wage
cuts to help them meet overseas competition. But once a union agreed to
concessions in an industry with a lower pay, nonpattern sector (union or not),
wages and other forms of compensation were put into competition, and the
resulting centrifugal forces were hard to reverse. Smelling blood, the
employers refused to limit their demands for conces- sions to the orderly
process the unions hoped for.
If many labor leaders did not seem to
grasp the economics of the situation, capital and its advisers understood it
perfectly. Charles Lieberman, an economist for Shearson/American Express,
explained it to Wall Street Journal readers: "Unlike the major
industrial economies of Europe, the US labor market is becoming progressively
more competitive. This development reflects the gradual erosion of the power of
labor unions as well as the impact of deregulation." . .
The centrifugal force of concessionary
bargaining was nowhere more graphically demonstrated than in meatpacking. The
meatpacking industry went through a series of structural changes in the 1960s
and 1970s. Many old plants were closed as the companies opened new ones outside
the industry's traditional centers in Chicago and Kansas City. Conglomerates
bought several of the major packers, in many cases divesting them later.
Meatpacking faced no serious competition from imports, nor was the industry as
a whole in crisis, unlike auto or steel. But as new firms entered the industry,
a substandard, competitive sector developed. Toward the end of the 1970s
pressure from numerous companies, both profitable and un- profitable, began to
convince UFCW local unions that they had no choice but to make concessions. One
UFCW staffer said at the time: "After Chrysler- went down, we started
getting hit by very aggressive moves from the companies for mid-term
concessions. They were hitting the local unions and trying to turn them against
the International."
In 1981 the UFCW leadership came up
with the utterly remarkable idea that the best way to stem the tide of
concessions being made by locals in the pork-producing sector of meatpacking
was to grant a wage freeze to all the companies -under the pattern agreement.
In a letter to all affected meatpacking locals dated 18 December 1991, UFCW Presieent William Wynn announced the four
objectives of the union's new strategy: 1) to "preserve and expand master
agreements," 2) "to bring lower wage operators more in line with
master agreement companies," 3) to resist "mid- term contract
concessions," and 4) to "minimize the wave of plant closings."
Predictably, Wynn's strategy achieved none of these aims.
The voluntary offer of a wage freeze
put the pattern wages into active competition by granting relief to the pattern
employers. Here, as elsewhere, this simply unleashed the desire of employers
for a further improvement in their competitive position. The master agreement
in the pork sector fragmented. Lewie Anderson, head of the UFCW's Packinghouse
Committee, told the Wall Street Journal that in the first eighteen
months of the new agreement the number of workers receiving the pattern rate of
$10.69 an hour had dropped from 50,000 to 30,000. Far from creating an orderly
closing of the wage gap as other firms raised wages, the industry experienced a
rapid downward spiral in wages. According to US Labor Department figures, the
average hourly wage in meatpacking plants went from $9.19 in January 1982, when
the UFCW's voluntary 44-month wage freeze went into effect, to $7.93 in January
1985. In addition, a number of the sub- standard firms got further concessions
during that period, fouling the union's plans to raise off-pattem wages....
... The situation in the industry
remained chaotic, and the companies pushed for further concessions in 1984. The
UFCW did not have to reopen the contract, which didn't expire until September
1985, but it did, granting a $1.69-an-hour wage reduction to those employers
still under the pattern. The basic labor rate in plants still under the
pattern, mostly Hormel and Oscar Mayer plants, was $9 an hour. The new
agreement called for an increase to $10 an hour in September 1985. The UFCW
claimed that by 1985 concessions would be over, but it was wrong. In Tennessee,
where Oscar Mayer workers had avoided the $1.69 wage cut, the company demanded
a $.69 cut in October 1985 to bring that plant's rate. down to the level of the
others. In Detroit, UFCW Local 26 suffered three defeats in late 1985 and early
1986. Kowalski Sausage broke the UFCW at its plant and cut wages. Hygrade
workers took a cut from $10.69 to $9.50 with an additional $.80-an-hour
reduction in benefits in February 1986 after a six- week strike. Thorne Apple
Valley 'which already paid below the pattern
rate, imposed a wage freeze in February 1986 after a three-week strike....
Beginning in 1986, the UFCW did manage
to win wage increases at some plants.
At Swift and Armour Dial (but not the ConAgra-owned plants) wages were raised
to $10 an hour in September 1986. Most Hormel and Oscar Mayer plants went to
$10.25 in September 1986 and were slated to reai-h $10.70 in September 1988. By
1988, the best of the new contracts would recover a rate first negotiated in
1979 and implemented in 1981. Real wages would be far below the level reached
at the beginning of the decade. And there was no longer an industry pattern.
These contracts, which rep- resent a tiny minority of the workers once covered
by the pattern, no longer cover the same period-that is, Swift, Armour Dial,
and Morrell are behind by a year and below the wage levels at Hormel and Oscar Mayer, which
means that the former companies have a competitive advantage. Even within the
two remaining single-company "chain" agreements, not all of the
plants at Hormel or Oscar Mayer receive the same rate. For example, workers
performing slaughtering at Oscar Mayer's Perry, Iowa, plant receive less than
workers doing processing. These contracts were negotiated at the height of an
economic recovery; given the domination of competitive rates in the industry,
it is quite likely that another round of concessionary demands will emerge in
the next recession....
The competitive logic that shatters
industry-wide patterns also tends to penetrate any company with duplicate
operations or the ability to out- source production. Companies demanded that
local unions make concessions, usually on working conditions or work rules,
with the threat that if they didn't give in the work would go elsewhere. This
tactic emerged in the auto industry after the Chrysler bailout....
In the fall of 1981, Ford told workers
at its Sheffield, Alabama, aluminum casting plant that it would close the plant
if they did not agree to a 50% cut in wages and benefits. The casting could be
done elsewhere. At the same time, Ford
asked Local 182 at its Livonia, Michigan, plant for a number of work-rule
changes, making explicit the threat to move work away from the plant. Bill
Grenham, financial secretary of the local, said: "Management told us there
were other manufacturers that want this job. They're looking to get it done for
the lowest possible price." At the same time, Ford won concessions from
three Detroit-area UAW locals, awarding them work on new projects. In the case
of two of the locals, Ford let it be known that it was considering sending the
projects to Toyo Kogyo, a Japanese firm that is 25% Ford-owned. The notion of
bidding for future work then supplemented the threat of plant closings....
Bidding wars between plants thus
became a regular feature of labor relations in the auto industry. As one UAW
local official put it: "The threat to close plants also helps these large
corporations pressure different plants into a bid war against each other for
their jobs. The corporations want to cut labor costs and the workers are giving
without receiving any return value." . . .
By 1987 competitive bargaining on a
local union basis was widespread. The Wall Street Journal noted that
"12 of GM's 22 assembly plants now have 'competitive' agreements, in most
cases because the local unions agreed to reopen local contracts before their
September 1987 expiration." Most of the local contract changes involved
reducingjob classifications and changing other work rules. By 1987, Chrysler
had negotiated "modem operating agreements" at five of its remaining
thirty-one plants.
The trend toward competitive local
bargaining on the basis of working conditions suggested that even wage
bargaining might be put on a plant- by-plant basis. In these cases, the
competition is not limited to plants within the same firm, but to those
performing similar work in the industry, even where outsourcing is not likely.
This has already occurred in meatpacking, where workers performing slaughtering
in the higher wage companies are paid less than workers doing other jobs
because of the existence of sub- standard plants in the industry. At Firestone
Tire, four of the company's eight plants pay wages below the national contract,
meaning, as the Wall Street Journal pointed out, that "the company
really doesn't have a national wage rate." Taking the collapse of pattern
bargaining in steel one step further, the 1986 contract at Armco established
different wage rates at most of the company's four plants. The Ashland,
Kentucky plant accepted a wage freeze, two plants in Kansas City took wage and
benefit cuts of $2.25 an hour, and the Baltimore plant took a $3.25-an-hour
reduction. In all likelihood, the Armco agreement will set a precedent for
future bargaining in a number of industries that employ dual or multisourcing
of their com- ponents or products....
The entire rationale for making
concessions has been that they will, in one way or another, save jobs. This
rationale has advanced from an argument for a temporary or exceptional
modification of bargaining practices and contracts to a basic component of
business unionist ideology for many union officials-committed as they are to
shifting the union to a nonadversarial relationship with industry. However, few
have put it as bluntly as UAW Vice President Don Ephlin, who announced that the
role of the union in this era is to "reverse the rapid decline of
America's manufacturing industries and help restore US competitiveness where it
counts, in the battle for markets and jobs." In this view, concessions,
like protectionism or labor-management cooperation, are just one means to that
end.
Top union leaders do not mean by such
statements that they plan to save all existing jobs. Since they share the
company's concern about being competitive, they accept that rationalizations,
new technology and other labor-saving steps will be needed. Nevertheless, when
selling a contract to the members who are worried sick about losing their jobs,
this more businesslike view of saving some jobs by allowing the company
to cut labor costs is seldom mentioned. The concessions, they argue, will save
jobs. But do they?
By the mid-1980s the record indicated
that the answer is no, concessions do not save jobs or plants. A study of
twenty-two tire plants that made concessions between 1977 and 1981 showed that
all but five of them closed anyway. In 1983, the same year that it received
concessions from the USW, US Steel announced plans to close one-third of its
remaining steel capacity as well as various finishing and fabricating mills.
Chrysler, of course, closed several plants as part of the bailout operation and
continued closing plants after returning to profitability....
One reason that concessions don't save
jobs is that labor costs are seldom the cause of a corporation's or industry's
financial problems. During the 1970s labor costs as a proportion of total costs
shrank in the economy as a whole and in manufacturing. On an
industry-by-industry basis, the manufacturing industries ... saw labor costs
decline or remain stable as a proportion of sales in 1976-80. Wages and
benefits rose, but the cost of other industrial inputs rose faster.
Business
itself did not see concessions as a means of salvation. One steel industry
executive told Business Week, "I don't think you can get enough
money out of wage cuts in the long run to save the industry." Ernest
Savoie, Ford's director of labor relations, was even more specific: "The
factors outside collective bargaining far outstrip the gains we can make in
wages and benefits. We could cut labor costs in half and still be
uncompetitive."
Indeed, labor costs are about 25% to
35% of total costs in most manufacturing industries where concessions have
become common. Concessions to this or that firm make little real difference to
a large multinational corporation. If concessions are to make a difference they
must be gener- alized so that the entire cost structure of the economy is
transformed. This was a goal that the Business Roundtable sought through
legislation in the 1970s. In the 1980s, concessions and union cooperation in
making other changes that reduce costs in the long run became central to
capital's strategy for enhancing the overall competitiveness of the US economy.
Ford's Savoie explained that what employers wanted was "a bending of the
labor cost trend line." He went on to say that he saw the concessionary
contracts of recent years as a "transference from we vs. they to us;
from adversarial to converging; from rigidity to flexibility; and from partisan
to common interest." . . . .1
The team concept, or the
"transference from we vs. they to us," became popular with
management in the late 1970s and early 1980s for precisely the same reasons
that they began to demand concessions: to involve the union in improving the
competitive position of the company, the industry, and the nation in the
interests of capital and at the expense of labor. Concessions relieve capital
of burdens that it believes undermine its ability to increase profits. But what
capital really seeks is an entire change in the rules. When it is able to rid
itself of unions completely, it does so. When the union is entrenched, it looks
for another way. The "team concept" provides a permanent,
institutional change in day-to-day company operations and labor relations.
Concessions seek to tie worker
compensation to company performance and to eliminate work rules that stand
between the workers and management's will. The team approach bypasses such
rules altogether. Its focus is not on
wages or benefits per se, but on productivity, the exploitation of the workers'
understanding of the production process, and above all the consciousness of the
worker.
These sorts of programs go by various
names: team concept, employee involvement, labor/management participation team,
quality circles, and perhaps most commonly, quality of work life (QWL).
Whatever the name, they share the purpose of getting workers to identify with
company goals. Depending on the particular scheme, the union is either
integrated into this process or marginalized altogether. . . . Obviously, it is
more difficult to eliminate union functions where an entrenched union exists.
So most QWL programs set up parallel or alternative structures that involve
rank-and-file members, shopfloor union officials, and supervisors as part of
the same team or group.
However, QWL programs are ultimately
directed at the of the workers. They seek not simply to get union leaders to to
integrate the union, but to change how the workers perceive their own position
in production and, hence, how they see unionism as well....
QWL programs do this by appealing to
genuinely felt needs. Like concessions, they seem to offer a way to protect
jobs by helping the employer. But unlike concessions they offer a
positive-sounding approach. They are designed to appeal to the worker's need to
be treated as an intelligent human being who understands what he or she is
doing either individually or as part of a group. QWL programs promise to
listen to the workers, to take their suggestions about production methods
seriously, to gie them "a say." The workers are encouraged to
"participate" in solving -he company's problems....
The point of departure of QWL programs
and the team concept is the language of industrial democracy and worker
participation, but the goal is something quite different: acceptance by the
workers of management's Competitive imperative as a day-to-day guiding
principle of behavior. Obviously, workers with that sort of consciousness would
not see much point
"arbitrary" union standards beyond.the pension and social
insurance provided for in the union contract. It is hardly surprising, then,
that some of the most aggressive companies, like GM and USX, not to mention
nonunion companies like IBM, are among the greatest proponents of QWL
programs....
In spite of the disastrous effect of concessions on union bargaining power, the clear intent of QWL programs as a "union substitute," and the complete failure of the "power-sharing" approach to alter real power relations one iota, much of the US labor leadership continues to hold out labor-management cooperation or nonadversarial labor relations as some sort of alternative to the collapse of the old system of collective bargaining based on pattern bargaining supported by governmental regulation. In fact, the popularity of nonadversarial labor relations reflects the conversion of a large number of union leaders to the competitive logic of the business enterprise, a fact that has given rise to the term enterprise unionism. Enterprise unionism differs from company unionism in that the union involved and administered independently of the employer. Its identity with the goals of the employer is less an ideological preference for norms than an adaptation to the effects of intensified.competition in a global economy. But in the end, it signals the decline of industrial unionism.