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Auto Workers of the World Unite . . .

January 25, 2006; Page A12
The Wall Street Journal, op-ed

General Motors and Ford, bleeding cash and market share, have vowed to cut 60,000 jobs over the next half-dozen years. So far, though, they have been unable to request, much less obtain, more than token economic first-aid from the United Automobile Workers. A recent modest health-care "give-up" proposal at Ford provoked angry union militants to accuse their president, Ron Gettlefinger, of rank appeasement and was endorsed by a vote of only 51% to 49%. Ford's announcement of its "Way Forward" downsizing has led UAW leaders to grouse that both auto makers should be mobilizing to increase sales rather than engaging in brutal cutbacks.

The collective bargaining negotiations upcoming in 2007 loom as a likely auto industry Armageddon, in stark contrast to a rising trend among similarly threatened industries in Germany, where unions are quietly customizing deals to protect jobs and preserve employers. The evident unwillingness of the UAW rank-and-file to participate in that sort of salvation effort is a legacy of the union's justly admired founder, Walter Reuther, an inheritance likely to prove now progressively more obsolete and self-defeating.

* * *
Reuther (1907-1970) was an old-fashioned American lefty, a breed now long extinct. Growing up in the household of an ardently Socialist immigrant father, he and his dad in 1917 visited party leader Eugene Debs during his controversial incarceration for opposition to American involvement in World War I. It made a lasting impression.

Reuther became a tool-and-die maker at Ford, the pinnacle of auto worker technical achievements. In the midst of the Great Depression, Walter and his brother Victor worked for two years at the Gorky automobile factory in the USSR, designed by Ford for the Stalin regime. The experience left Reuther with a firm antipathy toward communism and communist labor factions in the U.S. He believed that they cynically subordinated worker interest to political ambition.

On his return, he became active in the infant UAW and on May 26, 1937, became engraved into the national conscience. He and other UAW leaders, engaged in a leafleting effort at the Miller Road gate of Ford's River Rouge complex, were confronted by club-wielding thugs led by Henry Ford's confidante, ex-boxer Harry Bennett. The resulting "Battle of the Overpass" and its one-sided bloodletting, photographed by Scotty Kilpatrick of the Detroit News and widely circulated in Life, Time and other outlets, shocked the country.

Inevitably, the persistent worker "sitdown" occupations of their plants, combined with pressure from the Roosevelt administration's National Labor Relations Board, led to the unionization of all American auto makers. In 1946, Reuther was elected president of the UAW after a longstanding struggle against a faction led by Homer Martin, George Addes and Richard Frankensteen, which was considered -- probably accurately -- as Communist. It was almost surely an outgrowth of this intramural conflict that prompted a 1948 shotgun blast through Reuther's kitchen window, which left his right arm permanently damaged.

As leader of his union, Reuther was a stubborn and tactically brilliant negotiator. He repeatedly challenged the auto makers to prove that they were economically unable to meet his demands, and invented the concept of a "target company." For each collective bargaining cycle, the UAW selected one auto maker for negotiation: It might be the weakest and most vulnerable to a strike threat, or the strongest and most able to provide a generous settlement. The contract hammered out with the target company became the "pattern" applied to everyone else. In 1948, Reuther also invented the linking of worker compensation to inflation through an automatic cost-of-living (COLA) escalator.

Walter Reuther created the foundation of the entire panoply of worker benefits that now contribute to the overall cost sclerosis at GM and Ford. But the aspect of his legacy that currently weighs most heavily on the future of these auto makers was philosophic.

First was the cultivation among UAW members of a primary attachment to the union rather than to their employers. The employer was an adversary to be confronted rather than an ally to which workers owed loyalty and support.

Second was Reuther's belief that the UAW should never allow itself to influence competition among auto makers by differentiating contract terms. Wages, hours, benefits and work rules were to be identical. Even as the weakest companies -- Studebaker, Hudson, Packard -- foundered in the '40s and '50s, Reuther's UAW made little effort to throw them a life preserver. Indeed, there was little reason to do so since overall industry growth in that period readily absorbed displaced UAW members.

Reuther died in 1970, and it was only a decade later, with Chrysler teetering on the edge of insolvency, did then-UAW President Douglas Fraser allow that company some relief from the established-pattern terms. This gesture and his accession to Chrysler's board of directors, together with a modest federal loan guarantee and Lee Iacocca's inspired managerial improvisation, saved the company. But Mr. Fraser's actions came late in the Chrysler crisis and it was all a close-run thing.

Walter Reuther could not have foreseen the competitive world that Doug Fraser faced, much less today's. In the year of his death, American companies still held 87% of the U.S. market. Only Volkswagen, among offshore auto makers, sold as many as half a million vehicles here. Toyota and Datsun jointly accounted for about a quarter million and the coming of Honda was still five years in the future. Indeed the big story in 1970 was a three-month UAW strike at GM, which cost that company more than a million units of production.

The habit of confrontation established by Reuther, though, deeply impedes the willingness of his union to seek creative quid pro quos that might help GM and Ford avoid bankruptcies -- bankruptcies that would undermine their credibility among potential customers and lead to likely voiding of collective bargaining agreements. Throughout Germany, in contrast, unions affiliated with the IG Metall confederation -- many of them in the auto-parts sector -- have quietly been making the company-specific deals with employers that Reuther abhorred, in order to prevent the shifting of production to lower-wage venues and to guarantee job security. The German unions' most frequent concessions have given employers greater control over work hours, extended the work day without additional compensation, applied lower wages to new employees and reduced year-end bonuses.

The UAW, instead, seems to be falling into a policy of angry negativism. GM and Ford, despite the intensity of their problems, are viewed as still-rich enterprises afflicted with managerial ineptness who will just have to figure things out for themselves. It remains an "us versus them" kind of world at Solidarity House, the UAW's Detroit headquarters. By refusing to become involved in solutions to the auto makers' problems, as Doug Fraser found it desirable to do 25 years ago, the UAW makes itself into an increasingly prominent part of those problems.

* * *
In the late '70s, I figured in a singular reflection of the consequences to the UAW, both then and now, of the Reuther philosophy. My consulting firm was engaged by Nissan to advise it on key issues related to the establishment of what became the second Japanese-owned auto assembly plant in the U.S. One of them was labor relations.

Nissan was predisposed toward replicating its situation in Japan, where it has a company union which, in turn, maintains ties to a relatively weak national federation. Despite traditional theatrics around annual wage negotiations, Nissan's Japanese workers are deeply loyal to the company and proud of their affiliation with it.

We told Nissan that autonomous company-specific unions were a rarity in the U.S. and tended to be absorbed by strong national federations. Its real choice, then, was between the UAW and no union at all. We wrote a briefing book on the history of the UAW, striving to make it unbiased. We stressed the union's social progressiveness and its lack of corruption. But we also stressed its commitment, stemming from Reuther, to identical treatment of all auto makers.

The Nissan management struggled with this, weighing its traditional attachment to dealing with a workers' organization against the likelihood that the UAW would force it into work practices identical to those of GM or Ford or Chrysler. This was not at all what it had in mind. It prompted a painful decision, one that went deeply against the grain, but Nissan chose to reject UAW overtures to unionize its new Smyrna, Tenn., plant. It sent nearly 400 of its initial work force for training in Japan, most of them at a twin plant in Kyushu to learn its ways alongside Japanese counterparts on Kyushu's production line. Many of these Tennesseans had never been farther from home than Nashville.

Nissan adopted also a number of important symbolic gestures. All employees, including top executives, wore identical work uniforms. Production workers were empowered to stop the assembly line if they perceived any problem affecting quality. There were no reserved parking spaces nor was there an executive dining room. Smyrna quickly became the most productive auto plant in the U.S., with the highest level of objectively measured product quality, an eminence it continues to enjoy.

Three separate UAW organizing efforts have all foundered at Smyrna. No later Asian auto maker plant unaffiliated with the Big Three has ever been organized either.

Walter Reuther was an undoubted great man. However, the persistence in the contemporary UAW of his intractability, understandable though it may have been in his own time, ensures a continuation of the worst of all outcomes -- a shrinkage of employers and the disappearance of jobs.

Mr. Schnapp led the auto industry practice at Mercer Management Consulting and had a longstanding column on the industry in the Detroit News.

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