UAW/Chrysler deal slowly not failing…

Chrysler workers at three of four key United Auto Workers union locals voting Wednesday approved a new contract with the company, the presidents of the locals said.

…

Votes were still being tallied Wednesday night at Local 1700 in Sterling Heights. That local represents 2,500 workers who make the Chrysler Sebring and Dodge Avenger midsize cars.

The votes were good news for UAW President Ron Gettelfinger, who has faced serious challenges from some members opposed to the deal. The tentative agreement must be ratified by a majority of members to go into effect.

The four union locals voting Wednesday represent more than 8,600 workers – or roughly 19 percent of the 45,000 workers who would be covered by the historic four-year agreement.

It is interesting to see that which, usually, has indicated success, across the board. This time, however, mere percentages aren’t helping. Somebody get Dan Rather.

Eight local unions representing more than 16,000 workers have now turned down the landmark pact, while nine locals representing about 15,200 workers have approved it. It’s nearly impossible to keep a running total because most local union officials give out only percentages and not the number of people who voted. Also, officials of some smaller locals could not be reached or would not give out results.

Gary Chaison, a labor specialist at Clark University in Worcester, Mass., said the discontent with the contract is a sign of a union in disarray.

“Each local is looking out for themselves now,” Chaison said. “The larger locals, the big assembly locals, see the most to lose in terms of job cuts. They feel they can oppose the national officers.”

Interestingly, little to no importance (either in reporting or negotiation) has been given to the (new) Cerberus ownership of Chrysler. I’m not suggesting this is related – it could have just been that such ownership made up the impetus needed to really push back against the UAW and extract some real concessions (and I’m not even convinced that manufacturing cars people only want thanks to tax cuts is in America’s real interests, anyway).

One has to hand it to them, though: a fractured union, two-tiered workforce, self-interested locals displaying little cohesion or solidarity. If Cerberus’d made a list of cool things to do when they bought Chrysler, these would have rated well above whiskers on kittens.

UAW/Chrysler deal slowly failing

Having just written a UAW story. I’m not even a labour economist (hell, I don’t even drive).

Workers at three more United Auto Workers locals have rejected a tentative contract agreement between the union and Chrysler LLC, casting doubt on whether the deal will be ratified.

…

Although final totals from the 45,000 workers voting on the pact won’t be made known until next week, the size and locations of the locals voting no are not good signs for leaders in Detroit, said Harley Shaiken, a professor at the University of California at Berkeley who specializes in labor issues.

“The early results are abysmal,” Shaiken said. “Members have sent a message of considerable unrest.”

Given that the UAW/GM deal barely passed, overall (65% or so for, from memory), the pessimism and bad feeling setting in is a fairly bad sign (I think), concerning the ultimate prospects. The factories voting differ somewhat, though – specifically in terms of the future expectations of workers.

… 14 of 21 factories … have no future products to make after the current product life cycle or the life of the new contract. Seven were to get future products.

… McDonaugh, who favors the contract, said the vote was better than expected because the Newark plant is slated to be closed by the company. He was appalled at locals voting down the agreement at plants with future product guarantees and accused dissidents of spreading misinformation.

Many “noncore” workers at his plant thought their pay would be cut in half to around $14 per hour under the new contract, but McDonaugh said that isn’t true.

“The language states, no current seniority worker will be assigned entry-level wages even if they are classified in non-core jobs,” McDonaugh said. “They will be on the fork trucks, handling the material and working in the tool stores until they retire, quit or die,” he said.

One can see a problem asking a plant set for closure to vote on a new contract. However, this is still a workers’ union – is there solidarity or is there not? Surely the UAW can reasonably expect it. Given the high risk of the two-tiered workforce driving big splits in unionised labour, the smooth functioning of the workforce (the power of collective bargaining when it’s only half of the collective), to see bitter votes pushing towards the first failure of ratification in a couple of decades (and maybe it’s about time?) can hardly raise smiles in union offices.

There is also the voting itself – is a majority of members, or of plants, required? Reading the AP story, it seems that their success stories come from substantially smaller plants than those at which the ratification is failing.

To “save” the domestic auto industry, the union may end up killing itself

Columnist for the Nation Max Fraser made this his principle assessment of that last, mad rush to close the Summer and the Summer’s negotiations, for the United Auto Workers.

The historic concessions made by the United Auto Workers, billed as necessary measures to keep the reeling Big Three from bankruptcy, in fact represent something far more ominous. To “save” the domestic auto industry, the union may end up killing itself.

This is a fair assessment (allowing for the trouble the union is having with ratification for the Chrysler deal. The GM deal was ratified – just). The union has protected – more or less – its current members, but has done so at the cost of getting many more. Having established two tiers of auto workers – the new hires, the “non-core” hires, will cost around a third less (depending upon the estimates I see), so the odds of them giving any of what’s left to the union that created that tier is small. Even allowing for the argument that, without that concession, the jobs wouldn’t exist, on any tier (Communication Workers Union, if you’re reading…).

Fraser looks, with some clarity (and some subjectivity, but that’s cool, too) to the future:

… the proliferation of Toyota, Honda and other foreign-owned plants has accounted for virtually all recent growth in domestic auto manufacturing. After decades of watching plants close down and jobs move overseas, the UAW finds itself beset by a process of globalization-in-reverse, as foreign automakers increasingly “insource” production with cheap nonunion labor in right-to-work and Rust Belt states. The global South has arrived in Detroit’s backyard.

…

If the UAW is to have a future, it must figure out a way into these foreign-owned factories.

More easily said than done. Amongst other things, we’re talking about foreign firms building factories in the US. They aren’t stupid: in the Age of Waltons and Monopsony Employers, they know exactly how to keep both unions, and out-of-work-union-labour-from-out-of-state (read: Detroit) from buggering up their game – while also having learned exactly how Big Firms Appeal to State Legislatures. The UAW probably only had employed, unionised workers for them, and they just mortgaged off most of their future of that resource.

Ultimately, the debate is larger than this, entirely, including such questions as, should the US even make its own cars anymore? Can it compete in the world for the production of elaborately-transformed manufactures? At some point even the protectionist resource allocators may need to decide that there just isn’t a margin in pursuing that final value-added step in production.

Eco 1 students: this is comparative advantage, specialisation and gains from trade. Come the day, we may well look back on the death of Big Union with gratitude, for allowing unimpeded pursuit of points of consumption well outside our production possibilities frontiers. We may also deeply regret it – that’s half the fun of economics (we’re never the ones being squeezed out of our mortgages, you see).

UAW on to Chrysler, now

I saw the strangest story (from the Associated Press, via Yahoo! and the Huffington Post).

The United Auto Workers put Chrysler LLC on notice that a strike is possible if contract talks stall, a person briefed on the talks said, but a labor expert said the union’s action could be a bargaining tactic.

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A strike notice could be a tactic by the union to put pressure on the company as the talks intensify, said Harley Shaiken, a professor at the University of California at Berkeley who specializes in labor issues.

“The union wants the deadline to encourage a settlement sooner rather than later,” Shaiken said.

Uh-huh. Note to self: begin marketing self as labour expert. Here’s a tip: every industrial action by a labour union is a bargaining tactic. That’s why they exist – remember? Collective bargaining? Anything?

Anyway. In the end, it didn’t have much of an effect on the bottom line (i.e. shareholders) over at GM:

An indication that Chrysler (80-odd percent held by Cerberus still, as I recall) shouldn’t face too great a threat – as long as it signs the right dotted lines. I think GM benefitted from the strike, actually, being able to sell off some unwanted inventories (Economic Principles: unplanned investment occurs during an economic slowdown. When firms plan on selling a certain amount, they build/stock-up-on that amount. When the don’t sell that much, inventories build up. Unplanned investment).

So. Suppose you’re an auto manufacturer and you perceive the game as this: you’re not selling so well but, by dragging your feet a bit, you can make your own workforce take their own few days off…

Royal mail update x

Oh, Royal Mail. Why do your workers insist you bleed slowly to death?

The main postal union, the Communication Workers’ Union (CWU), has announced further details of its forthcoming UK-wide strike action.

Its 130,000 Royal Mail members will walk-out for 48 hours between noon on Thursday, 4 October, and the same time on Saturday, 6 October.

A second 48-hour strike will take place from 0300 BST on Monday, 8 October, to the same time on Wednesday, 10 October.

What is it about this time? The same thing it’s been about every time.

At the centre of the dispute is the CWU’s objection to the Royal Mail’s 2.5% pay offer and modernisation plans.

The union claims the shake-up plans will put about 40,000 jobs at risk.

It just doesn’t change. This time around, managers look like joining:

Royal Mail managers look set to join postal strike action over cuts to pensions.

The managers have previously stepped in to provide cover during strikes by Royal Mail workers but they look likely to join the strikes, according to the Unite union, which represents 12,000 Royal Mail managers.

I’m somewhat sympathetic to the Royal Mail. Somewhat – as I’ve said before, irregardless of the reasons why the Royal Mail has come to this point, 40,000 of its jobs are at risk because it has lost its monopoly on mail delivery in the UK. Soon it will also lose its functioning monopoly on “lest-leg” (i.e. to your door) deliveries. And it’s bleeding customers.

It can lose 40,000 jobs and fit in, in this new world, or it can keep the 40,000 jobs and lose itself. The insistence of workers on striking just seems to me cutting off one’s nose to spite one’s face. Or however that goes. This insistence is common, and commonly justified, by unions. It can easily be true that the a company is being pared back while its own executive level bathes in cocaine and leather-upholstered meeting rooms. I just don’t see that at the Royal Mail.

And I’m Australian – I won’t even cross a picket-line. Also, I’m less sympathetic to going after pensions. These people worked to your conditions, for the fixed income in retirement that you promise. Leave them alone.

In the interests of balance (not to mention interest), another perspective:

Mail Bosses Want to Smash Union

With the announcement of new strike dates by the Communication Workers’ Union (all out on 5, 6, 8 and 9 October, with rolling action after that), the Royal Mail bosses have decided to go for broke — for instance by announcing a drastic attack on postal workers’ pensions.

Okay.

GM UAW update 3

What do you think happened?

Yes, they all made up and got along. Sort of.

The United Auto Workers union and General Motors Corp agreed to a new contract on Wednesday, ending a two-day nationwide strike by 73,000 workers with a groundbreaking deal that includes a health-care trust fund.

News of the tentative four-year pact sent the automaker’s shares up more than 6 percent in early trading.

The agreement allows GM to shift more than $50 billion of retiree health-care liabilities to an independent union-aligned trust – considered a key requirement in closing the labor-cost gap between U.S. automakers and their foreign competitors.

Did they pay the USD30bn to ditch those liabilities? Don’t know.

Neither GM, nor UAW officials elaborated on details of the health-care trust. However, Gettelfinger told reporters the union expected the trust to provide steady funding for 80 years, based on cash flow and solvency projections.

According to some guy, however, it was was around USD36bn. Fair’s fair – they have a bloody tonne of retirees expecting met promises. Some of the other trades made:

GM currently has 340,000 hourly retirees and spouses. Gettelfinger said he recognizes some in the union are opposed to the VEBA, but the union has supported the idea for several years.

After ratification, the VEBA memorandum would have to be approved by the courts and would be reviewed by the U.S. Securities and Exchange Commission, GM said.

One of the people briefed on the contract said that because GM’s pension fund has more money than its expected obligations, both sides agreed to tap into it to fund the trust. Retirees also would get a pension increase, but it would be offset by an equal increase in health care contributions, the person said.

In exchange for their ratification, union members would get a one-time bonus of $3,000 and then bonuses of 3 percent, 4 percent and 3 percent of their annual pay each year for the last three years of the contract, said one of the people briefed on the contract.

…

GM would hire temporary autoworkers at full company wages and benefits. The company has approximately 6,000 temporary workers, the person said. Temporary workers who have been at the company for less than 90 days would be hired at a lower wage, the person said.

The pact also includes a lower wage structure for newly hired workers in certain non-manufacturing jobs such as sanitation workers, that person said. The person said in order to make way for the new hires, GM would offer early retirement and buyout packages of $35,000 to workers now in the positions.

Hoselton said that agreement paves the way for a two-tier wage structure throughout the company and industry, something the automakers have been seeking.

Two other interesting things. One, the strike may have helped GM’s production, since it lowered inventories. The second is that, since this turned out about the way we were told everybody expected it to, why did the share price bounce around like that? This is probably why I’m not a finance guy

GM/UAW strike day two

Although, while I am here. The UAW strike enjoys its second day, and the market becomes less enamoured of the idea.

Detroit: not the city of patience

From today’s Financial Times (and I’m late to this one – but I have revisions and mid-terms holding me down, if not under, for at least another week).

The United Auto Workers union called a strike against General Motors’ US operations on Monday, putting the struggling carmaker’s turnround plans in jeopardy.

The strike call, involving about 80,000 workers at 70 plants, came after a breakdown in talks in Detroit on a new four-year labour contract.

A “breakdown in talks”? Their contract expired how long ago, now, a fortnight? That would be the slowest breakdown in history (speaking of automobiles…). Of the competition:

Talks between the UAW and Ford and Chrysler are on hold pending the outcome of negotiations with GM. The union is likely to use a settlement at GM to extract similar concessions from the other two, who face similar challenges as they seek to cut costs in the face of mounting competition from foreign carmakers.

The union had better bloody hope they extract a settlement, rather than have one extracted from them instead. Meanwhile, optimism for GM remains, apparently, high – much like optimism over a deal has remained high since the September 14 deadline. I’m not sure:

But who am I to argue? The price is still up, relative to earlier in the week. I think people expected some good news today – not a strike.

“The interpretation that I would go with is that this is sort of a last-minute push by the unions to get GM over the hump on a couple of benefits,” auto analyst David Healy of Burnham Securities, told Reuters.

The two sides were negotiating again this afternoon.

Still, the strike marked an unexpected twist after the negotiations seemed to have brought the two sides close to an historic deal that would allow GM to cut its $5 billion annual health-care bill.

And if the strike lingers, it could prove costly. CNBC’s Phil LeBeau said the strike could cost the company $100 million a day in lost revenue as its daily production of 12,200 cars is halted. Because power trains for all GM vehicles in the Americas are made in the United States, he added, a strike would start to hit production in Canada by Thursday and Saturday for production in Mexico and South America.

…

Wall Street analysts have said establishing a VEBA could cut GM’s annual costs by $3 billion in exchange for a one-off payment expected to top $30 billion.

“A token strike is possible, but we suspect the primary motivation of the strike announcement, coming nine days after contract expiration, may be to pressure GM to finalize lingering issues,” JPMorganChase analyst Himanshu Patel wrote in a note to clients.

Optimism is probably safe enough: the unions face bringing Detroit down more or less entirely with either prolonged action (which, one assumes, its workers cannot afford) or very high demands.

Ford, et al. (another Detroit story)

How can Charles Bronson break Claudia Cardinale’s heart like that? Plus what is he, blind?

Ford has announced that its circumstances are yet more straightened than we’d believed.

Ford Motor Co., the second-biggest U.S. automaker, said it expects to reduce U.S. dealerships by about 300 this year, 50 percent more than initially intended, under a plan to eliminate excess outlets.

…

Ford has said it has too many U.S. dealerships, especially in metropolitan areas where they compete against each other. The Dearborn, Michigan-based automaker began the reduction program before Chief Executive Officer Alan Mulally assumed the post a year ago. Ford has said the effort is voluntary.

U.S. sales of the Ford, Lincoln and Mercury brands fell 32 percent to 2.72 million cars and light trucks last year from 4.01 million in 2000, according to Autodata Corp.

Its share-holders didn’t seem much to mind:

What didn’t seem popular last week was their plan for a third plant in China. At least they’re only laying off employees in dealerships, here, while planning plants in China. Rather than laying off manufacturing-plant workers.

Mind you…

Big Three US automakers union talks stall as deadline looms

With less than a week to go before the current agreement expires, contract talks between the United Auto Workers and Detroit’s Big Three automakers have slowed to a crawl with few signs of progress.

The contracts covering more than 160,000 workers at General Motors Corp., Ford Motor Co. and Chrysler LLC expire at midnight Friday, September 14, though the talks could easily extend through the weekend without any threat to production.

…

The union, which has already made major concessions to help General Motors and Ford manage massive losses, is unwilling to accept major changes without guarantees that jobs both at the automakers and their suppliers will not be shipped overseas.

And then there’s that recession we’re all apparently going to have. Flagging sales, a current workforce that is dwarfed by the former-workforce-on-benefits and fighting a non-unionised workforce in a country that already has a comparative advantage in Auto sales. I’m glad it isn’t my problem. I’m glad my livelihood, my pension and my medical benefits don’t all depend upon the health of Detroit (I’m glad I can state that honestly).

The Economist in me, of course, recognises that it would be better (like the current sub-prime troubles) for us to take our lumps right now. Let those with comparative advantages specialise, just like the textbooks say. For now, I reckon

1. if you’re one such employee, figure out how to get out now so that the “job equity” that you’ve built up is protected under any agreement: once the paper is signed, I reckon the clauses will say that anybody fucked over afterwards stays that way. The UAW can only protect the people covered by the start-up money the Big Three kick in; and
2. standard recession rules. Find economies that are going strongly, and increase your portfolio’s exposure in those directions. Which bodes still less well for Detroit, Chinese plants or no Chinese plants.

London underground workers to strike; drivers to film everything.

Take that, Gertrude Stein: I love semi-colons!

I woke (late) this morning to discover a strange spike in activity on this blog (there are as yet relatively few readers, so). The spike consisted entirely of a pile of people reading this post about Metronet Rail vs. Transport for London in the Great GB1bn Cost Over-Run. With no explanation why. Nor was it linked from a source, to my knowledge. The searching appeared, in my blogstats, thus:

Very odd. It did remind me, however, that I had wanted to talk about a Tube-related story. As luck would have it, another came along a couple of days ago, also. That first: several days ago, now, a train on the Central Line of the Tube derailed. Two trains were stuck (it and the one behind) for a couple of hours (900 or so people), with 37 injured. So much for that. The story – at least in ‘headline’ form – placed the blame on “debris”. In fact,

The Rail Maritime and Transport Union, which represents drivers and station workers, said it warned London Underground in April about equipment left on the tracks by Metronet crews in the area of today’s derailment, according to an e-mailed statement.

Metronet maintains two-thirds of the London Underground, doing repairs at night when the railway is closed. The union opposed the private company taking over track maintenance.

…

It was the fourth incident of debris on the tracks in 18 months, and the city should fire Metronet “in the interests of public safety,” said Bob Crow, the union’s general secretary, in an e-mailed statement.

Metronet said “a bale of material became dislodged” from a storage area, and that it’s checking all storage sites on the nine London Underground lines it maintains.

Score! Take the Tube, you might smack right into stuff! This will surely not endear Metronet Rail to the referree, Chris Bolt, in their dispute with TfL.

Tube strike

So when I caught sight of news that Tube workers were calling for a strike over ‘safety concerns’, I figured this was it. Nope.

Tube staff to strike over safety

Tube workers have voted for a 24-hour strike on the Bakerloo line next week over fears for workers’ safety.

The Rail Maritime and Transport Union said it is in response to plans to make staff remove passengers from trains north of Queen’s Park station unaided.

The union insists two station staff and the driver should empty trains but managers say one member of station staff and the driver can do it safely.

The strike will begin at 2200 BST on Thursday 19 July.

No wonder the Rail, Maritime and Transport Union bills itself as England’s fastest-growing. It is also involved with strikes over pay on the Silverlink service, which runs up from London to the Midlands.

Back with the original derailment, though, little enough seems to have arisen, besides the Rail Accident Investigation Board having a look at it. According a statement on their website, there was “no evidence” that the driver, the condition of the train or the signalling system were at fault – not a good sign for Metronet, because that means everyone but them has a chair, now that the music has stopped.

The other response to this derailment that I found, I found to be the best – that of the Socialist Party. As well as the article’s headline (“Kick out the dangerous profiteers!”, they cried), they also noted that Balfour Beatty, a sub-contracting unit of Metronet, has this job – not Metronet themselves. Ah, sub-contracting.

On, then, to the story I’d wanted to discuss.

YouTube shows Tube driver journey

You read correctly. Tube drivers are filming their journeys! I think it’s great. Check YouTube for “train drivers view” (no punctuation required – this is web 2.0, after all). Here are a couple to save you the time.

I think it’s fascinating, but, then, I’m not a passenger (that’s for Harold Ross). Passengers don’t seem all that pleased. Safety-wise, I can see their point, up to a point of its own. What if the drivers are using tripods? Surely if police cars can be operated safely with a pre-set camera facing out the windshield, so too can trains? Sure, if my Tube train passed into the station with an operator driving with one hand and filming with the other I’d worry – but then most of the motorists I see here in New York do the same with mobile phones, without punishment. I still have to cross the road.

So enjoy the Tube films while they’re there. They’re still enjoyable to watch.