UAW, GM-Ford contracts focus on saving jobs Essay

Increasing worker job security was the primary goal in the UnitedAuto Workers’ (UAW) bargaining with General Motors Corp. (GM) andFord Motors Co. The first settlement, with GM, established a JobOpportunity Bank-Security Program described by the union as”without equal in the history of collective bargaining with a majorU.S. corporation.” After the GM settlement, which was preceded by a strike at somelocations, the UAW and Ford settled without a strike. Terms for the115,000 Ford workers were essentially identical to those for the 350,000GM workers, except that the Ford contract bans plant closings.

Fordappartently was willing to accept this ban because it producessubstantially fewer of is parts than GM, and therefore is not as likelyto increase outside purchases, which could less to plant shutdowns. The new Job-Security Program guarantees that workers with at least1 year of service will not be laid off as a result of the introductionof new technology, “outsourcing” (procuring parts from othermanufacturers), negotiated productivity improvements, shifting of workfrom one GM plant to another, or the consolidtion of componentproduction. Layoffs for other reasons–such as declines in vehiclesales or sale of a facility–are not covered. The progam will extendthrough the new and succeeding contract or until GM’s commitment of$1 billion is exhausted. (At Ford, with fewer employees, the commitmentis $300 million.) Facing a layoff, workers will first exerciese their right to”bump” less senior workers. After this procedure iscompleted, any employees with at least 1 year of service who wouldordinarily be laid off will participate in an Employee Development Bank,where they will receive the pay rate of the last job they held or ifassigned to another job, the rate for that job.

Other possibleassignments for bank members include job training; replacing anotherworker undergoing training; moving into a job opening at another GMplant if there is no qualified worker with recall or rehire rights; andmoving into jobs within or outside the local bargaining unit, including”nontraditional” job Temporary assignments outside the localbargaining unit will be voluntary. Permanent transfers to UAWbargaining units at ohter GM plants will be filled by volunteers, ifpossible. Any remaining openings will be filled in inverse seniorityorder. Changes in the bank size will not correspond to changes inproduction volume, but will be reduced by one for each bank member whoquits GM or otherwise breaks or loses seniority (excluding discharge) orenters apprenticeship or other training; transfers to an opening in thelocal plant or another GM plant created by a reason other than aproduction volume increase; or transfers to a salaried job. Employees who do participate will continue to accrue pensioncredits and be covered by all other regular benefits, such as insurance,and paid holidays and vacations.

the Job-Security Program will be administered by joint UAW-GMcommittees at the local, area, and national levels. The nationalcommittee is permitted to set up special programs when there are moreemployees in the bank at a plant than anticipated openings at the localand area level. These programs would provide pensions calculated atunreduced rates and various supplements to departing bank members whoare age 55 to 61 with 10 years of service. Departing bank members who donot meet the age and service requirements would receive lump-sumpayments of $10,000 to $44,000, based on seniority. The union did not win its demand for a ban on outsourcing or acontinuation of the provision (adopted in 1982) prohibiting GM fromclosing plants due to outsourcing. However, GM must give the UAW 60days’ notice of outsourcing decisions affecting 25 or more existingjobs. Previously, the requirement applied to decisions affecting 10percent of a plant’s work force, or 100 workers, whichever wasless.

Job preservation also will be on the agenda of the new localJob-Security committees, which will discuss “sourcing” issues,review competitive conditions, and develop plans to improve localoperations. Also, GM agreed to recommend implementation of the Saturnsmall car program to the GM board of directors, assuming that productionconcepts conceived by a GM-UAW study team prove workable. The jointattempt to revolutionize domestic car production to counter theincreasing inroads of foreign manufacturers was initiated in 1982.Other layoff assistance.

There also were improvements in the GuaranteedIncome Stream and Supplemental Unemployment Benefits programs, both ofwhich provide employees with a financial cushion if they are laid off. Funding of the Guaranteed Income Stream was raised to a maximum of$185 million plus additional amounts from the profit-sharing plan duringthe contract term. (The funding level was $100 million under the 1982contract.) The plan covers workers with at least 10 years of servicewho are laid off due to a plant closing and those with at least 15 yearsof service who are laid off for any reason. After their SupplementalUnemployment Benefits entitlement is exhausted, these workers drawGuaranteed Income Stream benefits until they retire or return to work,or until GM’s maximum financial obligation is reached. The weeklyGuaranteed Income Stream benefit is 50 percent of the individual’sweekly base earnings on the last day of work plus 1 percent for eachyear of seniority above 15 years.

The maximum benefit is the lesser ofeither 75 percent of base earnings or 95 percent of after-tax earningsminus $12.50 ($17.50 on or after January 1, 1985). GM’s financing of Supplemental Unemployment Benefits wasincreased to a range of 19 to 31 cents per compensated hour in January1985, 20 to 32 cents in January 1986, and 21 to 33 cents in January1987. Previously, the obligation, which varies with the level of thefund, was 17 to 29 cents per hour. The Advance Credit Account, whichprovides benefits if the regular fund is exhausted, was strengthened byincreasing its “base” to $200 million, from $100 million. AnyGM payments into this fund are offset aginst future obligations.

Fundingalso was strengthened for the Guaranteed Benefits Account, which paysbenefits to laid-off workers with at least 10 years’ service if theregular and Advance Credits Accounts are depleted. GM payments into thisaccount are not offset against future obligations. In another move the union described as a “first,” GM andthe UAW will jointly develop and launch new businesses aimed atproviding jobs for UAW members. The program, to be financed by GM up toa maximum of $100 million, will be administered by a joint Growth andOpportunity Committee. Proposals for ventures, including those made bylocal Job-Security Program committees, will be studied by a New BusinessBenture Development Group, which will have a full-time staff.

Ventureswill be aimed at aiding communities hit by job losses at GM facilities,with hiring preference given to the affected workers. Overtimerestricted. The union, which in recent years has been pressing forcurbs on overtime to spread the available work among as many workers aspossible, won a requirement that GM pay 50 cents per hour for allovertime hours in excess of 5 percent of straight-time hours into theJoint Skill Development and Training Fund. In a related provision, GMagreed to a goal of reducing average weekly overtime by 2 hours.”Spreading the work” also was furthered by the addition ofthree paid holidays, bringing the total to 44 over the 3-year contract,which ends on September 14, 1987.

The overtime work penalty payments into the Joint Skill Developmentand Training Fund, and a 10-cent-an-hour contribution by GM for allhours worked, will help finance training for active and laid-offemployees. Laid-off workers are eligible to receive tuition assistanceranging from $1,500 for those with 1 year of service to $5,000 for thosewith 4 years or more of service. Active employees are eligible forpayments of $1,500 a year for courses at colleges and universities and$1,000 a year for other job-related courses and certain other trainingin accredited schools. The settlement does not provide for specified wage increases inevery contract year. This reflects company efforts to end the practiceof providing guaranteed annual wage increases regardless of corporatefinancial results.

The workers will receive one specified wage increaseand a $180 “Special Payment,” effective immediately; lump-sum”Performance Bonus” payments in October of 1985 and 1986;continued automatic pay adjustments under the cost-of-living formula;and continued profit-sharing distributions. The union forecast that thecombined yield would be $11,730 over the term (including $3,000 inprofit sharing), assuming a 5-percent annual rate of increase in theConsumer Price Index and continuation of the projected 1984 profitlevel. This would contrast with the 1982 accord, which only providedfor cost-of-living adjustments and profit-sharing distributions. The immediate specified wage increase ranged from 9 cents an hourfor the lowest paid workers to 50 cents for the highest paid. Accordingto the union, the 9- to 50-cent increase plus the projected futurecost-of-living adjustments will raise the range to $13.

93 for workers inthe lowest bracket to $16.20-$16.47 for those in the top bracket. Priorpay rates, including a cost-of-living allowance, ranged from $12.

29 anhour for workers in the lowest pay bracket to $17.19-$17.46 for those inthe top bracket.

The performance bonuses, to be paid in October of 1985 and 1986,will amount to 2.25 percent of pay for all compensated hours, includingovertime hours (but not overtime premium pay), vacation and holiday pay,and shift premiums. The union estimated that the payments would be $725and $750, respectively, using the assumed 5-percent inflation rate andcompensated hours equivalent to the 1983 total. The cost-of-living adjustment formula provides for 1-cent-an-hourquarterly adjustments for each 0.26-point movement in the BLS ConsumerPrice Index for Urban Wage Earners and Clerical Workers (1967 = 100),with 1 cent permanently diverted from each of the firest nineadjustments, and 2 cents from each of the two other adjustments.

Thediverted money will help offset GM’s cost increases for benefits.Previously, adjustments were computed at 1 cent for each 0.26-pointmovement in a composite 1967 = 100 index derived from the U.S. andCanadian consumer price indexes.

(The change was made because theformula for GM’s Canadian employees is now linked to the Canadiangovernment’s index only.) Under the 1982 contract, each of thefirst three quarterly adjustments were deferred for 18 months and atotal of 6 cents was permanently diverted from these adjustments. Othercontract provisions. The new contracts also provide: * A $3.85 increase in the pension rates over the term for workersretiring from October 1, 1984, through September 30, 1985, bringingtheir April 1, 1987, range of rates (which vary by preretirmentearnings) to $21.85-$22.60 a month for each year of credited service; a$3.95, through September 1, 1986, bringing their range to $21.

95-$22.70;and a $4.05 increase for those retiring on October 1, 1986, or later,bringing their range of rates to $22.05-$22.80. The provision for”30 [years]-and-out” retirement was revised to provide totalmonthly benefits of $1,185 for employees who retire from October 1,1984, through September 30, 1985, $1,195 for those who retire fromOctober 1, 1985, through September 30, 1986, and $1,205 for those whoretire later.

The benefit consists of a pension amount and asupplemental payment; the supplement ceases at age 62. There also wereimprovements in benefits for current retirees, including a $1 increasein the calculation rate for normal benefits. Employees who retiredprior to October 1, 1984, with at least 30 years of credited servicewill receive special $200 payments in December of 1985 and 1986. * Addition of a third type of optional health insurance coverage,some improvements in the existing “traditional” and HealthMaintenance Organization plans, and adoption of”preauthorization” and review procedures to precludeunnecessary surgery and shorten hospital stays. According to the union,the new Preferred Provider Organization coverage provides a broaderrange of benefits than the existing plans “while maintainingquality safeguards and assuring effective, affordable, andcost-efficient delivery of care.” * An increase in GM’s payment toward Medicare Part B premiumsfrom the $13.

50 a month to $14.60 on October 1, 1984, and $15.60,$17.60, and $19.60 on January 1 of 1985, 1986, and 1987. * The range of services provided by the legal services plan wasincreased and the eligibility requirement was reduced to 12 months ofservice, from 18. These changes, and others, were financed by a $17million surplus that had accrued during the 1982 agreement, whichestablished the plan.

GM will continue to finance the plan at the rateof 3 cents per straight-time hour and, in a change, it will provide anyadditional money needed to maintain the plan. (At Ford, a legalservices plan was established under the 1984 settlement.) * Adoption of a bonus plan to improve attendance. Beginning in1985, employees will receive $50 for each quarter year in which theywork all scheduled straight-time hours in the regular workweek. Thosewho receive three quarterly bonuses in a year will receive an additional$150 for a combined total of $300 and those who receive four quarterlybonuses in a year will receive an additional $300 for a combined totalof $500. This bonus provision was one of the changes to the 1982attendance plan, which continues to penalize workers who have excessiveunwarranted absences by reducing their holiday, vacation, and otherbenefit entitlements.

The resulting $9 million benefit cost saving thathad accrued during the 1982 contract was transferred to an existingnational training fund. * An increase to 25 cents (previously 20 cents) in the hourlypremium paid to employees for all hours worked in continous 7-day-a-weekoperations. * Increases in the relocation allowance to employees who transferto any other GM plant when there is a shift of major operations fromtheir home palnt to another GM plant. The allowance now ranges from$580 for single employees moving 50-99 miles to $2,310 for marriedemployees moving 1,000 miles or more, compared with the previous $500 to$2,025.

* Revision of the employee stock ownership plan to provide for GMfinancing equal to 0.5 percent of employees’ pay. Previously,financing varied with GM’s spending on plant and equipment. Inanother change, dividends will be distributed annually instead ofaccruing until retirement or other termination of employment.

* Establishment of an experimental child-care program at onelocation. The program will assist employees in obtaining child-careservices “appropriate for each employee’s particularneeds.” The bargaining leading to the September 21 settlement at GM beganin July.

Initially, the union was concurrently negotiating with Ford,but reverted to the usual “divide and conquer” strategy bysuspending talks with Ford and focusing on GM. Intense bargainingcontinued to the September 14 expiration date of the contract, but theparties were unable to reach agreement and the union struck GM’sWarren, MI, technical center and 12 assembly plants in nine States,purportedly over local issues. Apparently, the union struck these keyfacilities, rather than calling a company-wide strike over nationalissues, because a companywide stoppage could not be ended until asettlement is reached and approved by a majority of all UAW members atGM. A companywide strike also would have been a greater drain on theunion’s $563 million strike fund. The stoppage was later extendedto four additional plants, bringing the total number of strikers to91,000. At that time, an additional 19,000 GM employees were on layoffbecause of shortages resulting from the strike.

Immediately after thesettlement, employees began returning to work. The national terms wereapproved by the UAW’s 300-member council; then members of the 149local unions approved the contract, 138,410 to 102,528. Following the GM settlement, Ford and the UAW resumed negotiations.A settlement was reached in mid-October, ending a marathon 24-hourbargaining session. Ford workers approved the agreement by a vote of33,312 to 18,386. Despite the settlements on companywide issues at GM and Ford,bargaining was continuing on local issues. In these talks, conducted bylocal union and plant officials, the companies were attempting to offsetpart of the labor cost increase resulting from the national accords bypressing for changes in staffing levels, job assignments, outputrequirements, and other areas. UAW President Owen Bieber said he would ask Chrysler Corp.

toreopen negotiations for 65,000 workers despite the fact that the current2-year contract is not scheduled to expire until October 1985. Acompany official said Chrysler would listen to a reopening proposalbecause “there may be some things that we would like them to do forus.” Coal settlement peaceful Despite a change in union leadership, splintering of the managementbargaining group, high unemployment, and a history of long, bitterstrikes, the United Mines Workers (UMW) and the Bituminous Coal Operators’ Association (BCOA) settled peacefully on a 40-monthcontract. Both sides exulted in the new spirit of cooperation andindicated that it will continue as they attempt to deal with problems,which stem from increased foreign competitions; easing of the petroleumcrisis, which has slowed the shift to coal as a fuel for power plantsand other facilities, and also slowed the development of a national”synfuels” energy policy; growing production by nonunion domestic producers; and possible legislation to counter “acidrain” that could reduce coal burning.

Bobby R. Brown, chief executive officer of Consolidation Coal Co.and head of the BCOA, described the agreement as “fair andmodest,” and noted that it gives the industry an 80-month period(from the 1981 settlement to the January 31, 1988, termination date of anew contract) without a national strike. This, he said, will give a”clear message to our customers and competitors” that theindustry is a dependable energy source. Rich Trumka, the coal miner-attorney who won the presidency of theunion in 1982 on a promise to stabilize and revitalize the union afteryears of chaos, said the new contract, has “no concessions,absolutely none.

Not a single one. We made economic . .

. [and] othergains.” Delegates to the union’s prebargaining convention hadgiven Trumka a simple mandate for the bargaining: “No backwardsteps. No takeaway contracts.” During the negotiations, which began in April, the union hadindicated that it would settle on modest economic gains if the mineoperators accepted other terms designed to cut unemployment. (Aboutone-third of the industry’s 160,000 UMW members are unemployed.) The contract provides for a total of $1.40 an hour in wageincreases (compared with $3.

60 over the 40-month term of the priorcontract) consisting of 25-cent increase on October 1 of 1984, 1985, and1987, and a 30-cent increase on October 1 of 1986. In addition, workerswill receive 5 cents “quarterly” wage increases on January 1,April 1, and July 1 of 1986 and 1987, and on January 1, 1988. Theseincreases will result in hourly rates ranging from $13.924 to $15.

565for underground workers at deep mines (who are paid for 8 hours pershift), $14.946 to $16.328 at strip and auger mines (7.25 hours’pay), and $14.907 to $15.

514 at preparation plants and other surfacefacilities at deep or surface mines (also 7.25 hours’ pay). Theseincreases ranged from 11.2 percent (for the lowest paid workers) to 9.

9percent (highest paid) for underground workers, 10.3 to 9.4 percent forstrip and auger workers, and 10.4 to 9.

9 percent for preparation plantand related workers. The UMW did not win the curbs on overtime it had sought to increasethe number of jobs available for its members, but it did gain changes inother provision intended to increase job security: * New language ensures that miners will not lose their biddingrights to a job at their mine because the mine has been subleased toanother company. The union had charged that in many cases new operatorshad used loopholes in the contract language to evade hiring incumbentemployees. * Mine owners are not required to give local union officials copiesof warranties covering any onsite work being performed by outsidecontractors. The union said this was necessary because some mines werecontracting out work that should have been performed by UMW members. * UMW members shall perform all work “of the type”customarily done at the mine.

The u nion said this provision wasnecessary because some mine owners had previously been able to contractour some work because it was not the exact work performed by UMWmembers. * A company is required to notify the union of the sale of a minewhere a UMW contract is in effect and to furnish proof that the buyerwill abide by the terms. Previously notification was not required and,the union claimed, some new owners were able to “break” thelabor contract. * The BCOA and UMW will establish a “Joint InterestsCommittee” to promote the development and use of UMW-mined coal.

The committee, which replaces the “Joint Industry DevelopmentCommittee,” will undertake activities such as contesting acid rainlegislation, developing coal export capabilities, and developing acoal-based national energy policy. Benefit improvements included a $10 a month increase in pensionsfor all current retirees effective immediately and on October 1, 1987.Survivors of retired workers will receive $5 a month increases on thesame dates. For current employees, pension rates were increased by $1for those retiring during after September 30, 1987. For the latterretirees, pensions will be computed at the resulting rates of $17 amonth for each of the first 10 years of service, plus $17.

50 a month foreach of the next 10 years, plus $18 for each of the next 10 years, plus$18.50 for each year in excess of 30. Other terms included a 20-cent-a-ton increase in the royalty paidinto the miner’s health and retirement funds by mine owners on coalthey produce; an increase in life insurance to $30,000 (from $25,000); a$190-a-week sickness and accident benefit (formerly $185) increaseing to$195 in the second year and to $200 in the third year; and $160 clothingallowances on October 1 of 1984, 1985, 1986, and 1987 (under the priorcontract, the workers received three $150 allowances). At the time of settlement, the BCOA comprised only 32 companies,compared with about 130 at the time of the 1981 settlement. Thewithdrawals occurred because some companies believed they couldindividually negotiate more lenient terms.

However, UMW PresidentTrumka announced that he would not bargain with companies that droppedout until after the BCOA settled. The possibility of being struck whilethe BCOA companies and others operated led many of the dropout companiesto sign letters of intent with the union in which they agreed to bebound by the subsequent BCOA accord. Some did not sign the letters, butaccepted the BCOA terms immediately after they were announced. The fewcompanies that did not sign were briefly struck by 2,000 employees. Meanwhile, bargaining was continuing between the UMW and theAssociation of Bituminous Contractors, comprising companies that openmines and build related facilities. This bargaining covers about 10,000workers, most of whom were on layoff. City workers in Philadelphiasettle The City of Philadelphia and unions representing 13,600 workersagreed on a 2-year contract that called for a single 8-percent wageincrease at the beginning of the school year.

An arbitrator laterawarded 2,700 firefighters terms similar to the negotiated contract andawarded a similar, but earlier, payment to 7,500 police officers.Unions involved in the settlement and awards included the AmericanFederation of State, County and Municipal Employees (AFSCME), theFraternal Order of Police, and the International Association of FireFighters. Grocery workers settle, avert walkout A threatened strike by 65,000 workers was averted when nine localsof the United Food and Commercial workers agreed to a 3-year contractwith the Food Employers Council, comprising 12 grocery chains withstores in Sourhtern California. Under the settlement, top-rated clerks witll receive increasestotaling 85 cents in their $11.70 an hour pay rate, General merchandiseclerks will receive increases totaling 59.5 cents if they were hiredprior to August 7, 1981, and 55.25 cents if hired later.”Courtesy” clerks will receive a total of 30 cents.

Anotherpay issue was resolved when the employers agreed to guarantee eachemployee at least 16 hours of work a week. The union, which contendedthat 70 percent of the employees worked less than 28 hours a week, hadoriginally sought a 25-hour guarntee. Management won a “favored nations” clause, contendingthat the union had unfairly agreed to lower wage and benefit levels withsome chains that are not members of the council. The clause providesthat if one of the local unions and an independent store with at least25 employees agree to reductions in labor costs, the same reductionswill be extended to the stores of the council members within thejurisdiction of the local. The 1,334 stores covered by the settlement are in an area extendingfrom San Luis Obispo to the Mexican border. The stores are owned byAlbertson’s, Alpha Beta, Boys, Hughes, Lucky, Mayfair, Pioneer,Ralp’s Safeway, Smith’s Food King, Stater Bros.

, and Vons.Employees rate coworkers’ performance In an unusual move, Levi Strauss & Co. announced that it willconsider the opinions of fellow employees in determining who to includein an impending layoff. A company official said, “Most of thepeople who are laid off will clearly have not performed well enough tobe retained.” The new procedure will be useful in determiningwhich of the marginally satisfactory workers should be retained. Thelayoff will total 400 employees. Under the new “Objective JudgmentQuotient,” each of the 2,000 executive, sales, and other nonunionwhite-collar employees will be rated by a group of up to nine employees.Members of each group will be selected by the worker being rated.

More than 300 factory workers have already been laid off because ofa decline in demand for blue jeans. The company announced that anadditional 2,500 will be laid off by mid-1985 as a result of the closingof several plants and cutbacks at others. In this case, the employeeswill not have a voice in retention decisions. These workers also arenot represented by a union.


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