For years, the U.S. auto industry has been what Chrysler Chairman Lee Iacocca calls a "golden-goose industry." And so far as Iacocca is concerned, there are few places where this has been more evident than the inudstry's contract settlements with the United Auto Workers union.
Iaccoa calls the industry's labor settlements "scandalous." He should know -- he's been an integral part of auto management over the years, first with Ford and now with Chrysler.
Now with the industry in a near depression, labor relations experts in other industries appear to be counting on the auto companies to lead the management charge for cutbacks in union contract gains when they go to the bargaining table with the UAW next year. Next year is the start of a new three-year cycle of contract bargaining, and whatever the industry negotiates with the UAW is apt to become a pattern for union settlements in other industries.
General Motors and Ford will be the key to next year's auto bargaining. Both companies are talking about offering the UAW profit sharing and possible employment guarantees in exchange for some modification of the cost-of-living provision in the contract and an end to the personal paid holidays granted UAW members.
Traditionally, the major manufacturing unions such as the UAW, the United Steelworkers and, until recently, the United Rubber Workers have set the pattern for wage and fringe-benefit increases throughout the nation. This was particularly true throughout the 1970s as the auto and steel unions turned their attention away from wage and fringe-benefit increases to job security in the face of a massive erosion in the nation's manufacturing base.
But the top labor negotiator for one of the nation's major manufacturing firms that would be affected by any auto pattern isn't sure the auto industry is up to the challenge of wresting control from the UAW: "The auto industry has had an ability to pass along costs, and it never developed the ability to be sharp on costs. Up to now, the creativity at the bargaining table has been on the UAW side. Now it has to come from the companies or else we'll all be had, and that worries the hell out of me."
The way he sees it, there are three basic tiers of unions in the United States when it comes to any discussion of labor contracts: the top level, which includes the traditional pattern-setters such as the UAW and the steelworkers; the middle, which includes the bulk of the unions that tend to follow the patterns set by bigger unions; and the so-called have-not unions at the bottom of the ladder that seldom are affected by the big-union wage patterns.
He says that throughout the 1970s, there has been a "digression" in wage patterns by the top unions rather than the "regression" that normally would be expected in the hard economic times experienced by the manufacturing industries. Now "there are several forces that may cause regression to come back," he says.
In the short run, he sees the top-rank manufacturing unions continuing to struggle with "different kinds of contracts" as they cope with the problems of their industries.
A good example of this outside the steel and auto industry came recently from Teamsters President Roy Williams. Williams told Business Week magazine that his union may go for smaller wage increases and larger cost-of-living protection in next year's national trucking contract to help union employers compete in the newly deregulated industry.
But the management negotiator predicts that "the bulk of the unions which are clustered around the BLS [Bureau of Labor Statistics] mean [average] will bargain more traditional contracts that pay now money," that is, bigger pay increases rather than cost-of-living adjustments. Therefore, he says that in the short run, there is a chance that wage settlements at the high end of the union scale may be lower than those in the middle rank. In the long run, however, he says it will be up to the auto industry to take the initiative away from labor to set a pattern for the future.
"The 1982 bargaining year may have watershed implications," he says.