As president of the United Auto Workers union, Owen Bieber has a simple philosophy about labor negotiations. "It's like cooking a kettle of stew," he says. "If you run out of one ingredient, you add something else. The test is whether it's a good stew when it gets done."
This week, the UAW and General Motors Corp. return to the bargaining table to begin work on a job security plan -- the proper mix of economic peas and carrots for a contract stew that will pass the taste test of both labor and management.
The stage for the showdown over job security was set last week when the UAW picked General Motors as the company on which it will focus negotiations as the two sides struggle to reach a new contract covering 443,000 union members at GM, Ford Motor Co. and Chrysler Corp. Contracts in the industry expire Sept. 14, but negotiations at Ford and Chrysler are now in limbo until an agreement is reached at GM.
Whatever is agreed to at GM is certain to be taken as a pattern not only by the rest of the auto industry, but by other unionized manufacturing industries as they struggle to meet the test of global competition. Manufacturing industries have traditionally been a stronghold of the nation's trade unions, and unions such as the UAW have an enormous stake in attempting to preserve employment levels for the future.
The trick in these negotiations will be to come up with a formula that meets the needs of both sides: for the union, providing some type of job security for the 280,000 active UAW members at GM and hope for the 30,000 union members on indefinite layoff; and, for the company, allowing the flexibility to trim its work force by 20,000 people a year over the life of the next contract.
GM insists that it needs to pare down its work force by thousands if it is to be competitive, particularly in the parts and components areas where it is being hurt by the so-called "transplants," the U.S.-based assembly plants of Honda Motor Co., Nissan Motor Co. and Toyota Motor Corp. that buy components from lower-wage competitors. GM says it has to trim labor costs at its auto parts operations or it will be forced to follow the lead of Ford and Chrysler and contract the work out to other companies.
One way GM hopes to achieve these reductions is through a change in the attrition formula that it is forced to live by now. Under the current contract, the automaker must replace one worker for every two who leave through attrition. The company now wants attrition to simply take its toll with no replacement requirement.
But GM is also open to new suggestions as it attempts to deal with the issue of job security. "We're taking a pragmatic rather than philosophical approach. It just isn't the time for razzle-dazzle," said one GM source. "And I think the UAW this time is willing to talk about most things."
The Two-Tier Plan
One possible approach may be a two-tier job security plan similar to one the union signed three months ago with J.I. Case, a Wisconsin-based agricultural implement manufacturer.
Under that contract, the UAW agreed to a program that gives newer employees less job security than workers who have been with the company a long time.
To establish the two tiers, the Case contract establishes a "guaranteed employment level" that is determined on a plant-by-plant basis. At each plant, the company guarantees that employment will not drop below certain predetermined levels equal to 100 percent of the current work force "minus future allowable attrition."
Workers covered by this snapshot of the work force will be fully protected from layoffs during the life of the agreement. But workers in job slots above the guaranteed minimum level will not get the same protections. These workers can be hired to cope with any sudden increase in business and then laid off without penalty if business volume drops for reasons beyond the company's control.
But even these workers have some protections against layoffs for other reasons, such as the contracting out of work, the consolidation of operations or the introduction of new technology provided they have at least one year's seniority plus 26 weeks of work.
New employees have an opportunity to "grow in" to full protection under the contract. As more senior workers leave through retirement, death or other forms of attrition, other workers take their place in the protection plan at company locations where employment is above the predetermined baseline.
The contract also has a new "stand-in-shoes" provision in which laid-off workers can temporarily fill the jobs of full-time workers who are on short-term leave.
Although GM will not comment on its job security plans, a company source close to the negotiations at Ford said the two-tier security plan makes an awful lot of sense. "We feel you should not be fully protected when you first join the company," he said.
Such an approach would also seem to give the company additional flexibility for dealing with volume declines in production while the union would move closer toward its goal of achieving a guaranteed employment base.
One UAW official cautioned against making too much of the Case contract as a model, but negotiators said that contract is clearly being looked at as a possible model for some new ways of dealing with job security. In fact, it was the agreement the UAW signed at Case three years ago that served as a model for the auto industry's current job security pact.
The Case agreement would play differently at different companies. At GM, with 30,000 workers on indefinite layoff, most people recalled in the event of a business increase would have to work only 26 weeks before they received full contract protection. At Ford, with only about 400 people on layoff, a recall would involve more new hires who would have to work 18 months before they earned full job rights.
Unlike the two-tier wage systems of the 1980s that the UAW successfully resisted, a two-tier job security plan is apt to draw less worker resentment because it provides a comparatively short period to gain full job rights.
The specific concern of the union is how to build a guaranteed minimum employment base, not to mention a stable dues base, in an industry where more than a quarter of a million UAW jobs have been lost in the last decade -- a loss almost equal to the total number of jobs now at GM.
With an aging work force, GM is able to come to the bargaining table and offer income guarantees for thousands of workers who are close to retirement.
This could be accomplished either by guaranteeing the jobs of individuals until they retire, as the company did recently in settling a strike against its A.C. West components plant in Flint, Mich., or by simply paying employees to stop working and go away.
The average GM employee is 44 years old with 18 years of service. UAW employees can retire with full pensions after 30 years of service.
But income guarantees are not enough for the UAW.
"We're interested in income security with job security," said a UAW source closely involved in the talks. "We've got to come out of these negotiations helping to keep the industry alive."
The goal, he said, was to take care of the current GM workers and those on indefinite layoff while at the same time coming up with some mechanism to guarantee a job base for future generations.
"We're looking to tighten up the safety net," he said.
The union is determined to work out a plan that clearly differentiates between layoffs resulting from cyclical economic downturns and permanent employment reductions resulting from restructuring the company's operations.
Although the numbers appear to defy solution, both sides seem optimistic that an agreement can be worked out without a strike.
Other Contract Issues
While job security is the major issue at the GM bargaining table, it is not the only unresolved issue. But most other issues seem on their way to being settled if agreement can be reached on job security.
Despite loud public complaints against the cost of health care, GM did not propose any takeaways in its contract proposal to the union.
GM rejected the idea of trying to shift more of the health care cost onto the employee, a top company official said, "because I don't think you can get away with that."
Instead, the company is concentrating on more traditional cost-containment efforts, such as an extension of the existing "managed health care" program.
In the pension area, where there is political pressure on the UAW leadership for a cost-of-living allowance on pensions, the union appears willing to agree to a lump-sum payment as it has in the past to help retirees catch up on inflation.
But GM is looking to trim around the edges of some of the income protections in an effort to reduce costs. One target is the "job bank," the fund set up in 1984 for employees displaced from their jobs by new technology and contracting out work.
An employee in this category is removed from the plant payroll and paid from a special benefits fund set up by the company.
Another area the company wants to trim is the incentive bonus paid to workers for good attendance. The company wants to crack down on the number of days a worker can be absent without penalty and eliminate the extra financial incentive for simply showing up for work.
"The attendance program has been a failure and we need to fix that," the GM source said.
How the company fares in these areas will depend largely on the overall job security plan.
"It's going to be difficult," said a GM source, "but they've got to get a settlement with us sooner or later."