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Home - The Management Association of Illinois
Member Resources
Outdated Union Feels Pain from Automotive Troubles
by Lisa Callaway, JD, SPHR, Vice President/General Counsel
Published July 2, 2009
The United Auto Workers Union (UAW) is hurting, another fall-out from the crisis in the American auto market. In the late 1970’s, UAW union membership peaked with 1.5 million members. At the end of 2008, UAW membership dropped to 431,000. With two of the big three American automakers filing for bankruptcy, and the future of the American auto market in flux, this number will likely dip lower.
The questions that have been repeatedly asked about this union, in particular, are why the UAW waited so long to act and will it survive? These are questions being asked of the majority of unions today. Most are suffering. Through the years, there have been opportunities to merge. Business does it, why don’t the unions look at mergers as a necessary consolidation of resources in a changing business environment? Much of it appears to be about turf and not wanting to compromise. Union leadership does not want to be subservient to another union leader.
This is the current problem with the UNITE-HERE merger. UNITE-HERE was formed five years ago in a merger between unions representing primarily textile and hotel workers, respectively. Today, the leaders of the merged union are warring, and union president Bruce Raynor recently tendered his resignation after having been accused of improperly organizing a breakaway faction to join a rival union, the Service Employees International Union (SEIU), as well as conspiring to siphon millions of dollars of UNITE-HERE’s assets for the benefit of the SEIU.
The UAW was involved in serious merger discussions with the United Steelworkers (USW) and the International Association of Machinists (IAM) in 1995. Leo Gerard, president of the USW stated as recently as a few months ago that he would still be open to a merger with the UAW. The UAW has not responded.
According to the UAW’s 2008 annual report, the union continues to be resource rich, with assets totaling more than $1 billion, and a skilled, professional staff. But no union can continue to be successful with the declining membership numbers the UAW has experienced. Perhaps one of its primary problems is that the UAW is seen by some as less of a collective bargaining agent and, increasingly, a protector of retired autoworkers. As Roger Lowenstein describes in his book While America Aged, it was former UAW president Walter Reuther (1907-70) who won “womb-to-tomb” health-care coverage and retirement benefits for its members. The union is the fiduciary of the multibillion dollar VEBA trust fund for retiree health benefits. However, retired autoworkers do not pay union dues. At some point, current autoworkers will become frustrated over the burden of shouldering retiree benefits, if this is not already the case. Moreover, has the union created a conflict of interest in its ability to negotiate and represent current workers versus its legal commitment to retired autoworkers? It appears that the union’s strategy over the years to protect retiree benefits may in the end also be the union’s demise.
GM is forced to change, with the company filing for bankruptcy last month. Shouldn’t the union who represents its workers consider an alternate business model? There are many reasons for the failure of American automakers. Certainly, The UAW cannot credibly claim to be an idle victim, but instead appears to have played an active role in the current grim financial situation.
With the Employee Free Choice Act in the balance, a Democratic, union-friendly president and a Democratic-controlled Congress, the unions will never have a better shot at passing union-friendly legislation. The pertinent question remains, however, do workers want a union unable to change with the times?
