UAW puts its money where its mouth is

DETROIT — With dollars and declarations, the UAW is signaling that it's prepared for a long and costly strike to get what it wants.

Are Detroit's automakers prepared for that, too?

The answer could define the course and tone of collective bargaining negotiations set to begin this summer, and it could determine how much pressure automakers face on their profitability.

The talks were already expected to be contentious, with General Motors and Ford announcing job cuts even as they recorded billions of dollars in profits for 2018.

UAW leaders did nothing to change that perception last week, pledging to flex every muscle in their fight for improved wages and benefits and a role in the auto industry's high-tech transformation.

"We will go into this bargaining session using every tool we have to protect the rights and wages of our members," UAW President Gary Jones told reporters after the union's Special Convention on Collective Bargaining, seeking to rally a restive rank and file in the wake of a financial scandal involving union leaders. "We will do what we need to do. We will use every ounce in our leverage, every last ounce."

Jones told more than 900 union delegates from across the U.S. that leaders and negotiators were "preparing for a conflict." The mobilization included boosting the weekly strike pay for members 25 percent to $250, effective immediately, and raising it to $275 beginning in January — which would be months after a Sept. 14 contract deadline. UAW members would receive health care coverage during a strike.

The costs could escalate quickly, on both sides, said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research.

"Strikes, even local ones, can be extremely costly," she said. "Strikes are a last resort. It has to be. Any sustained outage is going to be painful for membership."

And yet, Dziczek said, Jones' comments along with simmering labor tensions in the industry suggest that the possibility of a strike this year is "pretty high."

National strikes have been scarce in recent decades, aside from brief actions at Chrysler and GM in 2007. The UAW's last prolonged national strike — 67 days — occurred against GM in 1970.

The union has been more tactical in recent years, conducting "bottleneck" strikes, in which workers halt production at key plants, creating a ripple effect in other operations. Such a tactic limits the union's cost for strike pay and shifts the cost of associated layoffs to the automaker.

With the fate of several U.S. plants hanging in the balance, Jones said the stakes for this year's negotiations are "especially high."

In the face of automakers cutting costs to relieve pressure on profits, the union looks to secure more jobs and maintain, if not increase, traditional benefits such as health care and profit-sharing bonuses. Union delegates approved planks calling for "a retirement that you can live on, pensions that you can count on and some new things as well," Jones said.

Leaders are also mobilizing to bargain for UAW members to be included in building future technologies such as full-electric and autonomous vehicles.

Much of that work, particularly building battery packs and cells, has been done overseas or in nonunion factories. Even if such work is added at union plants, special deals in place now allow GM and others to use temporary or lower-wage workers.

The UAW believes 35,000 or more of its members' jobs are at risk because of electric vehicles, UAW Research Director Jennifer Kelly said. EVs will require fewer labor hours on assembly lines, given that they don't need to be fitted with components such as multispeed transmissions or exhaust and fuel systems.

The greatest divide between the union and companies may be the use of temporary workers in plants. Automakers routinely use temps to help with launches, heavy vacation periods and other short-term work.

While the UAW seeks to reduce the use of temporary workers, several delegates urged the union to go further and seek to eliminate their use or convert them to full time. The UAW has argued that companies overuse and misuse temp workers, who do not receive the same benefits as company employees despite potentially doing the same job at a plant for years.

GM has more than 4,000 temporary workers; Ford has about 3,400. FCA's figure is believed to be in line with GM's or higher.

GM is expected to present the most contentious negotiations for the UAW. In November, it announced the potential closure of as many as four U.S. plants as part of a restructuring. Jones last week put automakers "on notice," emphasizing the union wouldn't be quiet about any plant closure or transfer of work to Mexico.

Ford also is amid a restructuring, but it's unclear how it will affect union workers and plants. The company has far less underutilized capacity. Bloomberg last week first reported Ford expects the cost of health insurance for its 56,000 U.S. hourly workers to top $1 billion for the first time next year.

Despite being a target of a federal investigation into the misuse of union funds, Fiat Chrysler Automobiles may offer the smoothest path for UAW negotiators. FCA has been adding jobs and last month announced investments of $4.5 billion that could create about 6,500 jobs in southeast Michigan.

The Detroit 3, in statements to Automotive News, said they will look for ways to address business challenges and stay competitive. GM said its "intent is to work with the UAW constructively" to address such issues. FCA said it's seeking an outcome that allows it to "continue investing in our plants, increasing our hourly workforce and meeting the objectives set out in our 5-year business plan." Ford said a fair agreement would allow it to "preserve and protect" factory jobs and invest in U.S. plants.

The UAW's overall message last week was, "We are one," a mantra that looks to reunite an embattled union.

The UAW has been embroiled in a scandal over the misuse of funds from a training center jointly operated by FCA and the union dating back several years. So far, seven people have pleaded guilty: three former FCA employees, three former union officials and another affiliated with the union. More charges are expected as the federal investigation continues.

Jones, who was elected UAW president in June, said he was reforming the union and would have more to share on changes in the coming months.

Reform isn't easy, he said, but is important to "strengthen your trust in us."

Vince Bond Jr. contributed to this report.