UAW Spring Strikes - Do They Signal a Change in Strategy?

Implications:  The GM strike at Lansing and the strike warnings at other plants suggest that there is some dissatisfaction about the nationally-negotiated two-tier wage  among UAW-represented workers at GM.  It is also likely that upcoming union elections in GM local unions are encouraging local leaders to be more aggressive than they might otherwise be. Them two-month-old American Axle strike is due to the reluctance of the UAW to negotiate a contract to American Axle that is similar to the contracts negotiated with Delphi and Dana.  The UAW view is that these contracts were negotiated with Delphi and Dana when the firms were in bankruptcy and financial difficulty.  They were based on the specific financial circumstances of those companies. The UAW does not believe that American Axle has serious financial problems that warrant concessions.  American Axle believes it needs concessions to be competitive.     

Analysis:

The ongoing two-month-old strike at American Axle, local strikes at the GM plant in Lansing Michigan, and strike warnings at other GM plants (Grand Rapids, Kansas City) have raised questions about whether these strikes are part of a change in UAW strategy, especially in light of the settlements at other parts suppliers (Dana, Delphi) and path-breaking 2007 negotiations at GM, Ford, and Chrysler that resulted in the establishment of a two-tier wage structure and the creation of a VEBA.  Although the UAW has been generally quiet about the strikes, there are several possibilities to consider. 

            First, is the question of whether the American Axle strike GM strikes and strike warnings are linked.  The suggestion is that the UAW is using the GM strikes to force GM into providing some financial support to American Axle.   It is questionable, however, whether the UAW would informally put pressure on local leaders to take their membership on strike on the unlikely proposition that GM could be pressured to help American Axle.  If GM would provide financial support to a supplier to which it has not collective bargaining ties (unlike Delphi), it is reasonable to believe that many other suppliers would expect similar aid.  Thus, GM would likely resist such pressure, and it is reasonable to believe that the UAW knows it.

            It is most likely that the GM local strikes are related to the two-tier wage system negotiated in the previous contract.  Such an agreement could be seen by some more militant workers and locals as violating the principle of equal pay for equal work.  Thus, the local strikes may be demonstrations by the locals that they can be militant.  As the two-tier wage structure was negotiated nationally, the leadership of some of the locals may be attempting to put pressure on GM where they can.

            It is also possible that the local strikes may be related to the upcoming triennial local union elections.  This is a local election year, and leadership in some locals will tend to demonstrate aggressiveness.

            Regarding American Axle, the UAW has not yet been convinced that American Axle needs concessions of the sort given to other suppliers.  In essence, the UAW does not believe, based on the information it has been given, that the American Axle situation is comparable to other auto suppliers in terms of its financial condition. Concessions to Dana and Delphi were given under the threat of imposition of concessions by a bankruptcy judge; American Axle is not in bankruptcy. The UAW believes it contributed to the success of American Axle over the last ten years, and that those contributions are not being recognized by American Axle.  American Axle’s position is that it must obtain a contract similar to that of other auto suppliers in order to remain competitive.

            Overall, there is no reason to believe that the strikes have done serious long-term damage to either GM or American Axle.  Demand for cars and parts is down and inventories are high.  Thus, it is not likely that a substantial number of sales have been permanently lost that will not be recouped after the strike ends.  The UAW must have been aware of this demand situation.  Generally, it’s in a union’s interest to strike when demand is high, not when demand is low.  This suggests that GM strikes may simply be a demonstration of aggressiveness on the part of the UAW local leadership with no intent to do serious additional financial damage to a shaky GM.  Similarly, the occurrence of the American Axle strike during a demand downturn in conjunction with the decision of American Axle not to hire replacements suggests that the strike continues at a low level and that it is not doing serious long-term damage to American Axle.  This conclusion is also supported by an American Axle statement that it will invest in UAW-represented plants after an agreement is reached.