The UAW is Poised For Growth – Are Toyota, Honda, and Nissan Ready?
Jason Lancaster | Jun 08, 2009 | Comments 11
For years, casual observers of the auto industry were quick to point to the UAW as a source of trouble for GM, Chrysler, and Ford. Tales of do-nothing jobs banks and $70/hour compensation were the source of a popular disdain for the UAW and unions in general, and the UAW found it very difficult to attract new members in this climate.
Today, things are quite a bit different. While it says here that the UAW wasn’t perfect, anyone with a real knowledge of the auto industry will acknowledge that the UAW deserves only a part of the blame for the meltdown of GM and Chrysler. The fact is, terrible management, poor quality, and poor designs were the primary sources of GM and Chrysler failure.
The UAW hall in Bowling Green, Kentucky (pictured) might be the most important union battleground of the 21st century.
The good news for the UAW is that all of this is behind them now. The UAW is now more likely than ever to recruit Toyota, Honda, and Nissan workers over the next 2 to 5 years. Here’s why:
- For years, Japanese automakers have used veiled threats of plant closures to dissuade unionization. The latest tactic from Toyota is to show a video to workers that maps out plants with UAW membership and a correlation with plant closures. The big restructuring at GM, Ford, and Chrysler and the reduction in production capacity means that plant closures won’t be near as common as they once were, making this threat a little less powerful, especially once the current pending closures are completed.
- Toyota and Honda have been able to offer factory workers big bonuses, but times are changing. As recently as 2006, Toyota was able to pay workers in Kentucky $6k to $8k in annual bonuses, resulting in an effective salary that was higher than UAW workers in UAW plants. The Japanese automakers have also said that unionization would likely eliminate bonuses. However, considering that none of the Japanese automakers are likely to offer bonuses anytime soon, this threat isn’t nearly as powerful either.
- Overtime is making a comeback. Paying fewer workers overtime is more cost effective than hiring extra workers. As the domestic automakers shed plants over the next 2 years, the UAW workers that remain are likely to earn more overtime than workers at non-union plants operated by Japanese transplants. Consider that Nissan and Toyota have both announced they’re cutting overtime, and you have yet another source of recruiting power for the UAW – bigger checks for union workers because of more overtime.
- Japanese plants and workforces in the USA are shrinking. Nissan announced 20,000 jobs worldwide will be cut in 2009 – so far, none of them in the USA (but it’s early). Toyota recently froze plans to build a new plant in Mississippi. Toyota and Honda have both offered workers voluntary buy-out packages, and the writing on the wall is that Japanese automakers aren’t immune to market swings. For years, the UAW has struggled to convince non-union autoworkers that “it could happen to you.” Now the UAW has proof.
- The political winds are blowing in the UAW’s favor. Say what you will about President Obama and a Democratically controlled congress, but there’s no mistaking this point: The UAW has the most political capital they’ve had in a long time, especially after agreeing to major reductions in wages and benefits in order to try and help save GM and Chrysler.
- The UAW has to recruit autoworkers at Japanese plants in order to survive. If the UAW can’t recruit autoworkers at Nissan, Toyota, and Honda plants, they’re not going to survive. Their membership is smaller than ever, and the current UAW leadership has just agreed to the biggest contract concessions in the history of the union. New members are needed if the UAW wants to remain relevant.
- The auto business is going to be a lot tougher for Honda, Nissan, and Toyota going forward. For the last two decades, Japanese automakers have feasted on weak, poorly operated domestic automakers. That’s not going to happen anymore – Ford is producing vehicles with industry leading quality, and GM and Chrysler just “fixed” their business models. The domestics are going to be more competitive than ever, and that means the Japanese automakers are going to cut costs, tweak production, and try to do more with less. That’s going to filter down to the workers.
It’s important to note that the UAW isn’t necessarily bad for automakers – especially if the UAW is the reasonable and realistic version that we’ve seen over the last 6 months. Unions provide benefits and protections to workers, and when managed carefully they can work with (and not against) their employers. Automakers often enjoy political benefits from unionization – the number of tax benefits and corporate loopholes that automakers enjoy in Michigan, for example, would never have been possible without strong political support from unionized workers and the UAW’s powerful lobby.
The bottom line: These are interesting, historic times in the auto industry. The climate has never been better for the UAW to recruit autoworkers at Toyota, Honda, and Nissan. Will they be able to make inroads? How will Toyota, Honda, and Nissan respond?
What do you think – with the UAW establish itself in a non-union factory in the next 5 years?
Filed Under: Auto News
I’m sorry. I swore I stopped taking those drugs weeks ago but man this article makes me doubt myself. Back in the real world the UAW had it’s hands in everything and was too powerful. The UAW was a MAJOR factor in the demise of the American auto industry. The point that it put itself as an enetity ahead of it’s members was the day it should have been dismanteled. If you think the UAW is for it’s members, try disagreeing with the union line, you will be diciplined and re-educated in the ways of the dark side. Trust me, If you do you will be looking for another, non union, job if you are lucky.
Unions haven’t changed since my job with Kaiser Aluminum and we had United Steel Workers Local 13,000. It was the best Union a company could buy.
I was a union member at my company for 10 years. Our Union didn’t seem to do much of anything, but protect jobs of people who should have been fired years ago. One example would be a drunk alcoholic co-worker of mine had issues of stumbling in late or not coming in for work at all. The company went through the proper right up procedures with the verbal warning, then written warning, final warning, and then finally fired him. Two weeks later he gets his job back because the union filed a grievance and said he had an addiction and needed help. 6 months later he was fired again for the same thing.
Ironically I know someone who’s company’s employees voted to be represented by the UAW. The UAW came in made a bunch of promises and didn’t do anything for them. Now the company just got sold and all the employee’s have to each interview to keep their jobs, what protection did the UAW provide. NONE!
This is an intersting article, but not all that factual. That is the benefit of being a “writer.” You simply formulate an opinion and then attempt to pass it off as reality.
The UAW is not the only reason Chrysler and GM failed – but they were a willing and able partner in that failure. One cannot use the past six months as evidence of a “new and improved” UAW. Yes they finally made concessions – at the cost of tens of thousands of jobs.
Japanese automotive plants have remained union-free for one simple reason. They take care of their employees (i.e. keep their promises). Toyota, Honda, and Nissan have kept their employees working, in most cases with full pay and benefits, through the worst economic time in the history of the auto industry.
The automotive industry is indeed changing. Everyone hopes that GM and Chrysler emerge from their failure as stronger companies. Toyota, Honda, and Nissan will have to do things differently – but their core values will continue to keep them head and shoulders above the competition.
Kabuki Jo – I don’t get it – you accuse me of being non-factual, then fail to show what statements I made that were wrong. The best statement you made was that “one cannot use the past six months as evidence of a ‘new and improved’ UAW.” I agree. However, that’s as close as you’ve come to proving one of my points wrong [I said that unions aren’t necessarily bad for automakers, especially if they’re like the union we’ve seen over the last 6 months].
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For the record, I’m not saying that the UAW WILL grow, I’m saying that the UAW has the best position to grow that it’s seen in a long, long time. Exactly how is that misleading? You say that Honda, Nissan, and Toyota have taken care of their employees (true), but I say that they’ve had a significant labor cost advantage over the domestic automakers for the last 30 years (also true). Just because Japanese automakers HAVE always taken care of their workers doesn’t mean they always WILL – especially if Ford, ChryFiat, and the new GM are able to make competitive vehicles at a profit. Love it or hate it, the road just got a lot tougher for all the foreign automakers. Read the article again – I think you’ll find my ideas (and my facts) have merit.
I think it is ironic that people dump on the UAW pertaining to the jobs bank. It kept employees who would have been otherwise off the un-employment rolls, taking stress off the state tax syste. There is now proof that Toyota, Honda and Nissan have “jobs banks” of their own and no one is even making a peep. On difference though, the Japanese government subsidizes this jobs bank, un-like the UAW ones.
http://blog.mlive.com/autoblog.....nk_of.html
Why dont the UAW go after Walmart workers, they are the ones that need union representation.
there would be no problem if Japan opened up their auto markets to American made vehicles, but Japan is shut down to American products. Stop buying Japanese, and maybe the Japs will get the message.
justin Casey – From what I’ve heard, some people have tried to unionize WalMart. Not sure why the UAW doesn’t try that.
gpep3 – That old saw. Read this: https://www.tundraheadquarters.com/blog/2009/12/18/japan-auto-market-protectionist-politics/
US vehicles are given special preferential treatment, yet they still fail to sell. The reason? Ford, GM, etc. don’t make a car that would sell well in Japan. Japanese consumers want tiny, efficient autos…nothing like we have here.
I really hope this doesn’t happen. Being made in America by non-union workers is the reason I buy Nissans
Bob – I think the window has closed. Whatever chance the UAW had to unionize a transplant automaker died with the Republican takeover of the House in November 08′. From what I’m told (not trying to be political), the UAW needs legislation to get into a transplant…legislation that a Republican controlled House will probably never pass.
A good article on this issue: http://www.thetruthaboutcars.c.....elections/