Chrysler, union try to work it out together
04-23-2006, 12:06 PM
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Chrysler, union try to work it out together
TOLEDO, Ohio -- As Bruce Baumhower wheeled his Town and Country mini-van past the gleaming white boxes of this city's new Jeep Wrangler plant on a recent spring afternoon, his cell phone rang with a call he'd been waiting for all day.
"This is him," he said with a grin, connecting to one of DaimlerChrysler AG's top U.S.-based manufacturing executives.
Baumhower, the preternaturally optimistic president of United Auto Workers Local 12, had hatched a plan for Chrysler to save two-thirds on its local natural gas bill if it could just capture the methane gas seeping from an old landfill across the street from the plant. The only catch: Chrysler would have to spend $1 million on a processing facility.
"It looks like you could recoup that in the first year," Baumhower said, sounding more like a company accountant than the man representing thousands of its workers.
It wasn't so long ago that such a phone call would have been unthinkable between officials of Chrysler and Local 12. But in a U.S. auto industry bloodied by bankruptcies and job loss, Toledo's workers are providing a powerful example of what can happen when the UAW trades its long history of confrontation for cooperation.
Before Chrysler bought the old American Motors Jeep factory from Renault in 1987, militant local officials were best known for wildcat strikes and welding the doors shut on Jeeps to protest shoddy treatment. But in the last two decades, leaders from Local 12, Local 14 and others in the region have banded together to convince their rank and file that getting along can produce striking results.
The proof is easy to see. Since 2001, Chrysler has located two new assembly plants in Toledo, General Motors Corp. has invested $500 million in its transmission plant here, and suppliers have followed like pilot fish.
All told, the industry has invested almost $4 billion in local plants and their products, saving almost 10,000 jobs and adding 1,200 more.
"It sure contrasts with what's going on in the rest of the auto industry," Baumhower said. "We're just trying to stay alive."
Baumhower acknowledges that working closely with management has rankled officials in more recalcitrant corners of the UAW. But staying alive means much of his day is spent concocting ever more audacious methods of protecting wages by cutting costs in other ways. The landfill proposal is one example. Another is use of public and private funds to create a 200-acre supplier park connected to the Jeep plant via a $4 million monorail that could save millions in logistics expenses.
Baumhower's calculus is simple: There is no shame in working with management as long as it protects jobs. He, Regional Director Lloyd Mahaffey, and Oscar Bunch, president of Local 14, are part of a tradition of innovative leadership that began decades ago when local UAW officials decided that their best future lay in relinquishing their past.
When Chrysler took over the money-losing Jeep plant, Toledo's local was so militant and aggressive that the company--and the union--said it couldn't join the "master" agreement that underpins the UAW's pattern bargaining strategy.
But in some ways, that may have been the best thing that ever happened to Toledo. Over the next several years, Local 12 charted its own course, proving to Chrysler that Toledo workers were highly industrious if motivated in the right way. Officials cut an agreement guaranteeing Toledo workers the same pay and benefits as the national union. In return, Local 12 made broad concessions in areas long held sacrosanct by the UAW.
Union officials eliminated more than 100 job classifications and adopted Japanese-style work teams. They agreed to productivity measures and flexible work environments. Workers traveled to Jeep dealers to find out what sorts of quality problems crimped sales and then devised ways to fix them. They also broke down the process that turned rolled steel into doors and hoods to find out why so many of them were damaged and had to be scrapped. Through initiatives like these, employees slashed $100 million in costs during the 1990s.
Local 12's reward came in 2001 when Chrysler invested $1.2 billion in a new plant in Toledo to produce a small SUV called the Jeep Liberty. That plant has performed so well that Chrysler gave it a sister vehicle called the Dodge Nitro, adding more work.
Then in 2003, the company approached Baumhower with a radical new proposal championed by Chrysler Group CEO Tom LaSorda, who was then head of manufacturing.
If the UAW would agree to let Chrysler outsource three-quarters of a new Wrangler plant to suppliers, the company would build the new facility next door to the Liberty plant. The alternative was that a Wrangler plant that started out making bicycles in 1906 would be shut down and production moved abroad.
"If we didn't agree it was going to go to Mexico," Baumhower said. "Obviously, some of our guys looked at it as it's dividing the union."
Baumhower, though, looked at it differently. In his view, the old plant was living on borrowed time anyway. And the new idea made plenty of sense. As LaSorda outlined it, the plant's traditional functions--the body shop, the paint shop, the chassis operation, and the final assembly line--would be divided between four buildings connected by covered conveyor belts. Chrysler would own the final assembly facility and the right to coordinate production. Three separate suppliers from Germany, England and Korea would equip, own and operate the other three functions.
Idled UAW workers would get "preferential treatment" in hiring at the new supplier plants and would get paid similar wages. The suppliers agreed not to oppose any UAW organization drive. Those companies would spend a total of $300 million on the plant and equipment, allowing Chrysler to free up that much for new product development--a crucial advantage in a competitive market.
The UAW had balked at this sort of arrangement for years, fearing a loss of bargaining power. In the case of Toledo, it also meant that young workers transferring to the new plants had to give up their chance at a cushy retirement funded by Chrysler.
As a practical matter, most of the transfers are old enough to leave Chrysler with full benefits and then take up their new jobs at full pay. But even so, union leadership had to lobby hard to win a vote on the matter.
"If it wasn't for Local 12, we wouldn't have that deal down there," said Larry Drake, the president of KUKA Flexible Production Systems Inc., a unit of the German company that will run the body shop.
Baumhower and his lieutenants have no illusions about the risks involved. Already, in a shock to everybody, financial trouble at the British paint-shop operator forced it to liquidate, leaving Chrysler holding the bag. The risk to the union is that Chrysler will hire a new partner under duress that is less friendly to labor.
Baumhower also had to flex his muscles after KUKA began hiring skilled workers off the street, winning assurances that the new company would respect its informal promise to hire UAW workers.
"It was a miscommunication," Drake said, noting KUKA's support for the UAW.
To Baumhower, none of this is about losing union power. It's about creating a new, more competitive paradigm for union-management relations.
Ken McCarter, Chrysler vice president for union relations, said new behaviors hatched in Toledo have to other Chrysler facilities, most notably the plant in Belvidere.
The starting point of negotiations is "How can we make this work for everybody?" McCarter said. "It's not `If you do this, I'm gonna do this.' Those are not the type of discussions we have in this day and age."
As proof that getting along isn't just a euphemism for rolling over, Baumhower gives the example of the Johnson Controls Inc. plant that opened in nearby Northwood, Ohio, several years ago to supply instrument panels for the Jeep Liberty. At first, Johnson Controls refused to let the UAW organize the plant. So the union called for a walkout that to other non-union Johnson Controls facilities around the country.
In the end, the company accepted the union in Northwood and elsewhere across the U.S. And under the leadership of a Toledo veteran named Wayne Truitt, the union then played ball. In return for cutting costs and creating a lower starting wage, the existing workers have received two new product lines and industry beating wages at the top end of the scale.
Truitt said the new arrangement took convincing on all sides. "People fight change just because it's in their nature," he said. His job now, he said, is to bargain for a boost in low-end wages in the next negotiation.
Whether the UAW can learn from Toledo is an open question. Ongoing animosity toward Local 12 has prevented it from joining the master agreement, despite an opportunity in 2003. Bunch, the president of Local 14, which represents workers at the nearby GM transmission plant, said that even in Toledo keeping the rank and file convinced that cooperation makes sense means reminding them almost daily that "we can't be in a world market and fight with management."
To some Toledo Jeep workers like Ron Montri, a former union official, the issue is the extraordinary long-term loss of jobs and union power in the face of pressure from low-wage countries.
"I just want to build cars. That's what we do: We figure it out," he said.
UAW official Dan Lewandowski voiced a similar regret, despite the fact he's a big supporter of the new Chrysler plant and Local 12's progressiveness in general. "You know what this (area) got us?" he asked. "About 12 jobs. All for competitiveness. It's amazing."
"This is him," he said with a grin, connecting to one of DaimlerChrysler AG's top U.S.-based manufacturing executives.
Baumhower, the preternaturally optimistic president of United Auto Workers Local 12, had hatched a plan for Chrysler to save two-thirds on its local natural gas bill if it could just capture the methane gas seeping from an old landfill across the street from the plant. The only catch: Chrysler would have to spend $1 million on a processing facility.
"It looks like you could recoup that in the first year," Baumhower said, sounding more like a company accountant than the man representing thousands of its workers.
It wasn't so long ago that such a phone call would have been unthinkable between officials of Chrysler and Local 12. But in a U.S. auto industry bloodied by bankruptcies and job loss, Toledo's workers are providing a powerful example of what can happen when the UAW trades its long history of confrontation for cooperation.
Before Chrysler bought the old American Motors Jeep factory from Renault in 1987, militant local officials were best known for wildcat strikes and welding the doors shut on Jeeps to protest shoddy treatment. But in the last two decades, leaders from Local 12, Local 14 and others in the region have banded together to convince their rank and file that getting along can produce striking results.
The proof is easy to see. Since 2001, Chrysler has located two new assembly plants in Toledo, General Motors Corp. has invested $500 million in its transmission plant here, and suppliers have followed like pilot fish.
All told, the industry has invested almost $4 billion in local plants and their products, saving almost 10,000 jobs and adding 1,200 more.
"It sure contrasts with what's going on in the rest of the auto industry," Baumhower said. "We're just trying to stay alive."
Baumhower acknowledges that working closely with management has rankled officials in more recalcitrant corners of the UAW. But staying alive means much of his day is spent concocting ever more audacious methods of protecting wages by cutting costs in other ways. The landfill proposal is one example. Another is use of public and private funds to create a 200-acre supplier park connected to the Jeep plant via a $4 million monorail that could save millions in logistics expenses.
Baumhower's calculus is simple: There is no shame in working with management as long as it protects jobs. He, Regional Director Lloyd Mahaffey, and Oscar Bunch, president of Local 14, are part of a tradition of innovative leadership that began decades ago when local UAW officials decided that their best future lay in relinquishing their past.
When Chrysler took over the money-losing Jeep plant, Toledo's local was so militant and aggressive that the company--and the union--said it couldn't join the "master" agreement that underpins the UAW's pattern bargaining strategy.
But in some ways, that may have been the best thing that ever happened to Toledo. Over the next several years, Local 12 charted its own course, proving to Chrysler that Toledo workers were highly industrious if motivated in the right way. Officials cut an agreement guaranteeing Toledo workers the same pay and benefits as the national union. In return, Local 12 made broad concessions in areas long held sacrosanct by the UAW.
Union officials eliminated more than 100 job classifications and adopted Japanese-style work teams. They agreed to productivity measures and flexible work environments. Workers traveled to Jeep dealers to find out what sorts of quality problems crimped sales and then devised ways to fix them. They also broke down the process that turned rolled steel into doors and hoods to find out why so many of them were damaged and had to be scrapped. Through initiatives like these, employees slashed $100 million in costs during the 1990s.
Local 12's reward came in 2001 when Chrysler invested $1.2 billion in a new plant in Toledo to produce a small SUV called the Jeep Liberty. That plant has performed so well that Chrysler gave it a sister vehicle called the Dodge Nitro, adding more work.
Then in 2003, the company approached Baumhower with a radical new proposal championed by Chrysler Group CEO Tom LaSorda, who was then head of manufacturing.
If the UAW would agree to let Chrysler outsource three-quarters of a new Wrangler plant to suppliers, the company would build the new facility next door to the Liberty plant. The alternative was that a Wrangler plant that started out making bicycles in 1906 would be shut down and production moved abroad.
"If we didn't agree it was going to go to Mexico," Baumhower said. "Obviously, some of our guys looked at it as it's dividing the union."
Baumhower, though, looked at it differently. In his view, the old plant was living on borrowed time anyway. And the new idea made plenty of sense. As LaSorda outlined it, the plant's traditional functions--the body shop, the paint shop, the chassis operation, and the final assembly line--would be divided between four buildings connected by covered conveyor belts. Chrysler would own the final assembly facility and the right to coordinate production. Three separate suppliers from Germany, England and Korea would equip, own and operate the other three functions.
Idled UAW workers would get "preferential treatment" in hiring at the new supplier plants and would get paid similar wages. The suppliers agreed not to oppose any UAW organization drive. Those companies would spend a total of $300 million on the plant and equipment, allowing Chrysler to free up that much for new product development--a crucial advantage in a competitive market.
The UAW had balked at this sort of arrangement for years, fearing a loss of bargaining power. In the case of Toledo, it also meant that young workers transferring to the new plants had to give up their chance at a cushy retirement funded by Chrysler.
As a practical matter, most of the transfers are old enough to leave Chrysler with full benefits and then take up their new jobs at full pay. But even so, union leadership had to lobby hard to win a vote on the matter.
"If it wasn't for Local 12, we wouldn't have that deal down there," said Larry Drake, the president of KUKA Flexible Production Systems Inc., a unit of the German company that will run the body shop.
Baumhower and his lieutenants have no illusions about the risks involved. Already, in a shock to everybody, financial trouble at the British paint-shop operator forced it to liquidate, leaving Chrysler holding the bag. The risk to the union is that Chrysler will hire a new partner under duress that is less friendly to labor.
Baumhower also had to flex his muscles after KUKA began hiring skilled workers off the street, winning assurances that the new company would respect its informal promise to hire UAW workers.
"It was a miscommunication," Drake said, noting KUKA's support for the UAW.
To Baumhower, none of this is about losing union power. It's about creating a new, more competitive paradigm for union-management relations.
Ken McCarter, Chrysler vice president for union relations, said new behaviors hatched in Toledo have to other Chrysler facilities, most notably the plant in Belvidere.
The starting point of negotiations is "How can we make this work for everybody?" McCarter said. "It's not `If you do this, I'm gonna do this.' Those are not the type of discussions we have in this day and age."
As proof that getting along isn't just a euphemism for rolling over, Baumhower gives the example of the Johnson Controls Inc. plant that opened in nearby Northwood, Ohio, several years ago to supply instrument panels for the Jeep Liberty. At first, Johnson Controls refused to let the UAW organize the plant. So the union called for a walkout that to other non-union Johnson Controls facilities around the country.
In the end, the company accepted the union in Northwood and elsewhere across the U.S. And under the leadership of a Toledo veteran named Wayne Truitt, the union then played ball. In return for cutting costs and creating a lower starting wage, the existing workers have received two new product lines and industry beating wages at the top end of the scale.
Truitt said the new arrangement took convincing on all sides. "People fight change just because it's in their nature," he said. His job now, he said, is to bargain for a boost in low-end wages in the next negotiation.
Whether the UAW can learn from Toledo is an open question. Ongoing animosity toward Local 12 has prevented it from joining the master agreement, despite an opportunity in 2003. Bunch, the president of Local 14, which represents workers at the nearby GM transmission plant, said that even in Toledo keeping the rank and file convinced that cooperation makes sense means reminding them almost daily that "we can't be in a world market and fight with management."
To some Toledo Jeep workers like Ron Montri, a former union official, the issue is the extraordinary long-term loss of jobs and union power in the face of pressure from low-wage countries.
"I just want to build cars. That's what we do: We figure it out," he said.
UAW official Dan Lewandowski voiced a similar regret, despite the fact he's a big supporter of the new Chrysler plant and Local 12's progressiveness in general. "You know what this (area) got us?" he asked. "About 12 jobs. All for competitiveness. It's amazing."
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