UAW, automakers make peace during crisis

By Nick Zieminski - Analysis

DETROIT (Reuters) - Here in the Motor City, both automakers and their unions are singing the blues, and they are largely carrying the same tune.

Unions, traditionally a thorn in the industry's side, are now doing whatever they can to help automakers weather an unprecedented storm of falling sales, shrinking market share, soaring raw material prices, and a rapid shift in customer

tastes toward smaller and more fuel-efficient vehicles.

Their support -- which includes vocal backing for U.S. government loan guarantees the automakers see as crucial -- suggests organized labor is one problem Ford, GM and Chrysler do not need to worry about right now, executives and union leaders told the Reuters Autos Summit in Detroit this week.

"We made a lot of concessions," said Ron Gettelfinger, who heads the United Auto Workers union, which represents the bulk of Detroit's hourly workers. "We've had our teeth kicked out over the years."

Automakers cannot get out of their current predicament by squeezing labor any further, he said, after the UAW last year agreed to landmark benefit cuts and a two-tier wage system that reduced costs by billions for Detroit's Big Three.

"They have been critical of us. But here lately you haven't heard a lot of that I don't think," Gettelfinger said, citing the tone at an industry conference last month. "Management people called me and said, "My God, you wouldn't believe it. This is the first year they never criticized the UAW." So I think we have done our part."

Many industry CEOs agree. Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz). chief Alan Mulally said the company did not need to ask the UAW for further concessions.

"We are very pleased with our last contract negotiations," Mulally said. "It was a transformational agreement on wages and benefits, and really is an enabler for us operating profitably here in the United States."

Dick Dauch of American Axle & Manufacturing Holdings Inc (AXL.N: Quote, Profile, Research, Stock Buzz). -- which this year was able to cut union wages to about $33 an hour from $73, after a prolonged strike -- said the parts supplier is on track to cut its workforce and close plants, saving some $350 million a year.

"We have no more labor issues -- 2008 to 2012. Labor is no longer a restrictor for us," Dauch said.

The shift comes amid broad declines in union membership. Last year, about 12 percent of Americans were part of a union, according to government data, compared with more than 20 percent a generation ago. UAW membership, at about 465,000, is the lowest since World War II. It has fallen by a third from 2001 and is down by two-thirds from its 1979 peak.

Those losses could reverse if a Barack Obama Democratic administration next year signed the Employee Free Choice Act, legislation blocked for years by Republicans, that would make it much easier for workers to form unions.

MORE RATIONAL - OR REALISTIC?

With its 2007 agreement and its subsequent flexibility, the UAW has shown willingness to adapt to tough economic times.  Continued...