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All or nothing, sooner or later

Whatever settlement may emerge between American Axle & Manufacturing and the United Autoworkers representing its workers at five plants (and you can be sure, there will be a settlement) it is certain to be an unhappy one. Whatever concessions the drivetrain components producer and the union are making in their negotiations, neither side is going to come out of this feeling they got what they want, or trusting the other, and that will shade the future of both the union and the company.

The issues, as always, are wages and benefits. American Axle contends it pays $73.48/ hour per worker, which it says is approximately three times what its domestic competitors are paying to workers who are members of the same union. It also wants structural changes to the working agreement, similar to rule changes the union has accepted at other domestic automotive suppliers. The UAW, whose striking members are the remainders after several rounds of employee buy-outs at American Axle, contends the company wants wage reductions of up to $14.00/hour, and elimination of future retiree and pension benefits.

The strike began as February was ending, and as April winds toward May there is no sign of it ending. Negotiations stopped for a time in March, then restarted, but each side has rejected the other’s proposals, and the union ruled out federal mediation. On the surface, there appears to be no movement.

In fact, both sides are playing a “long” game, figuring that the dragging out the strike may be painful and destructive, but it is the only route to their long-term objectives. Think of it: last year, the United Autoworkers traded jobs, wages, and benefits in their agreements with the Big Three domestic automakers. With American Axle, the union has drawn a line over fewer than 4,000 positions.

The difference is that last year’s agreements locked the union into place with General Motors, Chrysler, and Ford, while the union’s gamble now is it can hold its place at American Axle before it — and dozens of other mid-sized manufacturers — gain the leverage to drop the union, or domestic production, entirely.

That, after all, is American Axle’s threat. “We have the flexibility to source all of our business to other locations around the world, and we have the right to do so,” chairman Richard Dauch has said. “We will not be forced into bankruptcy in order to reach a market-competitive cost structure in the United States. If we cannot compete for new contracts in the U.S., there will be no work in the original plants.”

The company’s version of the facts — $73.48/hour —would be easy to refute if it were not true, but they are almost incidental to a larger point: absent some new idea (e.g., an independent benefits association, as the auto companies established, or national health insurance) the union cannot pare its demands far enough to change American Axle’s perspective on domestic labor costs. The company is comparing its production costs to its domestic competitors, but its real target, plainly, is the costs set by its own overseas operations

One issue that probably is not being negotiated, at least directly, is a common outlook for this business. Does American Axle care if its products are manufactured domestically? Does the union care what its members do, and for whom, as long as they have high numbers of dues-paying members from which to build their influence and promote their agenda?

For now, one has to conclude there will be a settlement, because neither side has jumped to effect the more radical answers to those questions. They can work this out, and they can work together, for now. What’s unknown is whether they can, or want to, work together for the long term.

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