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UAW trying to go after foreign automakers' plants

DETROIT (Bloomberg) – The UAW is trying to hold its first successful organizing drive at a foreign-car factory in the U.S. To succeed, the union has to convince people like Rocky Long.

“I don’t see any problems here. I don’t see how they could help me out,” said Long, who’s worked at the Hyundai Motor Co. assembly plant in Montgomery, Ala., for five years. Of the union representatives who came to his home this year, he said, “I really didn’t give them the time of the day.”

UAW President Bob King has pledged to organize a foreign automaker this year to expand its bargaining power beyond the U.S. companies it has negotiated with for seven decades. While Detroit is mostly retooling old plants, overseas car companies are building and expanding U.S. factories.

The union is seeking to revive membership ranks that declined 75 percent to 376,612 last year from its peak of 1.5 million. Standing in his way are rising sales and added investments at Hyundai’s Alabama complex and sites such as affiliate Kia Motor Corp.'s factory in Georgia.

Already, King and his organizers are learning that workers at foreign-owned assembly plants, most of which are in the U.S. South, may not be easy to persuade.

“The UAW has to convince workers that they need a union when in fact without a union they got what they consider to be one of the best jobs they’ve ever had: a good manufacturing job with a company that’s expanding,” Gary Chaison, a professor of industrial relations at Clark University in Worcester, Mass., said in an interview.

Michele Martin, a UAW spokeswoman, didn’t respond to requests for comment or to interview union supporters in Alabama. King hasn’t said which automaker he’s trying to organize.

Hyundai costs

Hyundai’s lower wages and benefits have given it hourly labor costs of about $44 to $48 an hour, compared to $52 an hour at Toyota Motor Corp.'s U.S. plants and about $58 an hour at the U.S. factories of General Motors Co., Ford Motor Co. and Chrysler Group LLC, according to Sean McAlinden, chief economist with the Center for Automotive Research in Ann Arbor, Mich.

While Hyundai officials declined to speak about specific pay, workers said the hourly rate is generous for the area. Montgomery’s median household income in 2009 was $42,346, about $9,000 less than the national median and $6,400 less than in Michigan, according to the U.S. Census 2009 American Community Survey.

Wanda Carter, a Hyundai hourly worker, said she doesn’t see a need for a union at the Alabama plant. “Hyundai does the best they can do to work with the Hyundai employees,” said Carter, who declined to give her age.

Volkswagen plant

She wasn’t alone. Workers at another potential UAW target, Volkswagen AG’s new plant in Chattanooga, Tenn., said they were excited just to have a job in the auto industry. There isn’t any talk of forming a union, said Terry Young, a line worker.

“You don’t want to look a gift horse in the mouth,” said Young, 34. The position is much safer than his previous job as a welder at construction sites and the pay is “great” for the area, he said.

“This is one of the good jobs,” Young said. “I love it.” King has said the union has set aside $60 million from its strike fund to organize the U.S. workers of an Asian or European automaker this year. He’s said the campaign will aim to put public pressure on the companies and accuse them of violating workers’ human rights if they try to block organizing efforts.

‘Human-rights violator’

“If a company makes the bad business decision to engage in anti-union activity, suppress the rights of freedom of speech and assembly, we will launch a global campaign to brand that company a human-rights violator,” King said in a Jan. 12 speech in Detroit. “We do not want to fight, but we will not run from a fight.”

Hyundai’s lower costs allow it to price the Sonata sedan built in Alabama starting at $19,395, compared to Toyota Camry that starts at $19,820 and a Chevrolet Malibu that starts at $21,975. Hyundai’s U.S. sales rose 24 percent last year, more than twice the industrywide gain of 11 percent, and its U.S. market share rose to 4.6 percent from 2.7 percent in 2005.

About 25,000 people applied for jobs at the Alabama factory before it opened, said Robert Burns, a Hyundai spokesman. It employs 2,500, including 2,100 hourly workers. The turnover rate is about 4 percent, he said.

Hyundai production

The plant is running almost around the clock on two, 10-hour shifts, five days a week, plus some Saturdays, and is expected to produce 330,000 cars this year, 10 percent more than the planned capacity, Burns said.

Ashley Frye, the plant’s vice president of production, meets each month with employees and that has contributed to a good relationship between management and hourly workers, he said. The factory also provides a comfortable and safe environment, he said, noting the facility’s air-conditioning and low rate of injured employees.

“We maintain an atmosphere of civility,” he said. “As an example, use of salty language, we don’t allow that here.”

Wednesday is steak day in the employee cafeteria and the annual employee appreciation day this year included a performance by “Morris Day and the Time.” Part of the challenge the UAW faces in organizing labor in the South is cultural, said James Hornsby, business manager of the International Brotherhood of Electrical Workers Local 443 in Montgomery.

‘South is tough’

“The South is tough,” he said. Some of it could be “the Southern mentality that I can stand on my own, I don’t need anybody’s help.”

Hornsby, president of the AFL-CIO’s regional council that includes Montgomery, said the key for his union has been educating workers about the benefits of organized labor.

“The really hard part is that these car plants know what they’re doing,” he said. “They come in and pay the best wage in town. That’s to convince all of their employees that they don’t need representation.”

Long, with a growing family at home, said he feels lucky to have landed a job at the Hyundai plant and is thinking about buying a house next year.

“This is probably one of the best jobs in the area – pay-wise, benefits,” Long said. “You can’t go anywhere with a Hyundai shirt on without somebody saying, '‘Hey, are y’all hiring?’ Everybody is trying to get a foot in the door.”

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Bringing in a union will only increase the costs of the vehicles and would probably have the parent company just move out of the area where there won’t be a union.
I’ve not been a fan of unions ever since I was in one(UFCW). Took my money and never seemed to get things taken care of in a timely fashion. Where I work now isn’t a union shop, though they do have an open voting policy(vaguely mentioned in a meeting with our plant manager) where the majority vote would take effect for a whole year. I have never seen or heard of any union gatherings, nor would I attend one.
If nothing else, unions promote laziness; a “you can’t fire me without some union guy present and he’ll stick up for me” kind of attitude.

UAW did a LOT for it’s workers (some 40+ years ago). But I don’t see the need for them now. What Unions fought for years ago is now LAW (either federal or State).

If workers were being abused or working conditions were pitiful like they were years ago…then I’d say there’s a need. But not sure it’ll lead to anything constructive…Except lining the pockets of UAW executives.

Unions were invented to address abuses of workers. If the workers in this plant are happy, then the union is trying to expand there only because of its own self interest.

Having seen generations of Americans lose their pension benefits, I wonder if the workers in this plant are happy about the lack of a pension.

They probably have a company matched 401k plan going on.
And I agree with Mike, they’re only interested in collecting more union dues and lining their pockets with it.

In the “right to work” south, there is a predominant culture of independence and self-sufficiency. The Hank Williams tune “A Country Boy Can Survive” was originally “southern boy,” And the tune was quite popular down here. Apparently the sharecropper heritage leaves many, even in today’s small world, readily accepting working on production and more disdainful of unions than the “evil bossman.” Toyota will soon open a new plant a few miles from me and they have thousands applying for positions there.

“Hyundai’s lower costs allow it to price the Sonata sedan built in Alabama starting at $19,395, compared to Toyota Camry that starts at $19,820 and a Chevrolet Malibu that starts at $21,975”

I have some serious problems with this statement.

  1. It assumes that the base models are equivalent vehicles
  2. It assumes that MSRP is indicative of the actual price you would pay, which in most cases is actually more of the invoice price, though the Sonata’s short supply would likely lead it to slightly higher prices
  3. It ignores all rebates
  4. It assumes that the price differential must be just because of labor costs.

If I go to and compare a sonata to a camry and a malibu, the conclusions are a bit different.

Sonata vs. Camry: 4 cylinder base models w/ manual transmission, equipped to have all that is standard on either (ie, base Sonata GLS vs. Camry with Bluetooth and satellite radio added): The Sonata has an $860 lower invoice. However, the Sonata has no rebate while the Camry has a $1000 rebate. Net, the Camry is $140 cheaper.

Sonata vs. Malibu: 4 cylinder base models (GLS vs LS) w/ auto transmission (you can’t get a Malibu with a manual) and bluetooth and a spare tire added to the malibu: The Sonata has a $1,530 lower invoice. However, the Sonata has no rebate while the Malibu has a $2000 rebate. Net, the Malibu is $470 cheaper.

Now, the cost to build the vehicles may be different, certainly, but the whole assumption that the Sonata was cheaper to the consumer because of labor costs? Bogus.

Besides, according to the Harbour Report, most sedans take less than 25 man hours of labor to assemble (the best are all under 20). Including engine, transmission, stamping, as well as assembly, Toyota averages 30.37 man-hours, GM averages 32.29 man-hours, and Hyundai averages 35.10 man hours. At the labor rates quoted, that means the following labor costs:

$1579 at Toyota
$1615 at Hyundai
$1873 at GM

Of course, the quoted difference in wages is also outdated. The Harbour Report puts the difference in labor cost in 2011 between GM and Toyota at $97 per vehicle.

I don’t have a pension…Many high-tech companies don’t offer them…401k only…and when I was a consultant I didn’t even have that. That’s NOT to say I haven’t saved…I have…If I didn’t still have one kid in graduate school and one in college and one in highschool…I could retire.

Pensions can be HIGHLY overrated.

Teachers in Ohio (like most places) have a pension system. Like many, it is currently significantly underfunded, so they’re looking to fix the plan. Currently, teachers pay 10% of their salaries in, and the district matches with 14%, and the teachers can retire with up to ~98% of their final 3 year average salary with 35 years of service (at any age) and COLA set to adjust with inflation. For teachers who are retired or retiring in the next year, its a good benefit.

However, the system is changing for teachers with more time to retirement and new teachers. Now they’re going to the teachers paying 13% and the district matching with 14%, but with retirement no earlier than 60 and the pension being 77% of final 5 year average salary with 35 years of service and COLA set at 2%, noncompounded, and kicking in only 5 years after retirement. Some people say that’s still overly generous. But if you do the math, it isn’t.

Why? Well, the average company pays 6.2% into social security, plus a 3% match on the first 10% of your pay you contribute. In other words, the average private sector company puts in a 9.2% match.

So I took a local school district and their pay scale under their current contract, and assumed a 1.5% compounded annual increase on top of the seniority increases under all future contracts (so starting after the 3 year current contract is up, which has no raises of any sort allowed). In inflated dollars, someone retiring at age 60 in 35 years would have a final average salary of $101,113, and get a starting pension of $77,857.06. To fully fund their pension with their COLA through the remainder of their life expectancy, the pension fund would have to return 4.76% annual if they had an average private sector 9.2% match from the district. With the 14% match, they need a 4.05% return.

Those are VERY low rates of return. And here’s the rub. Hartford, MetLife, Nationwide, and Pacific Life all currently offer immediate annuities with annual rates of return of at least 6.5% for those at age 60. If you could get just 6% rate of return, the needed match from the district would be 2.72% - just 1/3rd of what the average private company puts into their employee’s retirement benefits between 401k matches and social security - even below the average 401k match.

But people here still complain the benefit is too generous and that they could never get that generous of a retirement benefit… even though they EASILY could if they just put as much money in and invested it conservatively.

That said, yes, SOME pensions are generous… but they seriously can’t all be painted as such.

The traditional foreign manufacturers with plants in the US have typically not been here long enough to go through several business cycles. Those that have, like Toyota and Honda, have expanded business substantially over that time period. They may have avoided significant layoffs. If hard times hit and the layoffs or other cost cutting efforts were seen as unfair, things might change. But that doesn’t appear to be coming any time soon.

More and more Americans live pay check to pay check. And although for many it is their choice, for a growing number it is from desperation due to the decline in wages relative to the cost of living. Pensions were nearly non-existent in Mississippi even 30 years ago and they are somewhat rare now. I am very anxious to see what the current businesses in this area do when Toyota and subsidiaries begin to up the average wage and benefits and take the ‘cream of the crop’ of employees.

I heard a statement once that companies that have unions usually deserve them. I think that it could be true. Since retiring from the Navy, I have always worked in management. During job searches, I found that I did not want to work for any company that had a union, not because of the union but because of the management.

At companies that had unions, the management always bad mouthed the workers, had nothing good to say about them. At companies that did not have unions, I found the management had a high level of respect for the employees and spoke highly of them.

In many ways, the success of the unions has been their downfall. Unions came into being over safety issues, not pay issues as a lot of people believe. It was the unions that campaigned for OSHA, even though OSHA has removed much of the reason for their existence.

While I do not want to belong to a union or work in a company that is unionized, the fact is that we all benefit from the unions. Where needed, unions force companies to provide fair wages, benefits, and a safe working environment to their workers, leveling the playing field with companies that do it because it is right.

But, if the unions were to suddenly disappear, you can bet the rat-b@st@rds (RBs) would take over and we would all be working for peanuts again. The good guys would not be able to compete with those RBs who take every advantage possible of the workers. The RBs would cut costs at the employees expense, putting the good guys out of business.

“At companies that had unions, the management always bad mouthed the workers…”

I worked in a steel mill for the first 12 years after college. And a lot of the management did badmouth hourly workers. Not all of them, and it was really directed at what they did and not who they were. The games they played were astonishing. They used to set up foremen and really anyone in management that didn’t catch onto their games immediately. I’m sure that past managers asked for it and those I worked with were just paying for past problems. I didn’t have to address the problems because I was just an engineer and not yet a manager. They also seemed to give me a pass because I let them know that all my mother’s brothers in law were hourly workers at another steel mill in my company. And I was willing to listen to them and treat them like people. But that was one-on-one. When the chips were down, I was just another management lackey. So managers in a strong union shop have good reason to be frustrated.

I can only tell you what I observed while being interviewed by these companies.

I’d like to add a few comments to this thread.

The UAW has been trying for years to organize Southern US car plants.

The import brands who make cars in the US have a relatively young work force with less need for medical care, a large expense these days. If the import brands don’t start acting stupid by finding excuses one day to phase out older workers inclined to have more health care problems, then they will have worked in part to keep unions at bay.

I seriously doubt that US mfrs would go back to the bad old days, thinking poorly of their production people and shorting their wages and benefits as much as possible. They have learned their lesson as evidenced by the resistance to unionization in import brand factories. Mistreat your people and you get a union; easy to understand?

I never heard of professional people badmouthing the shop people where I worked. The shop people were a vital part of the organization which could not function without them. The culture in the company where I worked as instilled by upper management fostered cooperation among everyone for which I am thankful as it made my job easier.

One more thing, Critical thinking is good for evaluation but applied too heavily at the wrong time is not good for creative thinking.

That has to be one of the most poorly-disguised, slanted articles I’ve read:

  1. “go after” foreign automakers plants? vs the objective “organize”? (That is, after all, what they’re doing.) Bias clear from the start…that an editor of a Junoir-High-School newsrag shouldn’t miss.

  2. The inteview of two workers, with solid anti-union views (for whatever reason), meant to stand in for ALL prospective workers. (FYI, quotes are a classic way for a journalist to inject his opinion: he wants to say. “Sen. Snee is a no-good crankypants,” but cannot do that due to rules of journalism. He CAN, however, interview someone who says, “Sen. Snee is a no-good crankypants.”)

  3. Note that the UAW, no doubt wisely, didn’t want to talk to the journalist.

  4. A bunch of other stuff, like implying that the wage differential was due solely, or predominantly, to non-union status, “accuse them of violating human rights” vs. insist on appliction of Federal laws re: illegal campaigning prior to the ballot.

This “journalist” would be better suited to writing PR (or, openly admitting that).

How much news these days is news and not opinionated journalism?

Non-union workers need to realize that the wages and benefits they receive were won for them by unions many years ago… If there were NO unions setting the wage and benefit standards, corporations would be paying $1/day for a 12 hour day like they do wherever they can get away with it…

“Non-union workers need to realize that the wages and benefits they receive were won for them by unions many years ago… If there were NO unions setting the wage and benefit standards, corporations would be paying $1/day for a 12 hour day like they do wherever they can get away with it…”

That may be true. But we are not talking about the same companies. Just because Asian manufacturers located plants in the US does not mean they would choose ill-advised management practices that have been shown to be counterproductive.

They pay “prevailing wage and benefit packages”…in whatever area they are located…These wage and benefit standards have developed over the years as a result of a lot of suffering and sacrifice by organized labor…