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Date Posted: 21:01:58 10/14/03 Tue
Author: Moderator
Subject: UAW Membership May Fall to Lowest in 6 Decades Under Contract
In reply to: moderator 's message, "Topic: What do you think of the new 2003 National Contract?" on 18:39:50 10/12/03 Sun

UAW Membership May Fall to Lowest in 6 Decades Under Contract
2003-10-14 00:03 (New York)

UAW Membership May Fall to Lowest in 6 Decades Under Contract

Oct. 14 (Bloomberg) -- The United Auto Workers' decision to
accept job cuts in exchange for health-care benefits in last
month's labor agreement may extend a membership slide that would
reduce the union's ranks to the lowest in 61 years.
The four-year accord with General Motors Corp., Ford Motor
Co. and DaimlerChrysler AG's Chrysler unit will close eight
plants, cutting as many as 50,000 jobs by 2007, Goldman Sachs
analyst Gary Lapidus estimated in a report. That would lower UAW
membership below 600,000 for the first time since 1942, and from
a 1979 peak of 1.5 million.
The success of Asian automakers such as Toyota Motor Corp.
at winning market share has taken a toll on the union's ability
to confront the Detroit-based automakers. UAW President Ronald
Gettelfinger's decision to swap jobs for benefits highlights the
union's waning influence since the previous contract in 1999,
when it won a ban on factory shutdowns.
``There was a major, major philosophical change'' in the
union's approach, said Dan Genter, chief investment officer of
RNC Genter Capital Management, which manages $1.6 billion in
bonds, including debt issued by Ford and General Motors.
``Corporate survival is now superseding individual (union)
members' needs.''
Last month's contracts were negotiated as General Motors and
Ford offered rebates of as much as $6,000 and no-interest loans
for as long as six years. Even with escalating incentives, the
market share of those two companies and Chrysler fell to 60.1
percent in 2003's first nine months from 61.7 percent in the 2002
period, according to Autodata Corp. Asian automakers gained 1.5
percentage points to 32.9 percent. Ten years ago, the U.S.-based
manufacturers controlled 78 percent of the market.

`Going to Shrink'

The U.S. auto industry ``is going to shrink,'' and
Gettelfinger ``is trying to manage the shrinkage,'' said Richard
Block, a professor of industrial and labor relations at Michigan
State University. ``There's a realization there will be far fewer
UAW-represented workers at the Big Three.''
Gettelfinger, whose union has about 644,000 members now,
declined to be interviewed.
In the most recent contract, Ford received the union's
blessing to close assembly plants for the first time in almost
two decades. General Motors won permission to shut a Baltimore
assembly site and a parts plant in Michigan. Chrysler is shutting
two parts plants and selling three others.
Union members also agreed to hold down pension increases by
taking lump-sum payments during the first two years of the
contract rather than wage increases. The move saves money over
time because pension payouts are based on salaries.
The union preserved company-paid health insurance premiums
for the rank and file.

`Realistic Understanding'

Gettelfinger, 59, ``went in with a realistic understanding
of the situation,'' said Mark Oline, a managing director of Fitch
Ratings in Chicago. ``Both sides won some and lost some.''
The union preserved jobs where it could. Ford originally
targeted a St. Louis plant that produces sport-utilities for
closure. Instead, the automaker is shutting down a Lorain, Ohio,
factory that makes vans. The St. Louis plant still took a hit,
with production to be cut in half. Ford hasn't determined how
many jobs will be eliminated there.
UAW organizers are taking steps to keep its ranks from
dwindling. In the past year the union negotiated agreements with
auto-parts makers Johnson Controls Inc. and Dana Corp., making it
easier to organize as many as 26 plants employing 8,000.
``There is a very strong motivation to organizing,'' said
Harley Shaiken, a labor professor at the University of California
at Berkeley. ``They're putting will and resources into
organizing.''

Fallen Fortunes

The UAW's struggle to retain members mirrors battles at
other unions. The percentage of U.S. workers belonging to unions
dropped to 13.2 percent in 2002 from 28.6 percent in 1960,
according to the Labor Research Association.
Plants wholly owned by Japanese automakers generally don't
have unions. The UAW so far has failed to win converts because
employees of Japanese-owned companies are younger and make almost
as much as their counterparts in Detroit.
The Detroit automakers' fortunes have fallen with the
union's.
Ford's losses totaled $6.4 billion in 2001 and 2002, and
Chrysler lost $1.1 billion in the second quarter. While General
Motors has avoided losses, its U.S. pension deficit, at
$19.3 billion, prompted the automaker to sell $13 billion in
bonds this year, the most ever by a U.S. company.
Japanese automakers, by contrast, earned a combined
$15 billion in their latest fiscal years. Nissan Motor Co., the
smallest of Japan's top three automakers, has a market value that
exceeds General Motors and Ford combined.
General Motors shares declined 11 percent over a five-year
period ended Sept. 30, while Ford slid 76 percent. Toyota shares
rose 7.5 percent during that time, Honda Motor Co. increased 7.7
percent and Nissan shares tripled.
Toyota's 2 7/8 percent notes maturing in August 2008 yield
3.21 percent, less than the 6.47 percent on General Motors' 7
percent bonds due in 2012 and the 7.08 percent on Ford's 7 1/4
percent bond maturing in 2011. Toyota's debt has the highest
ratings from Moody's Investors Service and Standard & Poor's,
with the U.S. companies eight levels lower and two above
investment grade.

--Bill Koenig in Detroit (1) (248) 827-2943 or
wkoenig@bloomberg.net with reporting by John Lippert in Detroit.
Editors: Simenhoff, Wiegold, Merz, Reichl.

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