Deep in conversation on the floor of Detroit’s cavernous Cobo convention hall, the General Motors (GM) chairperson Ed Whitacre last week swapped views on electric vehicles with the speaker of the US House of Representatives, Nancy Pelosi, in front of a prototype of the Chevrolet Volt. In a huddle with the pair at the annual Detroit motor show, was a trim, bespectacled figure with a carefully cropped grey moustache.
Ron Gettelfinger, president of the United Auto Workers (UAW) union, is well and truly in the loop at the top of the US motor industry. A former chassis line repairman at a Ford factory in Indiana, the 65-year-old has led America’s blue-collar automotive employees for eight years and has emerged from a catastrophic economic year as one of the most powerful men in Detroit.
Known as “the chaplain” for his drink-free, smoke-free habits, ÂGettelfinger has steered his 513 000 members through a period of drastic job cuts, plant closures and financial hardship. And he has emerged in a remarkable position — his union, through a healthcare benefits trust, has become the part-owner of two of America’s big three carmakers. Following a post-bankruptcy restructuring, the UAW is sitting on a 17,5% share in GM and a 55% controlling stake in Chrysler.
“People need to hang in there, to be optimistic,” Gettelfinger told the Guardian, speaking on the fringes of the Detroit show. “I truly believe, after what we went through in 2008 and 2009, that the worst is over. I feel good about where we are today.”
The scale of the devastation afflicting the US car industry is evident at the UAW. In 1979, the union represented 460 000 workers at GM. By the end of this year, that figure is likely to be 42 000.
“Every job we save is an important job — that’s what we’re all about,” said Gettelfinger, who makes no apology for making concessions in employment, wages, healthcare and pension benefits. “If these companies had gone out of business — if GM had collapsed, they would have brought down Chrysler with them. They’d have brought Ford down too and they’d have hurt every foreign nameplate.”
A traditionalist who still greets members as “brother” or “sister”, Gettelfinger is one of 12 siblings from a small midwestern farming town. A shop steward since the 1970s, he is fluent in union-speak — he dismissed private equity firms as “flip and strip” merchants until one such company, Cerberus, bought Chrysler. Addressing the National Association for the Advancement of Coloured People three years ago, he ended his speech by thundering: “Solidarity! Solidarity! Solidarity for ever!”
Under pressure
But since his unopposed re-election in 2006, Gettelfinger has been under immense pressure. Rapidly losing market share, America’s carmakers pointed to employee costs as the key reason for their lack of competitiveness. In 2007, the average cost per employee hour for Detroit’s “big three” carmakers was $70 to $75 — at least $20 more than their overseas rivals. And for GM, the bill for providing healthcare and pensions to retired employees consumed a crippling $1 500 for every car sold.
At the heart of reforming the finances of Detroit’s carmakers were ground-breaking deals struck in 2007 in which the union took the burden for pensioners’ healthcare coverage off the books of GM and Chrysler, through the creation of trusts known as VEBAs (voluntary employees’ beneficiary associations). Overseen and administered by the UAW, these trusts ended up with large equity stakes in the two carmakers when they declared bankruptcy last year and were unable to stump up agreed contributions.
In an arrangement criticised by one labour expert as a “festival of conflicts of interest”, that means that the UAW now negotiates with companies in which it holds a substantial ownership stake. Gettelfinger says the union’s shareholdings are overseen by an independent body — but he admits there are “a couple of advantages”.
“We’ve never had anyone on the boards before. We now have people on the boards at both Chrysler and GM. That can give us some inside knowledge,” he says.
Not everybody is enamoured with this arrangement. Jonathan Cutler, author of a book about the UAW called Labor’s Time, says it heightens workers’ dependence on their employers: “You’re an employee of a company and your union’s investment portfolio is also tied to that company. That moves everything in the direction of financial dependence on one company. A union utterly dependent in that way is not in a position to exercise its power.”
As recently as 2007, the UAW brought both Chrysler and GM to a halt, calling members out on strike as pay negotiations stalled. Although quickly resolved, the stoppages had near-unanimous support from 49 000 Chrysler workers and 73 000 at GM and indicated the loyalty still commanded by the union.
Two-tier system
Critics of Gettelfinger, who is due to retire when his second four-year term ends in June, say the union has made little headway in gaining membership and recognition beyond Detroit’s “big three”, sustaining a two-tier system in which foreign carmakers such as Toyota, Honda and Mercedes-Benz are able to get away with lower labour costs at US factories than the home-grown industry. On Wall Street, certain analysts argue that the historic strength and inflexibility of the UAW is partly to blame for Detroit’s decline.
But Richard Block, a professor of industrial relations at Michigan State University, says Gettelfinger has generally secured decent packages for victims of Detroit’s cutbacks: “He’s done a very good job in some of the most trying times a union has ever experienced.”
Gettelfinger himself says the union has tried to act “responsibly” throughout the industry turmoil and rejects any notion of blame, although he pauses over a relatively militant wave of stoppages back in the 1990s, including a landmark strike at a GM factory in Flint, Michigan: “Have we made a decision over the years we shouldn’t have? Some people might want to go back to Flint and talk about the strike there in 1995. But we can prove that, over the years, we’ve been responsible.”
He says Detroit’s problems should serve as a wake-up to America about the importance of industry.
“We look at other countries around the world and look at how they value their industry. We don’t really have an industrial policy in our country,” says Gettelfinger. “There were a lot of people in this country who didn’t care if the big three [carmakers] went away, who didn’t care if the auto industry went out of business. We know the importance of the auto industry.” – guardian.co.uk