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Auto industry update.

Auto industry update

Developments in Industrial Relations

The Electronic Workers and General Motors Corp. negotiated a 3-year contract convering 24,000 employees at nine plants in Ohio, Mississippi, New York, and New Jersey.

Terms, which were similar to those negotiated by the Auto Workers (see Monthly Labor Review, November 1987. p. 51), included a Secure Employment Numbers program that protects eligible employees against layoffs; a ban on plant closings except under "extraordinary" circumstances; tighter restrictions on subcontracting worker and overtime work; and immediate 3-percent specified wage increase; continuation of the provision for automatic quarterly cost-of-living adjustments, leading off with a 14-cent-an-cost-of-living adjustments, leading off with a 14-cent-an-hour adjustment retroactive to the September 14 expiration date of the prior contract, with all adjustments no longer subject to a 1- or 2-cent reduction; and lump-sum payments in the second and third years equal to 3 percent of the employee's earnings during the preceding 12 months.

Elsewhere in the automobile industry, Chrysler Corp. and the Auto Workers agreed on a 5-year contract for 5,800 workers at the Jeep plant in Toledo, OH. The previous contract, negotiated in 1985, had been scheduled to expire in February 1988, but the union agreed to bargain early after Chrysler purchased American Motors Corp. and its Jeep operations in August. Chrysler asked for the early negotiations to bring wages and benefits at Jeep in line with those in its 1985 "national" agreement with the union. To some extent, Jeep employees were induced to bargain early because their plant was one of several being considered for shutdown. After the settlement, Chrysler said the plant would kept open for at least the duration of the contract. The Company also agreed to a minimum staffing level of 4,500 employees, based on anticipated production needs in September 1988, when Chrysler negotiates a new national agreement. If the actual employment need is higher at that time, the higher level will prevail.

The contract continued existing restrictions on subcontracting, but specified that any additional restrictions resulting from the 1988 Chrysler-WAW talks would apply to the Jeep plant. The Jeep settlement also provides that if the plant is sold, the new owner must honor the labor contract with the union.

In January 1988, the workers received a lump-summ payment equal to 3 percent of their earnings during the preceding 12 months. This payment was scheduled under the 1985 agreement. A month later, they received a 2.25-percent increase in base rates under the 1987 agreement, bringing the range to $13.80-$15.79 an hour.

Afer the employees ratified the 1987 contract, they received a lump-sum payment averaging $2,950, representing a partial payback of wage increases and paid holidays they had given up in 1982 to improve Jeep's financial condition. At that time, the parties agreed to finance the payback from the company profits, but there were no profits, so they later agreed to finance it through a $100 "tax" on each vehicle produced in the plant. The payback had been scheduled to occur early in 1989, but in the 1987 settlement, the parties agreed to move up the payment date and to liberalize the formula. The Auto Workers said that the $2,950 average payment was about $1,350 more than the originally scheduled amount but was still only 55 percent of the amount the employees had lost as a result of their 1982 sacrifices.

Events were less optimistic elsewhere in the industry, as volkswagen announced that it will close its New Stanton, PA, plant by the end of 1988. The company said it made the decision after a "thorough analysis of both the financial implications and market outlook" based on the fact that the plant had been operating at 50 percent of capacity and losing money during the past 5 years.

The Auto Workers called the proposed shutdown a betrayal of "a loyal and productive U.S. work force in Pennsylvania. " The union also contended that volkswagen had failed to develop new vehicle models that would appeal to enough american consumers to sustain the plant, which employs 2,500 people.

when the plant began operating in 1978, volkswagen expected to capture 5 percent of the U.S. automobile market. It peaked at 3 percent in 1980 and dropped to 1.9 percent during the first 10 months of 1987. After the closing, volkswagen will service the U.S. market with cars produced in Europe and South America.
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Title Annotation:Developments in Industrial Relations
Author:Ruben, George
Publication:Monthly Labor Review
Date:Feb 1, 1988
Previous Article:Job gains strong in 1987; unemployment rate declines.
Next Article:Food store settlements.

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