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Worker concessions save American Motors plants.

A threatened closing of American Motors Corp.'s Kenosha and Milwaukee, WI, plants was averted when 8,000 members of the Auto Workers agreed to wage cuts and other concessions intended to bring labor costs down to the level of General Motors Corp. and Ford Motor Co. In return for the concessions, the company pledged to keep the plants open for the remaining life of its only two car models, the subcompact Alliance and the Encore, both of which are experiencing severe sales slowdowns. The company, which is 46 percent owned by the Renault automobile firm of France, indicated that further concessions would be needed before it would consider introducing larger models to compete in the more popular segment of the industry that has developed in the wake of stabilized prices for fuel. Although Renaul agreed to lend American Motors $174 million, (in addition to the $545 million it had invested in the company since late 1979), the future was clouded by the fact that Renault was suffering severe losses at its home plants and was under pressure from its unions to withdraw from manufacturing in the United States.

The new 3-year contract at AMC provides for a pay cut averaging 60 cents an hour, bringing the average pay to about $13, slightly below the levels at GM and Ford. Other changes included elimination of 9 paid vacation days per year, cuts in the number of company-paid union stewards, and changes in work rules. Combined, the coincessions were expected to reduce the $27 an hour labor cost at AMC to the $24-$25 at Ford and GM.

A change favorable to the union was the adoption of a Job Security Plan similar to that at GM and Ford and financed by an AMC commitment of $18 million through the life of the next contract, expected to expire in September of 1991. The company also agreed to an immediate lump-sum payment of $180, and payments in October of 1896 and 1987 each equal to 2.25 percent of individual employee earnings during the preceding 12 months. AMC also agreed to increase pensions for future and current retirees and to improve insurance benefits.

The company did not attempt to win concessions from the UAW for its profitable Jeep plant in Toledo, OH, where it negotiated a new contract in March 1985. (See Monthly Labor Review, April 1985, p. 60.)

A dispute between AMC and workers at Kenosha, Milwaukee and the Jeep plant had flared up earlier in 1985, when the parties disagreed in which of two formulas in the 1982 contract should be used to restore to workers money they had lost by deferring two 3 percent pay increases, eliminating a third, and deferring cost-of-living pay adjustments. (The two deferred 3 percent increases were both put into effect in January 1985.) Finally, the union accepted the formula linked to company profits in 1984, resulting in a May 1985 payment equal to 3.8 percent of the $6,000 in wage concessions, or about $228. This payback approach will be subject to change after 1985, the first year of the scheduled 4-year payback period.

General Dynamics contract ends two-tier wages

The Machinists union negotiated a contract with General Dynamics Corp.'s Pomona, CA, plant that eliminated the two-tier pay system established in the prior contract.

Union Vice President Justin Ostro said, "The two-tier is now dead at GD/Pomona and at the end of the next round of aerospace bargaining . . . I am confident that our [Machinists] negotiators will have exorxised the evil from any other aerospace contracts that have it in place." Under two-tier compensation systems, wages or benefits, or both, for new employees are temporarily or permanently lower than those for employees already on the payroll at the time of settlement. The union maintains that elimination of dual pay at General Dynamics was necessary because the system had hurt morale and production.

Other provisions of the 3-year accord included a 3-percent immediate wage increase; lump-sum payments in the second and third years, each equal to 4 percent of employee earnings during the preceding 12 months; a two-step increase in the pension rate to $18 a month for each year of credited service; company-financed HMO medical plans; 10 paya grades, instead of 17; improved dental insurance; and creation of a joint committee to study automation and its impact on employees.

Drive to organize nursing homes successful

The Service Employees and United Food and Commercial Workers unions drive to organize and negotiate contracts with Beverly Enterprises, Inc., the Nation's largest nursing home chain, has showed some success since the unions agreed to drop a "corporate campaign" against the company in exchange for assurances that Beverly would maintain a noncoercive attitude toward organizing efforts. (See Monthly Labor Review, May 1984, p. 56.)

According to the unions, they have won 62 representation elections involving 9,000 employees at Beverly homes in 21 States and have lost 27. Beverly has 940 homes in 44 States and a total of 87,000 employees.

During the first half of 1985, the Service Employees union negotiated initial contracts at 37 locations, bringing its total to 43. The contracts vary in duration from 1 to 2 years, but are generally consistent in duration and provisions in particular areas. In Texas, the 9 contracts run for 1 year. In these contracts, and those negotiated elsewhere, the employee gains were primarily in the area of work rules, rather than employee compensation. Service Employees Local 9 business agent said the Texas accords give workers the right to refuse work on a day off, and require that they be paid for a full shift on such a day if they work at least 4 hours; and require Beverly to show "just cause" for disciplining employees.

The Food and Commercial Workers union reported 35 settlements with Beverly, also emphasizing improvements rules rather than compensation.

Truck manufacturer to give lump-sum payments

In Portland, OR, four unions negotiated a contract with Freightliner Corp. that provides for lump-sum payments in lieu of specified pay increases. Each of the 1,500 workers will receive an initial payment of $300, followed by payments in July of 1986 and 1987 each equal to 2.25 percent of pay for straight-time hours worked plus vacation, holiday, and other paid time off during the preceding 12 months. The lump-sum payment for 2,080 compensated hours will range from $515 to $614, varying by job grade.

In another change from the preceding contract, workers will receive automatic cost-of-living pay adjustments in lump-sum payments in October, February, and June of each year and the adjustments will not be incorporated into base hourly pay rates. Previously, adjustments were included in regular weekly pay checks. The adjustment formula remained at 1 cent an hour for each 0.3-point movement in the Bureau of Labor Statistics CPI-W (1967 = 100).

The unions also negotiated a 20-cent-an-hour increase in Freightliner's payment into the pension fund. The unions involved in the settlement were the Machinists, Teamsters, Painter, and Service Employees.
COPYRIGHT 1985 U.S. Bureau of Labor Statistics
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Author:Ruben, George
Publication:Monthly Labor Review
Date:Sep 1, 1985
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