UAW Deals Seen Boosting Ranks at Suppliers

CHICAGO – The United Auto Workers (search) is enlisting automakers as unlikely allies in its drive to increase its ranks at U.S. auto parts makers in exchange for letting the Big Three U.S. automakers close plants and cut jobs, industry analysts said.

The UAW, whose active ranks have dropped to 676,000 from a high of 1.5 million in 1979, has made recruiting new members a priority under the leadership of Ron Gettelfinger, who was named the union's president last year.

Details of a tentative agreement reached on Monday between DaimlerChrysler AG's Chrysler unit and the UAW were not made public. But analysts said Chrysler and the other automakers in the midst of negotiations will likely agree to encourage new union organizing at parts makers in exchange for some job security concessions.

"Essentially, the auto companies are saying to the suppliers, if you want to get future business from us, you have to invite in the union," said J.P. Morgan analyst David Bradley.

The UAW said on Monday it was still in talks with General Motors Corp., Ford Motor Co. and suppliers Delphi Corp. and Visteon Corp.

"The UAW intend to bolster their membership, and offset the declining Big Three rank, by signing up automotive suppliers," said Goldman Sachs analyst Gary Lapidus in a report on Monday.

Shortly after Gettelfinger took office, the UAW won an agreement with No. 4 parts maker Johnson Controls Inc.  to organize 26 of its plants through "card checks," ending a two-day strike against the supplier that hurt production at five assembly plants owned by General Motors and Chrysler.

"Bucking a 25-year decline in membership and influence, the UAW has scored some remarkable successes with independent parts suppliers in the past two years," UBS analyst Robert Hinchliffe said in a recent report.

Just the threat of a strike against a supplier gives the UAW significant leverage with the Big Three because of just-in-time production practices common throughout the auto industry, analysts said.

A Johnson Controls spokesman said nine plants so far had completed card checks and agreed to join the UAW. The process simplifies organizing by letting workers sign cards saying they want to unionize rather than voting in formal elections.

The union is strongly represented at the nation's top three parts companies — Delphi, a GM spinoff; Visteon, spun off from Ford; and Lear Corp. — but represents less than a quarter of all workers employed by U.S. parts companies.

The UAW won a key victory in August, when it reached an agreement with auto parts maker Dana Corp. recognizing the union's right to organize.

Dana spokesman Gary Corrigan said the pact covers plants that supply the Big Three but declined to comment on which of its 200 U.S. factories are affected.

The UAW has also reached so-called neutrality agreements with Canada's Magna International Inc. and Metaldyne, a privately held maker of metal-based components.

Some analysts said broader union representation initially would have minimal impact on supplier profits and could be viewed as a financial positive if it helps companies win more business from the Big Three that otherwise may have gone overseas.

"The issue is longer term. Once the supply base is predominantly unionized, they would then have the clout to demand higher wages and benefits. That is the risk," J.P. Morgan's Bradley said.