Auto Talks Hit a Roadblock

GM and the U.A. W. fail to agree to cut labor costs

It began in an atmosphere of great expectations. Early last month the United Auto Workers and General Motors reached an extraordinary "agreement in principle" to link wage concessions by the union to lower car prices. Intensive negotiations began, faltered once and then resumed again in Detroit last week. Finally, after three straight days of bargaining, the talks broke down. Just 30 minutes before the mutually agreed-upon deadline of midnight Thursday, both sides admitted failure. Said U.A.W. President Douglas Fraser: "We tried hard, and I think the company tried hard, but we couldn't get the ingredients that are necessary to make a settlement." Added Alfred S. Warren Jr., GM's chief negotiator: "We are deeply disappointed."

In the end, there were several unresolved issues. GM and the union could not agree on job guarantees for production workers or on how to limit the shift of auto-parts production to cheaper, nonunion manufacturers. There was also disagreement on how to match benefit cuts of blue-collar workers with those of white-collar employees.

Both sides should draw solace from their success in progressing as far as they did. The fact that talks went forward means that the company and the union have become partners in the struggle to improve the fortunes of a shrinking U.S. auto industry. For the first time in 29 years, the union had been willing to discuss reopening its three-year contract with GM, in an effort to keep jobs and help the company cut labor costs. At the same time, GM agreed to open its records on manufacturing costs to an outside accountant. Both concessions will be important precedents for any future negotiation.

The roadblocks to a settlement, however, were too difficult to overcome. GM believed that auto prices would have to be cut by more than $1,000 to make Detroit-built cars more competitive with Japanese imports. The union, though, was unwilling to consider benefit reductions large enough to make those car price cuts. It refused to consider a drop in the hourly wage of $10.19, which makes up the bulk of the estimated $19.65 total compensation package. Fraser was also forced to bargain with the knowledge that any settlement would have to be approved by militant rank-and-file workers, who seemed unwilling to make major concessions. Two weeks ago, union members voted 57% to 43% to reopen the talks, and there was a good possibility that any settlement would have been voted down by the workers. Said GM's Warren: "I'm not sure that all of our union members understand what it means to our business and what it ultimately means to them."

While last week's talks moved toward deadlock, the domestic auto industry continued to weaken. Sales for the middle ten days in January fell 5.2%, compared with last year's already poor results. GM's sales declined 7%, in part because it had promised to cut prices if an agreement was reached. The automakers' production plans for this month indicate that it may be the worst February for sales since 1961. Financially troubled Chrysler is reportedly already trying to sell its profitable tank division for about $300 million to General Dynamics.

With the GM talks ended, the U.A.W. will resume negotiations this week with Ford. The company has not agreed to the principle of tying wage concessions to price cuts, but is said to be offering a form of guaranteed job security for workers over a certain level of seniority. Ford could lose nearly $1 billion in 1981, and its workers appear willing to make wage concessions in order to hold on to their jobs.

With the failure of its negotiations, GM turned to a simpler way of lowering car prices. Late last week it announced that it would offer rebates of $500 to $2,000 on certain car and truck models beginning February 1. The Big Three automakers are all now discounting prices, without a significant impact on sales. GM is not scheduled to sit down with the autoworkers again until July. At that time the two sides will begin negotiations on a new three-year contract to replace the one that expires midnight Sept. 14.

This file is automatically generated by a robot program, so viewer discretion is required.