Faced with Economic Crunch and Management Squeeze, Unions Fight Back


As companies scramble to shore up profits, many are turning to a well-rehearsed script: ask union workers for concessions. The supposed payoff ? You’ll get to keep your job. In late November, the Teamsters announced a deal with Yellow-Roadway Corporation to crack open their contract and cut wages 10 percent.

The company claims it is the latest victim of the credit crunch, unable to secure financing for its large debts. Union officials warn that the company could fall into bankruptcy if concessions aren’t granted. If approved by the members, the wage cuts will stay in effect through 2013, when the contract expires. In exchange for concessions, the company has offered the union about 15 percent of the company’s stock.

“We’re being bamboozled,” said Mike Schaffer, a Roadway driver and member of Local 769 in Miami. “Even if they come back to profitability, we don’t get any relief. The union agreed to this lock, stock, and barrel.”

But even profitable companies use turbulent times as an excuse to get the upper hand. In Sault Ste. Marie, Ontario, Essar Steel Algoma pressed Steelworkers (USW) Local 2251 for concessions in October, despite a record-setting third quarter where net income topped $146 million. The sheet-steel maker, whose products are sold to the construction and auto industries, insisted that workers agree to gut their contract. If not, the company threatened to lay off nearly a third of the workforce—1,000 workers—and build a new pipe plant elsewhere. Essar’s laundry list of givebacks would have clipped workers’ overtime and unemployment pay and steamrolled hard-won rights over job assignments and scheduling, as well as layoff and recall rights.


Management first developed the concessions formula during the downturn of 1980-1983. Since then, companies have stretched the argument for concessions to fit almost every situation. Whatever the problem, from global competition to rising health care costs, the solution is always making workers do more with less.

“Companies are going to use these hard times to try to see what they can get out of us,” said Cam Pucci, a steward in Local 2251 who’s repaired and maintained machines at Essar for 30 years. “They put the fear factor in, to see how far they can go.”

In hard times, employers frame concessions as shared sacrifice—everyone pulling together to get the company back on its feet. But sharing was in short supply during the 1990s, when profits were flush and CEO pay skyrocketed.

Even in hard times, though, management is brazen about cushioning itself. United Airlines, for example, clawed back more than $4 billion from workers between 2003 and 2006, while shedding 20,000 jobs and unloading pensions onto the federal government through bankruptcy courts. Top brass, meanwhile, were amply rewarded. Last year United’s top eight executives took in a combined $45 million.

At Essar, the union discovered that the company had paid out $438 million to shareholders in 2005 and 2006. “If they want concessions,” Pucci said, “they should be trying to recover some of that money.”

Although evidence has piled up for nearly 30 years that concessions don’t save jobs, some union leaders still call for givebacks as a solution to hard times. But others have seen that whether it’s easing work rules or chopping wages, health care, and pensions, concessions can’t change the economic landscape. These givebacks only weaken the union once business picks up.

“Taking $2 an hour off employees’ wages is not going to improve market conditions for steel,” said Wayne Fraser, USW district director. “That’s not the answer to what’s happening now. If other companies try it, they’re going to get the same answer.”

Despite the venom aimed at unions, wages don’t make or break a company. According to the latest figures from the Commerce Department’s Economic Census, even if every auto worker in Michigan worked for free it would only lower the price of the cars they produce by 5 percent.


For unions that want to fight concessions, the first line of defense is refusing to reopen the contract. Essar tried to have USW’s district leaders reopen two years early, but the district declined. When Essar turned to local officers they shrugged off the hard sell, too. Mike DaPrat, president of Local 2251, told the company he would work within the confines of the contract, but that rewriting under duress was out of the question.

The union had learned from experience: workers had taken concessions in four contracts since 1992, slicing members’ wages, health benefits, and their majority stake in the company. Now the Steelworkers are wrangling with the company over shift length. Following one of the cardinal rules when concessions can’t be avoided, DaPrat insists that any changes be automatically reversed in three months, that future agreements be re-signed and not involuntarily renewed, and that management violations be subject to penalties.

Sometimes union leaders have to be told “no” as well, as rank-and-file carhaulers demonstrated in August. In an attempt to help ailing companies, Teamster officials had agreed to a tentative deal that would have weakened job security, introduced two-tier wages, and given companies the green light to use new technologies that track and discipline drivers. Members voted down the proposed agreement by 59 percent. Veteran driver George Warner called it “the worst contract I’ve seen in

38 years, since I’ve been hauling cars.” The second round of bargaining produced an agreement that removed the worst concessions, and members ratified it in October.


Even in difficult times workers can use strikes—or a credible strike threat— to hold the line against givebacks. West Coast longshore workers dodged the fallout from slack shipping volumes, using a May Day walkout—together with weeks of on-the-job agitation—to score healthy gains in wages and pensions, together with increased crew sizes to spread the work under container cranes.

And in Chicago, workers at Republic Doors and Windows captivated the nation last month by taking over their factory when the owners claimed Bank of America wouldn’t release funds to pay them severance. They won a settlement, and now their union, the United Electrical Workers, is in talks to reopen the plant. Republic workers didn’t miss the importance or power of action on the job.

“Would we have won without using direct action?” asked Melvin Maclin, UE Local 1110 vice president. “I don’t even have to think about that. We would have been out the door.”

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