In These Times - March 5, 2020

The 60-year descent that led to Gary Jones' indictment.

Contract negotiations between the 400,000-strong United Auto Workers and Detroit’s Big Three automakers always kick off the same way: with ritualized handshake ceremonies in front of the press pool, the UAW president grinning with each automaker’s CEO.

But in 2015, the cozy routine at the UAW-Chrysler Training Center in Detroit devolved into an outright display of affection. UAW officials and Chrysler management flanked the stage (in matching polo shirts featuring interlinked organization logos) and merged into a sea of indistinguishable figures. Then, Fiat Chrysler CEO Sergio Marchionne pulled in UAW President Dennis Williams for a tight bear hug.

That night, things really started cooking.

The UAW team for bargaining with Chrysler, including lead negotiator and UAW vice president, Norwood Jewell, went out for dinner and drinks at London Chop House, an extravagant (and historic) restaurant and cigar lounge. Both Henry Ford II and former Ford (and then Chrysler) CEO Lee Iacocca have been among the dapper, A-list regulars to enjoy whiskey highballs there amidst the soft jazz and heavy cigarette smoke. Today, the restaurant—complete with working rotary phone booths (local calls only)—caters to the nostalgia of Motor City as the epicenter of global manufacturing, back when union leaders like Walter Reuther were household names.

The UAW’s night out resulted in a hefty tab—and Chrysler footed the $8,494.37 bill. That dinner is just one of the many examples of union leaders taking payouts, according to a federal probe by the Department of Justice. Marchionne, Williams, Jewell and at least a dozen others have been named in a long-running conspiracy by Chrysler to buy off the UAW. In a December 2018 memo, federal prosecutors described “a culture of corruption” in which “lavish entertainment and personal freebies, all paid for by the car company” were “the rule rather than the exception.”

The investigation also uncovered lucrative kickback schemes among union officials who awarded contracts for UAW-branded swag, like 58,000 gold watches that were left sitting in a warehouse. First, they would inflate an item’s on-paper cost; then, when a training facility jointly operated by General Motors (GM) and the UAW paid for the items, they would receive some of the cost difference. Finally, multiple union officials embezzled millions from the UAW itself through fraudulent purchases and reimbursements to finance lavish lifestyles. Between 2014 and 2017, officials spent over a million dollars of the membership’s money on resorts, golf, cigars, steak dinners and liquor.

To date, three Chrysler executives, nine union officials and the widow of a deceased UAW vice president have been convicted of crimes uncovered by the investigation. Just this week, the federal government brought charges against former UAW President Gary Jones, who resigned in disgrace less than two years into his term after the union brought charges against him that could have led to his expulsion. Court documents suggest that Jones plans to plead guilty to his role in embezzling $1.5 million in members dues and will cooperate with the investigation of Williams and current UAW president Rory Gamble.

Right-wing anti-union propagandists have been eager to weaponize this scandal. When Volkswagen workers in Chattanooga, Tenn., were considering joining the UAW in June 2019, the corporate-backed Center for Union Facts purchased billboards around the plant and ads in the local newspaper targeting the union’s history of concessions and corruption, and even produced a video for social media featuring a shadowy “UAW whistleblower” with a voice modulated to sound like a baritone hell demon. “I would not bet on the promises made by the UAW that they will protect you because they will eventually sell you down the road for their own benefit,” the voice growls over news reports about a GM plant closure.

The U.S. Attorney’s Office, which is actively pursuing top UAW officials, has named the UAW itself as a conspirator, setting the stage for a possible government takeover. The government took a similar route 30 years ago to free the Teamsters from mafia control. Claiming that leaders of the 1.7 million member union had “made a devil’s pact with La Cosa Nostra,” then-U.S. Attorney Rudy Giuliani filed suit against the Teamsters under the Racketeer Influenced and Corrupt Organizations Act, threatening a government trusteeship. Teamsters for a Democratic Union, a rank-and-file caucus formed to fight concessions and corruption, successfully campaigned for a different solution. They helped negotiate a settlement in which the union constitution was changed so that top union leaders would be selected by members in a court-supervised, one-member, one-vote election, with a joint government-union board to investigate and prosecute corruption and election irregularities. Absent a similarly strong rank-and-file movement in the UAW, things could turn out much worse, especially under a Trump administration.

While the indictments continue for UAW leaders, rank-and-file members are left to wonder how their union—once renowned as one of the strongest and cleanest in the country—got to this point, and what to do next.

A Nation Built on the Automobile

The United States saw incredible economic growth in the three decades following the Second World War, and the UAW, more than any other union, set the terms and conditions of workers’ share of that prosperity. The postwar economy, down to the Interstate highway system, was predicated on that quintessential American product, the automobile.

At the center of this manufacturing boom was General Motors. GM held the number one spot on the first Fortune 500 list ever published, in 1955, and topped the list 37 more times over the next 45 years. GM became the largest private manufacturer in the world and the largest private employer in the United States. With Ford and Chrysler, the Big Three automakers were synonymous with U.S. heavy industry.

The UAW, founded in 1935, had meanwhile won a reputation as a fighting union through pitched street battles, plant occupations and militant strikes. It secured its first major contract, with GM, through what came to be known as the Flint sit-down strike of 1936 and 1937, in which 2,000 workers took over a plant and fought off armed police. Over the next decade, the union wrested contracts from a number of hostile and often violent employers, organizing “flying squadrons” of brawny unionists who protected strikers from company-hired thugs and police.

By 1955, the UAW had organized much of the domestic auto industry, including many suppliers, and had aligned the expiration dates of its contracts at all three major automakers. The Big Three then entered into something of a gentlemen’s agreement: If the UAW struck a deal with any one of them, the other two would match it. This “pattern bargaining” helped the UAW establish standards across the entire industry.

These UAW contracts heavily influenced the standards for steel, copper, aluminum, railroad, rubber and glass workers. Once the UAW won a large increase in wages or pensions, other industrial unions, like the Steelworkers, could fight for the same. The benefits even trickled down to non-union employers, who would match union pay and benefits hoping to remove the incentive to organize. For millions of workers across the country, the result was decades of unparalleled increases in their standard of living. The gains were especially significant for Black workers, whose numbers grew to make up 30 percent of the auto manufacturing workforce by the 1960s and who sought out union jobs in other industries in droves after the 1964 Civil Rights Act barred hiring discrimination on the basis of race, sex, religion and nationality.

By the mid-1970s, however, the post-war economic boom was over. High interest rates, rising unemployment, inflation, oil shocks and the influx of goods from rebuilt European and Asian economies triggered the largest recession since the Great Depression. Corporations, emboldened by high unemployment, went on the offensive. Democrats and Republicans alike championed deregulation and other employer-friendly policies, pushed by the newly formed Business Roundtable, a political powerhouse composed solely of Fortune 500 CEOs, and new conservative think tanks and political action committees. President Ronald Reagan’s merciless breaking of the air traffic controllers’ strike in 1981 broke the taboo on the permanent replacement of striking workers, undermining one of the most powerful tools in labor’s arsenal. Businesses also began putting the squeeze on labor costs, forcing concessions from unions. ...
Read full report at In These Times