Labor-management bargaining in 1992

Monthly Labor Review, Jan, 1993 by Michael H. Cimini, Susan L. Behrmann, Eric M. Johnson

The economy's inability to emerge from a 2-year recession and the failout from defense cuts contributed to difficult negotiations in 1992 for unions and management. Several key unionized industries were forced to downsize and lay off workers. For example, weakened demand for steel (particularly from the sagging auto industry) and overcapacity brought losses for many integrated steelmakers; aerospace companies were generally hard hit by the recession and defense cutbacks; most major airlines posted net losses because of summer fare wars, soaring fuel costs, and a sluggish economy; and heavy machinery companies were adversely affected by softening sales because of slow growth here and abroad. Several other industries also experienced economic difficulties because of the prolonged recession, weak sales, foreign competition, or government regulations.

During 1992, management and labor negotiators continued to grapple with pressures to reduce or at least stabilize labor costs in the face of stiff foreign competition, the effects of deregulation in the transportation industry, structural and technological changes in many industries, and the spiralling cost of health care. Many companies subcontracted work to nonunion shops, moved plants overseas, to Mexico, or to "right-to-work" States, closed obsolete facilities, reduced staff, and introduced new production methods. As a result, many negotiations focused on how to preserve jobs and keep companies economically viable in a sluggish, changing economy.

However, health care costs and benefits continued to be the most common and most contentious bargaining issue. In some cases, unions traded all or part of a wage increase to avoid a cut in health care benefits or a shift of health insurance costs to their members. In others, they agreed to cost containment provisions, such as increased employee deductibles and coinsurance payments, a second surgeon's opinion on nonemergency operations, and offering preferred provider and health maintenance organization plans.

Organized labor's economic and political formes continued to slip in 1992, as:

* the United Automobile Workers (UAW) members returned to work unconditionally at Caterpillar Co. after a failed 5-month work stoppage;

* the Amalgamated Transit Union gave its members permission to return to work at Greyhound without a contract after a failed 2-year walkout;

* General Motors (GM) announced plans that are expected to result in the closing of 21 plants, slashing 74,000 jobs over the next 3 years;

* unionized companies such as AT&T, McDonnell Douglas, Amoco, and Alcoa downsized, and Pan American ceased operations;

* organized labor compromised on its long-held position on strike replacements by offering to send disputes to factfinding panels and restrict its right to strike in exchange for a ban on the use of permanent strike replacements;

* Congress effectively placed new restrictions on railroad unions' already limited right to strike and to determine contract terms through the collective bargaining process; and

* the new Teamsters leadership, elected on an anti-corruption plafform, became embroiled in a dispute with the Federal Government over government control of the union.

Two indicators of the condition of labor-management relations in 1992 are the Bureau of Labor Statistics data on major work stoppages (strikes and lockouts involving 1,000 workers or more) and on major collective bargaining settlements. Most measures of work stoppage activity were lower than in the previous year. By the end of November, there were 41 work stoppages that involved 339,000 workers and nearly 3.9 million days of idleness (amounting to about 2 days of 10,000 available work days during the 10-month period). Comparable figures for the same period a year earlier were 44 stoppages, 410,000 workers, and almost 4.2 million days of idleness. Although the work stoppage data imply a continuation of industrial peace, they belie undercurrents affecting labor-management relations, particularly the weakening of the strike as an economic weapon and the continued conflict between employers' need to cut costs--through changes in wages, compensation, work rules, and staffing--and unions' attempt to protect their members by blocking such actions.

Data on major collective bargaining settlements showed the average wage rate change under settlements in private industry during the fourquarter period ended September 30, 1992, was an increase of 3.1 percent annually over the life of the contract, compared with 2.9 percent when the same parties last settled, typically in 1989 or 1990.

These statistics conveniently summarize some of the outcomes of the 1992 contract talks between organized labor and management. However, they mask the specific problems the parties faced in negotiations, as well as the variety of solutions they attempted. Many of these are described in the following discussion of developments in individual industries and firms.

Automobile industry

Although the "Big-Three" (Ford, GM, and Chrysler) domestic automakers did not conduct master contract negotiations last year, significant events in the industry centered on red ink, layoffs and plant closings, corporate restrucmring, shake-ups in the corporate suites, and labor disputes. Three disputes at GM highlighted its contentious relationship with the UAW, brought about by the automaker's plans to downsize operations and the union's efforts to block these moves. The disputes also foreshadowed tough negotiations in 1993 when contracts expire between the "Big-Three" and the union.