On the heels of the United Auto Workers Union (UAW) ejection from the new Volkswagen plant in Chattanooga Tennessee, union bosses have decided to raise membership dues by what amounts to a half-hour of each worker’s pay.
After 78 years, UAW is still the richest union in the U.S. with a billion dollars in assets as of 2012; however, membership has declined 30 percent since 2006, forcing its leadership to sell off tens of millions in assets to make up for a 40-percent-plus decline in income from union dues.
According to officials, annual revenue for UAW dropped $115 million between 2006 and 2012. UAW membership, from a broader perspective, peaked in 1979 at 1.5 million and has plunged to a current enrollment of 382,000.
As Detroit’s auto industry hit bottom during the recent financial crisis, Ford, Chrysler and General Motors all lost tens of billions of dollars in profits as the companies struggled to compete in an increasingly competitive global auto market.
Foreign competition and a particularly slow economic recovery resulted in the subsequent culling of high-paid UAW members through buyouts, plant closures and layoffs. As high-paid workers left in droves after the financial collapse and during a stalled economic recovery, revenue collected from UAW members sharply decreased.
As membership waned, union bosses agreed to lower wages for their rank-and-file workers. New hires started at $15 per hour verses $28-$32 earned by veteran employees performing similar work. This gave U.S. automakers traction in sales but exacerbated UAW’s economic woes. At the same time, foreign competition in the South has made union bosses and autoworkers increasingly wary of threatening walkouts and strikes. In the near future, as more foreign carmakers build non-union plants in the South, this trend is not likely to change.
Equally troubling for UAW leaders, membership increased slightly last year due to increased sales but dues collected from UAW members continued to decline.
Many financial analysts contend that today’s UAW membership is paying the price for decades of artificially inflated pensions and wages that left their respective companies unable to compete in a rapidly expanding global market.
Union bosses figured union-friendly VW, building a new plant in Tennessee presented their best shot to advance membership in the South where automakers from Japan, Korea and Germany have 14 assembly plants including 10 constructed in the last 10 years while Detroit was closing factories. To that point, Bob King, the UAW’s president, has said the union has no long-term future if it fails to organize foreign car plants in the south. To UAW leader’s dismay, earlier this month workers rejected their offer to unionize.
Most automakers and autoworkers in the South, domestic and foreign, do not want or need UAW representation. Given the UAW’s record in Detroit, which itself is bankrupt largely due to bloated, union-negotiated pensions and benefits – who can blame them?