UAW looks to restore its image amid corruption scandal, shrinking job market

The UAW is choosing its probable new leadership team this week in the wake of several devastating blows that include an expanding corruption scandal, failed attempts to organize Southern auto assembly plants and a shrinking number of manufacturing jobs that are its base.

"They have been knocked down in the 11th round and the ref is counting to see if they can get back up," said Dave Sullivan, a product analysis manager at AutoPacific, who worked at Ford on the assembly line and as a supervisor. "2018 will be a trying year for the UAW."

UAW membership totals from 2001 to 2016:

He says the union —- which represents more than 415,000 automotive workers, casino dealers, college teachers, agricultural equipment manufacturers and aerospace engineers — has lost its influence and lacks a clear mission. A federal probe into stolen worker training money makes things worse.

"The UAW has always had a reputation for being a union with integrity," said Gary Klotz, a longtime employment lawyer. "The brand is taking a beating."

Meanwhile, union leaders are working to highlight accomplishments.

Under Dennis Williams, first as secretary-treasurer and then as president, the UAW has regained its financial footing, grown membership over the past seven years, won the first member-approved dues increase in decades and recruited new members from outside the auto industry. About 40% of UAW members come from outside autos.

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Now, like all UAW presidents before him, Williams will retire after his 65th birthday and the union must find a way to navigate in a legal and political environment that has been hostile toward organized labor and to build on its recent gains.

This week, local union leaders from around the country are meeting at Solidarity House, the national headquarters on East Jefferson Avenue, to choose a slate of leadership officers.

That slate will campaign until June, when the 37th Constitutional Convention election takes place in Detroit. Challengers to union leaders' slate can run, but short of a full-fledged mutiny, those chosen this week will move up.

It is then that UAW delegates elect their new president.

Front-runners to succeed Williams include:

Gary Casteel, 59, of Ashland City, Tenn., a secretary-treasurer who has led organizing efforts at auto assembly and parts as well as nonautomotive employers. He is an avid hunter who may not want to relocate from his farm outside Nashville to Detroit, which is required. He is married, with children and a grandchild. His father was a national UAW negotiator.

Cindy Estrada, 48, of Whitmore Lake, a charismatic Detroit native who, as vice president of the union's General Motors department, oversees one of the training funds now under review by federal investigators. As a widow with teenagers, she is considered young enough to pursue the presidency in the future. Her husband was a retired UAW organizer.

Gary Jones, 60, of O’Fallon, Mo., a regional director who oversees Missouri, Texas, Louisiana and the West Coast. He is widely considered the top choice as a detail-oriented certified public accountant whose thoughtful and fastidious approach may be what the union needs. Having started with the UAW at the Ford plant in Broken Arrow, Ala., he went on to serve as the union’s top non-elected finance person for nearly a decade. He is married, with children and grandchildren.

Union officials have declined interview requests prior to the caucus.

Dennis Williams' legacy

Williams, a foster child who grew up to become a U.S. Marine, marry a Marine and see his son deployed as a Marine, is described as a leader who focuses on long-term strategy.

He has helped guide the union to a seven-year streak of membership growth and managed a solid budget. Along with his predecessor, Bob King, Williams helped push through the first member-approved dues increase since 1967.

As dues revenue declined with overall membership, the operating budget ran low and the UAW diverted money from its strike funds to cover losses.

The UAW saw its finances fully recover in 2015 for the first time since the Great Recession, and continue to improve in 2016. The strike fund grew from $633 million to $679 million, according to the UAW International Union.Total assets, which include buildings and other property, went from $886 million to $934 million. The union saw net income from operating funds increase from $5 million to $6 million in 2016.

“The state of the UAW is solid,” Williams has said. “Our members are getting pay increases. I think you’ve seen the bonuses that came out with Ford, GM and Chrysler, and that was a success story.”

In early 2017, GM workers received $12,000 profit sharing checks; Ford workers received an average of $9,000 checks; and FCA union members received an average of $5,000 checks, according to UAW records.

Diversifying beyond autos

The union represents college instructors in California, Michigan, Minnesota and New York; poker dealers in Las Vegas, Detroit, Baltimore, Cincinnati, Cleveland, Toledo, Columbus and Mashantucket, Conn.; workers at Miller, Coors Beer, Bacardi Rum, John Deere and Caterpillar. They build coffee makers, pizza ovens, battleships, tractors and whiskey barrels.

Analysts wonder whether a diversified membership dilutes UAW bargaining strength for its 59,000 Ford workers, 49,500 General Motors workers and 41,000 Fiat Chrysler workers and 102,000 members at auto suppliers. Retired members, most from the auto industry, exceed 700,000.

But auto manufacturing jobs continue to shrink as companies add automation and shift passenger car production outside the U.S. Asian and European automakers and suppliers, which employ more than half the autoworkers in this country, have kept unions out of U.S. plants.

Marick Masters, a business professor at Wayne State University, said diversifying into gaming and higher education can only take the UAW so far. Somehow, it must demonstrate continued relevance in the manufacturing sector.

“They need to make some major strides organizing within the industry,” Masters said.

While the damage of the unfolding scandal shouldn't be underestimated, organizers say the union has always demonstrated resilience — despite conflict among members, massive layoffs and the 2009 bankruptcies of Chrysler and General Motors.

Some UAW members ask privately why oversight didn't prevent wrongdoing. Others note that no member dues money was involved in the controversy.

The UAW, in its attempt to organize manufacturing plants this year, was crushed twice by a 2-1 ratio. Anti-union materials showed images of what appeared to be a post-apocalyptic Detroit and warned of what a UAW presence could bring.

In July, just weeks before a scheduled union vote at the Nissan plant in Mississippi, federal investigators indicted Al Iacobelli, former Fiat Chrysler vice president of labor relations, and Monica Morgan, widow of General Holiefield, former UAW vice president. Millions of dollars earmarked for UAW worker training was spent on unauthorized purchases including a $365,000 red Ferrari, two solid gold fountain pens valued at $35,700, a pool and outdoor spa at Iacobelli's mansion.

Iacobelli abruptly retired in 2015 prior to the start of contract negotiations. Investigators say Holiefield, who died in March 2015 from pancreatic cancer, and Morgan skimmed more than $1 million.

Now Daniel Lemisch, the acting U.S. Attorney for the Eastern District of Michigan, has expanded the probe to look at evidence of similar misuse of joint training funds at the UAW's programs with Ford and General Motors.

The UAW says it is fully cooperating with the FBI in the training money investigation.

Even if the investigation finds nothing more, the timing was bad.

In November, just days before the failed union vote at Fuyao Glass America in Moraine, Ohio, reports emerged that federal investigators requested records from UAW and management officials responsible for joint training funds at Ford and GM.

Management at the Chinese-owned Fuyao Glass, used the corruption probe to discourage workers from voting for UAW representation.

Changing public perception is hard

Workers inside and outside the UAW are watching with concern.

Dan Watson, 45, of Wayne, an assembly line worker with Ford for nearly 23 years, said simply, "The union is absolutely vital to the automotive industry."

Dave St. Onge, 53, an electrician from Clyde Township, near Port Huron, said having union employers helps maintain wages and benefits in the surrounding community.

"The UAW negotiates all wages and benefits as a single voice," said St. Onge. "If workers do it on their own, they get nothing. The UAW is one of the most powerful. We’re all impacted.”

St. Onge, who belongs to the International Brotherhood of Electrical Workers, said he has seen employers pay competitive wages and benefits specifically to keep workers from taking union jobs.

“When I left a nonunion shop, the gentlemen who owned it had to give everyone a raise to stay so they wouldn't jump,” said St. Onge. "In the union, it's more about safety than just how fast you can get the job done."

In 2014, the loss of a high-profile vote at a Volkswagen plant in Tennessee by a slim margin embarrassed the UAW. Since then, more than 3,500 members have been organized in Southern plants, including skilled trade workers at VW.

Despite the perception that the Southeast has been hostile territory of the union, about 13% of UAW membership is in the South, according to UAW International data. VW didn’t oppose unionization initially, but Tennessee Republican legislators threatened to withhold tax incentives for future expansions at the plant if workers voted to join the union.

Yet a perfect storm of challenges could dilute union power when negotiators sit down with the Detroit Three auto companies to negotiate new contracts in 2019.

John McElroy, an industry observer over the past 40 years, said the UAW is in trouble. “I just don’t think they can turn around the situation. I don’t see them getting out of this ever. They’re in long-term decline.”

Yet Ford, GM and Fiat Chrysler continue generating profits in a competitive global environment. Automakers publicly credit the UAW.

A destabilized UAW disrupts cohesion that benefits union workers and their employers, McElroy said. “For the foreign automakers, they have to be as gleeful as possible.”

Last year, Grand Valley State University economist Brian Long told Michigan Capitol Confidential that when unions show value to members, unions remain strong. “Trade unions have seen very little decline in membership because they often provide a lot of services for their members such as health care programs, continuous training, job placement, pensions, certifications.”

If member growth is a reflection of perceived value, the UAW is on track. Its dues range up to 2.5% of member pay — 50 cents of every dollar goes to the local chapter, 45 cents goes to international and 5 cents goes to the strike and defense fund.

Struggling to deliver votes in national elections

Professor Harry Shaiken of the University of California-Berkeley, an authority on labor and the global economy, pointed out that the UAW-FCA scandal was initiated by a corporate executive. GM also saw one of its labor negotiators abruptly quit prior to the 2015 contract negotiations.

“I wouldn’t underestimate the damage,” Shaiken said. “But the UAW remains a vibrant union with an innovative vision.”

But the number of members who voted for Donald Trump in 2016 was a wake-up call.

In response, the UAW evaluated its voter outreach programs in the wake of Trump's win in once-union-friendly Michigan, Ohio and Pennsylvania.

The UAW data indicates members favored the Republican nominee in 2016 in numbers similar to GOP nominees Mitt Romney and John McCain, roughly one-third. The difference this time is that 8% of UAW members found both Trump and Hillary Clinton so unappealing that they declined to support either. About 5% sat out the presidential race completely. The result hurt Clinton the most.

Williams, whose union endorsed and worked on behalf of the Democratic nominee, was mystified that she declined to campaign aggressively in the Midwest.

“That’s your firewall,” Williams has said. “That’s like saying you have a wall that’s going to protect us but I’m not going to man the wall. … I don’t know if we had enough members in the particular states to make a difference. I think there was like 10,000 people in the state of Michigan that didn’t even vote for president.”

Kristin Dziczek, director of the Industry, Labor & Economics Group at the Center for Automotive Research, said that in organizing service industry workers, unions are jockeying for market share and scandal doesn't help.

“Growth in the auto sector has been a long slog," Dziczek said. "The UAW is not known for being corrupt. It’s (the training fund scandal) news because it’s an anomaly.”

If corruption involving the union is more widespread, said McElroy, host of the weekly "Autoline" show on PBS, “there will be a revolution in the UAW.”

Editor's note: An earlier version of this story contained inaccurate data provided by UAW officials about profit sharing checks. In early 2017, GM workers received $12,000 profit sharing checks; Ford workers received checks and the average amount was approximately $9,000 checks; and FCA union members received checks and the average amount was approximately $5,000. This story has been corrected.

Contact Phoebe Wall Howard: 313-222-6512 or phoward@freepress.com. Follow her on Twitter @phoebesaid.