UAW to Raise Dues 25% -- Update

By Dow Jones Business News, 
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By Christina Rogers

DETROIT--Delegates at a United Auto Workers' convention Tuesday voted to increase membership dues for the first time in decades, giving leaders a new source of revenue to rebuild the union's depleted strike fund.

The approval comes as the UAW gets ready to start contract talks next year with Detroit car makers, where union leaders will be under pressure to recoup some of the wage and benefits sacrificed over the last few years to help the companies survive.

Starting this August, the UAW will raise annual dues 25% to shore up a strike fund that has dwindled to $630 million last year, down from more than $900 million in 2006. Private-sector members now pay two hours of pay a month for dues.

Union delegates voted to pass the measure--the union's first increase since 1967--after two-and-a-half hours of vigorous debate, in which supporters cheered loudly in approval, while opponents argued the increase wasn't needed and would hurt membership morale.

Outgoing UAW President Bob King oversaw the debate, at times interjecting to defend the increase against dissenting speakers. The vote was taken by a show of hands where it was clear supporters had the majority. Mr. King made the final call, declaring it passed.

"With contract negotiations coming up for the auto industry in 2015 and several others in 2016, don't you think the companies are looking to see if we have a healthy strike fund," said Mark Dickow, president of UAW local 140 in Warren, Mich., speaking in support of the dues increase.

"With a depleted strike fund, we're going to be very vulnerable," he said.

The UAW, which has struggled to balance its budget amid falling membership and revenue, has been forced to tap its strike fund to help cover operating expenses and organizing activities.

Next year, the UAW is slated to negotiate new master contracts with Ford Motor Co., General Motors Co. and Chrysler Group LLC, a unit of Fiat Chrysler Automobiles.

All three U.S. car makers are now solidly profitable and have hired thousands of new factory workers as U.S. demand for new cars and trucks has bounced back following the 2009 recession.

However, the union's veteran workers--those earning $28 an hour and up --haven't had a pay increase in nearly a decade, and a two-tier wage structure that pays entry-level workers less than senior employees for doing the same work continues to divide the membership. Under the two-tiered system, entry-level pay starts at $15.78 and tops out at about $19 an hour.

Dennis Williams, the UAW's secretary-treasurer who is expected to take over as president, has said closing the gap on the two-tier wage will be a major issuing during bargaining next year with the three major U.S. car makers.

Mr. Williams said that the union doesn't want a strike but rebuilding the fund is crucial to bolstering its leverage at the bargaining table. "It's a deterrent," he said.

Like other industrial unions, the UAW is fighting to reverse years of membership declines tied to plant closures and companies moving more jobs overseas to lower-wage countries.

UAW membership grew slightly last year to about 391,000 workers, but it is still far less than its peak of 1.5 million members in 1979. As its membership has fallen, so has revenue generated from dues-paying workers.

The UAW is now working to straighten out its own finances at a time when members in Michigan can now opt out of paying dues under the state's new right-to-work legislation. About half its members employed by the major U.S. car makers work in Michigan.

"We're in a right-to-work state. We have 97% union members at our plants, " said Matt Blondino, of UAW local 2069 in Virginia, a right-to-work state. "If this goes through, I fear for what will happen to that."

"You talk about going after the two-tier wage, go after that first," he added. "That's going to bring up dues."

Delegates also voted Tuesday to pass several other cost-saving proposals, including combining two UAW regions and eliminating one of four vice president positions.

The UAW also plans to expand the purpose of the fund to include so-called defense activities, so public-sector members who don't contribute now because they can't strike can pay into the fund.

Additionally, the UAW is working to set up a health-care trust for its own union-represented staff workers to help offload the cost of retiree medical benefits.

The trust, also known as a Voluntary Employee Beneficiary Association, or VEBA, would be similar to those established with the Detroit car makers in 2007. UAW leaders expect the move will save it about $15 million a year.

Earlier this year, the UAW suffered a bitter defeat at Volkswagen AG's auto plant in Chattanooga, Tenn., where workers voted down union representation by a narrow 712 to 626 vote.

Mr. King said Monday the union plans to budget another $15 million a year over the next four years for organizing activities. It still has effort underway at Nissan Motor Co.'s auto plant in Canton, Miss., and a Mercedes-Benz plant in Vance, Ala.

Write to Christina Rogers at christina.rogers@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires


  (END) Dow Jones Newswires
  06-03-141713ET
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