Volkswagen AG, looking to avoid a strike by its 100,000 unionized workers in western Germany, this week agreed to pay workers a 3.2 percent raise on a contract that runs just 16 months. Then those workers will want another raise.
By contrast, UAW-represented auto workers haven't had a raise in five years. In fact, those 120,000 hourly workers at the Detroit 3 have made concessions since 2006 totaling between $7,000 and $30,000 per worker by King's own account.
As president of the UAW, King is charged with clawing back pay and benefits for a restive membership that has seen General Motors and Ford Motor Co. post huge profits in recent quarters and Chrysler Group operations break into the black.
King and the UAW have started preliminary discussions with the Detroit 3 to replace the current four-year contracts when they expire in September.
Problem is the UAW gave up the right to strike at GM and Chrysler until 2015 as part of 2009 concessions.
King personally tried to get Ford rank-and-file to make the same no-strike pledge. But that plan was overwhelmingly defeated nationally by Ford hourly workers. King was nearly booed out of the Ford Rouge plant near Detroit when he tried to sell the agreement to workers there.
The powerful German union, IG Metall, used the specter of a strike at VW to get a good deal for its members. VW, with aggressive global growth goals, found it better to share some of its prosperity with workers rather than endure a crippling production stoppage.
“We had no choice but to pay heed to the economic situation, which has changed enormously” since last February, VW pay negotiator Jochen Schumm told Bloomberg. The new VW deal also includes a one-time payment of 1 percent of base salary for the workers.
The U.S. auto outlook, likewise, has changed enormously for the better in a year.
King knows his members want a raise. For the first time in years, members this year will get profit-sharing checks from the Detroit 3.
Nice. But profit sharing doesn't accrue and compound like a pay raise.
Pay raises are a distant memory for UAW workers. They may remain beyond reach in September without the right to strike.