Doug Fraser was president of the UAW from 1977-83, the UAW's darkest period since it was formed in the 1930s.
With Chrysler Corp. teetering toward bankruptcy, Fraser had to persuade union members to make financial concessions. Moreover, he had to rally support among skeptics in Congress.
In an interview with Staff Reporter David Sedgwick, Fraser recalled those tumultuous events.
You became president of the UAW in 1977. At the time, did you know how bad off Chrysler really was?
I don't think anyone knew. (Former chairman Lee) Iacocca told me several times that if he had known how bad off it was, he never would have gone over to Chrysler. By 1980, they were extremely close to bankruptcy.
When Chrysler initially sought government relief, it did not have a loan guarantee in mind. First Chrysler tried to soften the Clean Air Act's automotive regulations, and then it tried to get a $1 billion tax break.
Yeah. It goes back to when Leonard Woodcock was UAW president. All three companies came to us and said the demands of the government were technologically impossible. Leonard and I went to Washington, and we tried to soften the Clean Air Act, but we were unsuccessful.
According to legend, you first learned that Chrysler was in deep trouble in June 1979. Mike Blumenthal - who was treasury secretary - supposedly tipped you off during a state dinner in New York for the German chancellor. Did you believe him at the time?
Yeah, I did. I knew Mike in the political arena, and I trusted him. I accepted it at face value. He wasn't trying to sell me anything. Blumenthal said things were much worse than Chrysler had indicated.
Yet the Carter administration was split over the bailout. Supposedly G. William Miller (who had replaced Blumenthal as treasury secretary) was skeptical about the bailout. He thought it was a political loser.
We had a very peculiar breakfast meeting with Miller in (Vice President) Fritz Mondale's home. We started talking about getting the bailout legislation introduced, and Miller was dragging, dragging, dragging his feet.
He said, 'Look at that food on the table. You gotta let it get ripe before you eat it.' He meant we shouldn't rush the legislation.
And I said, 'If you leave the food out long enough, it will get spoiled.' And he finally said, 'OK, we'll be ready to move next week.' Miller was trying to soften us up.
When Chrysler finally asked Congress for the loan guarantee, the UAW was in an awkward spot. In 1970, Woodcock had opposed a government bailout of Lockheed Corp. And now that Chrysler needed a bailout, the union flip-flopped.
(Laughing) They raised that issue with me. ... I remember Sen. (William) Proxmire pressed me very, very hard. Proxmire said there were 5,000 corporate bankruptcies last year. What's the difference with Chrysler? I said you had to look at each case individually. You had to look at the consequences of a Chrysler bankruptcy. ... For example, the government would have to pay out $2 billion in pension credits.
The loan guarantee faced tough sledding in the Senate in November 1979.
Iacocca worked the Republican side of the street, and I worked the Democratic side. We were very, very uneasy. ... They lent me an office, and I called the senators. Howard Paster (the UAW's legislative director) said it looked like it could be a tie vote. So I called Mondale. He had a bad case of the flu. He could hardly talk. I said you'd better get down here, because it's too close to call, and I don't want to take any chances. And he agreed.
He stayed in a little office just off the Senate floor. He had a suit over his pajamas, and he was shivering like hell. He was sitting there, just in case.
Congress passed the Chrysler Loan Guarantee Act on Dec. 20, 1979. But first, it demanded an additional $260 million in union concessions.
They really had us by the throat. If we didn't do it, we'd have no loan guarantee. Those were the circumstances.
The UAW was forced to grant concessions to Chrysler three times. That must have been a political nightmare.
We went to the mat three times in 14 months. ... (The first round of concessions) was not one of the more difficult ratifications. We convinced the membership that the company was in some trouble. The first time, we simply backloaded the agreement so that the Chrysler workers would get pay raises at the end of three years.
Then the bottom fell out of the market in 1980. We froze the cost-of-living adjustment, and we reduced the holidays. But we didn't touch health care, and we didn't touch pensions.
Then we had to reduce wages. We reduced them by $2 an hour and accepted inferior benefits. The vote (for ratification) was a squeaker. I knew it would be. It was terribly, terribly difficult.
As compensation for the givebacks, Iacocca offered you a seat on the board of directors in 1979. At the time, that was an unprecedented gesture, and Chrysler had rejected earlier UAW overtures for a seat on the board.
In 1979, the (UAW's) Chrysler committee was pushing this very, very seriously.
To Lee's credit, he stepped up to it. It was four in the morning, and we were in negotiations at Chrysler headquarters. And Lee said he would nominate me (to Chrysler's board).
The concept existed nowhere else in America. ... People were asking how could I serve two masters. So I mailed out a letter to every single worker, explained what it meant and why. There was a lot of publicity.
The union didn't really understand this. They were uneasy. I didn't want to stand for election again (to Chrysler's board) unless I was absolutely sure of their support. So the union had a vote. With one exception, all the locals voted yes.
Even with Congress' approval of the bailout, you weren't out of the woods. When Ronald Reagan was elected in 1980, you were afraid he would block additional aid to Chrysler. You had to make sure the Loan Guaranty Board approved the loan guarantees.
We were desperate to finish before Reagan took office. He had made a speech opposing the bailout. It was a traditional Republican point of view. So Miller (President Carter's treasury secretary) stayed in his office (to oversee negotiations) until the very last minute.
What happened after Reagan took office?
(Treasury Secretary) Donald Regan made Iacocca give up his planes!