Recent news that 38,000 Ford Motor Co. employees agreed to take the company's buyout offers might have been welcome news for the Michigan automaker — but it sure wasn't for the United Auto Workers, which has already seen its membership fall to 598,000 from 1.5 million 20 years ago.

"The buyouts at General Motors and Ford severely reduce the number of active members paying dues at the union, and this in turn affects the union's ability to organize," Jim Hendricks, a founding partner in the Chicago office of law firm Fisher & Phillips, told Workforce Management earlier this month.

Labor union membership has been falling for years.

Between 1983 and 2004, the union membership rate in the U.S. declined from a high of 20.1 percent to 12.5 percent. Last year's percentage of wage and salary workers being union members remained unchanged from 2004's, the U.S. Department of Labor's Bureau of Labor Statistics reported earlier this year. Nearly 15.7 million wage and salary workers were union members in 2005, according to last year's data.

Industry analysts say the UAW union may need to take some type of drastic action if it wants to continue to wield the clout that it once had. "I wouldn't be surprised if the UAW decided to merge with another industrial union," Hendricks said.

For employers in manufacturing, a UAW merger could result in a jump in organizing activity.

Some industry professionals foresee one big industrial union forthcoming. "This could result in more political clout for labor, especially if the Democrats retain control [of Congress] in 2008," Mark Neuberger, a partner in the Miami office of Buchanan Ingersoll, told Workforce Management.

Labor attorneys say that logical mergers for the UAW would be either with the United Steelworkers of America or the International Association of Machinists and Aerospace Workers.

Yet history has been known to repeat: ten years ago, a merger between the autoworkers, steelworkers and machinists fell through because the three groups couldn't see past their differences, noted Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts.

The only alternative it has would be to try to establish alliances internationally, particularly in China, where the auto industry is taking off. "It would be easier for them to try a merger than set up a union in China," Neuberger said.

Moreover, the UAW faces another difficult choice: reach agreement on concessions with the Delphi Corporation or risk seeing Delphi lose out on a deal that would help it emerge from bankruptcy. A group of private equity firms said yesterday that they were willing to invest at least $1.4 billion and up to $3.4 billion when Delphi emerges from Chapter 11.

The offer hinges on Delphi's reaching a new labor agreement with its unions, led by the UAW, by Jan. 31. Such an agreement has been elusive since Delphi filed for bankruptcy protection in October 2005, saying that its labor rates of about $27 an hour in the United States were too high to allow it to compete with non-union companies who pay much less.

Even more, UAW President Ron Gettelfinger yesterday said the union is reconsidering whether it should give healthcare concessions to the Chrysler Group, reports The Detroit News. Chrysler, which has already cut health care benefits for white-collar workers and retires, expects to spend $2.3 billion this year on healthcare. A deal with the UAW similar to the Ford and GM arrangements would save Chrysler hundreds of millions of dollars over time.

In September, the union told Chrysler it wouldn't give the company similar health concessions to those agreed to last year with GM and Ford because Chrysler's parent company, DaimlerChrysler AG, was in better financial shape. But apparently the automaker's $1.5 billion loss last quarter and its expected loss of $1.2 billion for the year is enough to convince UAW President Gettelfinger that Chrysler's not doing as well as he first thought.

Therefore, the UAW is conducting an independent financial study of DaimlerChrysler, as it did for GM and Ford, to assess the company's actual fiscal standing before a decision to offer concessions is made. Because DCX is a German-American hybrid, however, the UAW is finding it more difficult to gain access to the financial info needed. DCX, however, should be as forthcoming with that data as possible if it hopes to convince the UAW that health concessions would be in both their interests.

According to the latest annual BLS-released "Union Members" report, union membership last year grew at roughly the same pace as overall job growth, leaving the share of U.S. workers in unions in 2005 unchanged at 12.5 percent. This latest report marked a milestone in U.S. union history: for the first time ever, the share of manufacturing workers who are covered by a union is no higher than the share of covered workers in the rest of economy (both 13.7 percent). Manufacturing workers are now no more likely to be represented by a union than the average U.S. worker. Union membership rates are still slightly higher in manufacturing (13.0 percent) than in the economy as a whole (12.5 percent), but if recent trends hold, union membership in manufacturing will also soon fall behind the rest of the economy.

What changes, if any, do you you think labor unions — particularly the UAW — must make to keep/regain its clout or even to remain relevant?

Sources:

Workforce Management

Bureau of Labor Statistics

New York Times

Detroit News