2/9/08

UAW union-dues can't support strike-pay

More than a week after members of United Auto Workers Local 2069 walked out of the Volvo Trucks North America plant, picked up picket signs and began striking, their standoff with Volvo continues.

And, if a recent visit to the picket line provides any indication, their enthusiasm remains unchecked. On Wednesday, about 30 union members stood outside the Dublin (VA) plant's entance waving signs, laughing and calling out for passing motorists to "blow that horn!"

"This is our future," explained Carol Burton, a 45-year-old Dublin resident who installed truck cabs before going on strike. "We'll stay out here as long as it takes." Yet as the strike moves into its second week and Volvo's 1.6 million-square-foot truck plant remains quiet, financial forces are likely to start impinging on both the union's and Volvo's ability to hold out.

Who will fold first?

That depends, industry and labor relations experts say. But issues such as truck inventory, union member preparation and a weakening economy are expected to come into play if the strike continues for several weeks.

"If it's a very short strike -- a couple days -- that doesn't mean too much," said Kenneth Kremar, a New York-based analyst with Global Insight who follows the truck and trailer industries. "The million-dollar question is how long do they let it go? And it depends on how tough the union wants to be and how tough the management wants to be.

"My suspicion," Kremar added, "is if this goes on for more than a couple of weeks, Volvo's going to feel it fairly significantly in their numbers."

This year, however, wasn't anticipated to be a blockbuster one.

"As expected, demand in North America remains low, reflecting the weakening economy," reads Volvo's recently released year-end report. "This has resulted in lower profitability in the transport industry along with a relatively high level of inventories of new trucks at the dealers.

"Forecasting the market is difficult," the report continues, "but current expectations are a demand for trucks in 2008 on the same level as in 2007."

And 2007 was hardly a banner year.

Hit hard by new emissions standards that raised truck prices and caused customers to pre-buy trucks in 2006, Volvo Trucks has said it suffered a 46 percent decline in net sales in North America from 2006 to 2007.

A weakening economy and high fuel prices have also taken their toll, said Edgar Miller, general manager of Truck Enterprises' dealerships in Harrisonburg and Roanoke.

"Truck sales, I think, are at at least a 10-year low, if not 15," Miller estimated.

As a result, Volvo is unlikely to be pressed by unfilled orders -- at least not yet.

And this, Kremar said, may be a factor in how long the company can withstand a strike.

The Dublin plant is the only facility in North America that assembles Volvo's line of heavy-duty trucks.

Yet with the strike claiming more than 2,460 of the plant's 2,900 employees, it's unclear when production there might resume.

"It's too soon to say," Volvo spokesman John Mies said Thursday. "We're still exploring all the options for getting production up and running as soon as we can."

In the meantime, he noted, "there is a certain amount of inventory that exists at the dealer level so, depending on the specifications of the truck that a customer wants, there is still some availability in the short term."

Mies declined to define "short term," but Miller said, at least at this point, the strike hasn't been too problematic for Truck Enterprises, an eight-location truck dealer that sells Volvo, Kenworth and GMC trucks.

"There are less sales and we have a good amount of inventory in stock right now," he said.

Issues could arise, however, if a customer wants a specialty truck or if the economy picks back up, Miller said, and there's always the possibility that inconvenience could drive customers to Volvo's competitors.

"The longer it goes, the more difficult it is, because if it gets into a situation where they're really at loggerheads, potential equipment buyers will say, 'I can go and turn to someone else to supply my truck,' " Kremar said.

While Volvo faces the threat of lost orders, UAW Local 2069 must contend with its own set of strike-related pressures.

Chief among them is the ability of members to withstand financial hardship while off the job.

Throughout the strike, the union pays members $200 a week in exchange for spending four hours on the line picketing. The sum is a far cry from the average $21 to $22 an hour employees earn at Volvo, and because of that, many workers have scaled down their spending significantly.

"You do a lot of cutting back," Burton said. "You cut DirecTV and Internet, quit eating out, shopping."

These habits may not be a big deal in the short term, but over several weeks, or even months, the lost income could weaken union members' resolve.

Speaking about strikes generally, Kent Murrmann, an associate professor in Virginia Tech's Pamplin College of Business, said, "After a period of time, being away from the job is not what people want and so they get restless about getting back to the job. The union doesn't want to use up its strike fund entirely and has limited resources, so it has to make sure the issues it's striking on are really supported by the members."

Both officials and members say the strike has the union's full backing.

When UAW Local 2069 first voted to authorize a strike Jan. 28, the vote passed with 95 percent of the vote.

"Naturally everybody's concerned about the financial well-being of their families," said striker Mark Montgomery. "But sometimes you got to do what you got to do."

"No strike is good for anybody's monetary needs," agreed UAW Local 2069 President Lester Hancock. "But they're out here for the long term [and] they knew it, so I think they've been getting prepared for a while."

Members' strike pay, Hancock added, is paid from a pot of union dues and won't run out anytime soon.

"There's a lot of money," he said. "It would take several, several months before that would happen."

And a strike of that duration would hit both sides hard.

"A strike is always a sacrifice for both union employees and the employer," Murrmann said. "It's not something that either party enters into lightly."

(roanoke.com)

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