INDUSTRY-WIDE BARGAINING!

A Way to Balance Big Labor's Power

As the United Auto Workers aggressively presented their new wage demands to Ford and Chrysler last week, Detroit's worried automakers got some sound advice from Harvard University. Said Economist Sumner Slichter: "The auto companies would be wise to maintain a united front that would sooner or later lead to industry-wide bargaining."

Slichter touched a major problem for dozens of U.S. industries: they must either stand together or risk being whipsawed by unions. In many cases labor and management no longer sit as equals at the bargaining table. While big labor keeps a united front, management does not, and frequently comes off second best as one company is played against another. This weakening of industry's bargaining power is a big factor in rising prices, pushed higher and higher by wage boosts.

One of the best arguments for industry-wide bargaining is the way the idea has worked in practice. Of more than 125,000 collective-bargaining agreements in effect last year, roughly one-third, covering 40% of all organized U.S. workers, were negotiated between labor unions and groups of employers. Though only a few businesses, such as the garment industry (TIME, March 17), bargain on what amounts to an industry-wide scale, dozens of others negotiate contracts through associations of from two to 20 or more companies. The trend is particularly strong in service and construction industries, where both union and management groups like the idea so well that they have asked the Administration to guarantee the right of industry-wide bargaining.

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To many a small company, collective employer bargaining is vital: no small businessman has a chance alone against a powerful union. Employer associations can not only pool resources, but also save employers' time and money by bargaining for them. The mammoth steel industry practices a highly useful form of industrywide bargaining, though it boggles at any formal association of companies. After a bad strike in 1946, U.S. Steel Corp. sat down in 1947 with the union and hammered out a contract setting a pattern that the rest of the industry has since followed. In effect, U.S. Steel, biggest and toughest in the industry, negotiates on an industry-wide basis for most of the 22 integrated steel companies; before granting union demands, Steel takes care to consider its colleagues, who in turn back it up.

In other industries, a few of the biggest companies have also banded together for mutual protection. Libby-Owens-Ford and Pittsburgh Plate Glass, which comprise 95% of the plate-glass industry, got tired of seeing their wage scales leapfrog because of individual bargaining, feel that they have done much better since they decided to bargain together after a strike in 1936. Said a Pittsburgh Plate Glass executive: "We saw it as a means of protecting ourselves against the union's whipsawing tactics."

Some unions also favor industrywide bargaining on the principle that employers can then no longer play off one local against another. But many union leaders oppose it, recognizing that it minimizes labor's ability to play one employer against the other.

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Labor's strongest opponent of industry-wide bargaining is the U.A.W.'s Walter Reuther. Once when his union was weak, he argued long and loud for industry-wide bargaining, hoping thus to get more prestige--and members--for his union. Now, says Reuther, "there is no way they can force us to bargain on an industry-wide basis." Industry-wide bargaining would cost Reuther his major weapon in wage negotiations: the "key bargaining" tactic by which he singles out one company for attack, then uses that settlement as a pattern for the others. In 1955, at the last auto bargaining, Reuther's whipsaw worked to perfection and wrecked the industry's informal agreement to hold firm against demands for a guaranteed annual wage. When G.M. refused to give ground, the union turned on Ford. Fearing that G.M. would gain a new edge in the market if the union went on strike, Ford capitulated, forcing others to follow.

As a result, so much suspicion and ill will have been built up within the industry that it refuses to get together. Ford, Chrysler and American Motors are all for industry-wide negotiations. They know that the U.A.W. would hesitate to strike the whole industry at once. But General Motors, once burned, is against it. It is also leary of cooperation with the rest of the industry lest it bring down the antitrust lawyers. Thus, unlike steel, where the strongest company does the talking, the auto-industry pattern will probably again be set by Ford, which fits the U.A.W.'s idea of the perfect sparring partner--not too strong, like G.M., or too weak, like Chrysler. The automakers have industry-wide bargaining in effect, but without any of its protection.

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