Unions flexing muscle in disputes
By HARRY R. WEBER
By HARRY R. WEBER
ATLANTA — Bankrupt companies hold a big stick in how their reorganization turns out. They can cancel contracts, eliminate stock options and wipe away debt.
But increasingly, labor unions, especially in recent airline bankruptcies, are trying to show they have muscle, too. Their weapon: to strike, or at least make management think you will.
From the airlines to the auto industry, unions are attempting to protect their pay and their pensions. But some legal experts caution that unions can do as much harm to themselves as their companies by taking a stand in bankruptcy. And some question whether the threat of a walkout really does carry much weight.
The union activities come at a time when employees feel they're under more pressure than ever to match their peers in the money they make, the hours they work and the benefits they receive. And in this fight, not all unions are created equal, with some enjoying more success in labor disputes than others because of their roles in their companies.
"While unions might not have much in the way of power in a Chapter 11 case, they have a unique kind of influence," said David Dykhouse, a New York bankruptcy attorney. "They might not get their way, but they've been sort of taken into account, and things end up not being the way they would have been had the union not had this role."
It's yet to be determined whether the pilots union at Delta Air Lines Inc., the nation's No. 3 carrier, will have much power or influence to decide its fate in the company's bankruptcy case.
The union voted Tuesday to authorize a strike at the Atlanta-based company, and it says it will walk out if Delta is successful in persuading an arbitration panel to void its contract with its 5,930 pilots so the airline can impose up to $325 million in long-term pay and benefit cuts. But the company so far isn't flinching, even with some customers turning to other carriers, and with time running out for the two sides to reach a deal on their own.
Other sectors, like the auto industry, also face strike threats by unions representing employees of companies in bankruptcy.
The United Auto Workers responded angrily last week when auto parts supplier Delphi Corp. asked a federal judge to cancel its labor contracts so it can impose wage cuts. Delphi filed for bankruptcy protection last fall, and the judge is scheduled to consider the company's request May 9.
The UAW, which represents around 24,000 of Delphi's 33,000 U.S. hourly workers, has threatened to strike if the judge allows Delphi to cancel its contracts and Delphi imposes the wage cuts it proposed in its last offer. Delphi wants to cut pay from $27 an hour to $16.50 an hour.
But David Cole, president of the Center for Automotive Research in Ann Arbor, Mich., said strike threats are losing their power because all parties know that strikes could be deadly to the companies involved.
"Before, there was no question. Even if there was a strike, the company was going to be there. It was the Rock of Gibraltar. It was not going away," Cole said. "The company is in play today, so it just changes the atmosphere very dramatically."
Despite union rhetoric, there is much more collaboration behind the scenes than there used to be because a bankruptcy filing forces labor and management to see how much they depend on each other.
"They succeed together or they fail together," Cole said. "The risk from the union perspective is that if you throw out the contract, then all of a sudden, what you have planned for a whole career on is up in the air. That's a pretty dismal potential outcome. What's far preferred is that you come to a deal together."
That is particularly true in Delphi's case, Cole said, because the company has an older workforce and workers want to make sure they can retire with their pensions and benefits intact.