Federal corruption probe leads to first major overhaul of UAW elections in 70 years

Gary Jones, the newly-elected President of the United Auto Workers (UAW), addresses the 37th UAW Constitutional Convention June14, 2018 at Cobo Center in Detroit, Michigan. Bill Pugliano | Getty Images News | Getty Images

DETROIT – A federal corruption probe into the United Auto Workers has led to an overhaul of the union's elections, potentially bringing an end to a more than 70-year leadership dynasty under which recent leaders accepted bribes and embezzled millions in members' dues and funds.

UAW members and retirees voted to change the union's process of electing leaders from a weighted, delegate-based system to a direct, or “one member, one vote,” election, according to preliminary results published Thursday by a court-appointed UAW monitor.

Of 140,586 votes, 63.7%, favored adopting the “one member, one vote” system with 36.3% preferring the status quo, the monitor reported.

Both the monitor and vote, which still needs to be certified, were results of a settlement between the U.S. Justice Department and union to end a corruption investigation that sent15 people to prison, including two recent UAW presidents and three Fiat Chrysler executives.

Officials say it's unclear how the new voting system will impact companies with workers represented by the UAW, specifically the Detroit automakers. Current leaders could remain in power as a slate backed by a caucus or run independently. An overhaul of union leadership also could occur, creating a wild card situation for companies and potentially placing inexperienced or more combative bargainers in leadership positions.

“There could be one or more or all new leadership at the helm of the union after elections are held,” said Kristin Dziczek, senior vice president of research at the Center for Automotive Research. “Whoever wins, caucus or non-caucus, the consequences for companies is that these are going to be folks who want to show value to the membership to get re-elected. The way to hold on to their powers is to get the workers better contracts.”

The UAW's change comes amid a growing union movement in the country that has involved strikes by organized workers, many of whom want to be compensated for working largely throughout the coronavirus pandemic in critical industries such as manufacturing and healthcare. They're also are leveraging the support of President Joe Biden, who has loudly and continuously supported unions and workers organizing.

The first direct election is scheduled in 2022, a year ahead of pivotal contract negotiations with General Motors, Ford Motor and Stellantis (formerly Fiat Chrysler).

Reuther Administrative Caucus

The UAW is broken into an international and local groups. The international runs the operations of the union and leads national bargaining and organizing efforts. It is led by a group called the “International Executive Board,” or IEB, which is made up of elected union officials.

The new voting system will replace one where local union delegates cast a weighted vote based on the size of their membership to elect international leaders. The leaders have run as a slate with little to no opposition for decades.

While local union members elected their delegates, many have criticized the process as being a rubber stamp for results that were already pre-determined by a leadership group known as the Reuther Administrative Caucus.

The group is named after prominent UAW leader Walter Reuther, who retained the presidency from 1946 until his death in 1970 through that system. Whatever slate of leaders the caucus supported has essentially won by a vast majority since he led the union.

Supporters of the UAW's traditional system have touted the union's peaceful and smooth transition of power over the decades as a major benefit. Critics say it allowed for leaders to handpick their successors and incentivized local delegates to support the caucus in hopes of joining it or being given a position in the international union with higher pay.

Leaders in the international union can have annual salaries of hundreds of thousands of dollars. Even smaller rolls of servicing representatives, assistants and organizers can easily top $100,000.

More accountability?

Scott Houldieson, a Ford employee from Indiana who has served as a delegate at the last three UAW conventions, said the previous election process also allowed leaders to function without accountability. He believes the system “bred” the recent corruption.

Houldieson, who has been a vocal supporter of “one member, one vote,” has voted against the Reuther Administrative Caucus to the sound of “boos” during the last three UAW conventions. He's now part of a caucus called Unite All Workers for Democracy that plans to challenge the Reuther Administrative Caucus next year.

“The reason I've been so supportive of it is that we need to build accountability into our system,” he said during a phone interview. “I felt that our international leadership was not representing the best interest of our membership.”

FBI agents finish loading materials into a truck out of the home of United Auto Workers President Gary Jones on Wednesday, Aug. 28, 2019.Michael Wayland / CNBC

The impact of the new election system on UAW members as well as companies depends on how the new process is implemented, according to Frank Goeddeke, a senior lecturer in management at Wayne State University in Detroit.

“The devil is always in the details, so that can affect how this is going to play out,” said Goeddeke, who co-wrote a book about the UAW. “I do think that with the one member one vote, I do think that the officers will be more cognizant of how the membership is going to feel about certain things that they do.”

Houldieson described the new voting process as a “huge step in the in the right direction” but said it's just a “first step” in overhauling the union, which is expected to remain under federal moderation through at least mid-decade.

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