UAW clout seen limited as autos drama plays out

CHICAGO (Reuters) - The United Automobile Workers union, an icon of organized labor in the United States, is battling to preserve jobs and benefits at teetering U.S. automakers General Motors Corp (GM.N) and Chrysler with a losing hand.

"The UAW is not going to be a part of the final solution. They are dead meat," said Bill Adams, chief executive of Adams, Nash, Haskell and Sheridan, a labor relations consulting company in Erlanger, Kentucky.

Even if fellow unions were to rally around the UAW, it would not change the outcome, Adams said.

"They're along for the ride, and unfortunately, they're going to be out of business in the auto industry," he said.

Union backers don't agree.

UAW President Ron Gettelfinger said Friday that the union was continuing to work with a U.S. government task force on the bailout plans for GM and Chrysler. He said he would not respond to "speculation" about further UAW concessions.

But the union has been mostly silent since Monday, when U.S. President Barack Obama told GM and Chrysler neither company had done enough to justify the additional taxpayer money they were seeking. The president gave GM 60 days to wring additional concessions from workers, creditors and other stakeholders.

Chrysler's operation would be funded for 30 days as it works to complete an alliance with Italy's Fiat SpA (FIA.MI).

UAW spokeswoman Christine Moroski declined to comment on union strategy after the Obama announcements.

Auto analysts see the union as shell-shocked by the hard line taken by Obama, a former community organizer who won huge support from the UAW and other unions in last year's election.

Obama said the two companies should prepare for bankruptcy if the deadlines are not met, a business solution neither the union nor GM bondholders want.

But their choices appear limited and UAW, in particular, is seen having little leverage outside its political backers in Congress and state assemblies.

GM has cut 60,500 jobs -- or more than half of its factory workers -- over the past three years as sales have slowed and its financial position has weakened.

It looks set to close more than the five plants it had identified in February and would have to return to the UAW to offer another round of buyouts to factory workers.

"I would expect that we would need to take further measures," GM Chief Executive Fritz Henderson said on Tuesday.

UAW PENSION MONEY A WEAPON?

Some union backers have speculated that the UAW could pressure debt holders like mutual funds giant Fidelity Investments by threatening to withdraw union pension money from funds. But analysts dismiss such threats.

"In terms of UAW in influence over debtholders, they really don't have any," said Tony Faria, an auto sector analyst at the University of Windsor. "Those are simply two different groups that aren't working together to any degree."

"The relationship really is General Motors with their debtholders and General Motors with their union reps," Faria said. "It's not a relationship between the UAW and the debtholders."

J. Justin Wilson, managing director at the Center for Union Facts, said unions are restricted from using their roles as pension custodians to influence conditions not directly related to the pension returns.

Louis Campagna, chief of the U.S. Labor Department's Division of Fiduciary Interpretations, addressed that issue in June, 2008, Wilson said.

"A decision to make or refrain from making an investment may not be influenced by a desire to promote a particular industry or industry member, or to generate employment within that industry or industry member," Campagna said in the June 24 letter to the U.S. Chamber of Commerce.

But, there may be some flexibility in that rule, said Robert Bruno, associate professor of labor and employment relations at the University of Illinois in Chicago.

"I'm not aware of any hard-and-fast barrier to trying to use some of that instant leverage," he said.

Unions have become more sophisticated in using pension funds to further their interests, said Fred Feinstein, a professor at the University of Maryland's School of Public Policy. He noted, in particular, construction workers' unions that have invested pension funds in buildings to create jobs.

But Feinstein agreed that unions may not do anything to jeopardize their members' pensions.

"There are fiduciary rules that deal with how pension fund money can be used. They have to be used in a manner that's in the interests of the participants," he said. "The question is what is in the interests of the members?"

"They can't do things which are manifestly not in the interests of the pension fund participants," he said.

The UAW, one of 56 unions within the AFL-CIO grouping more than 10 million members, also seems to have isolated itself.

"It does appear as if the UAW has rather inexplicably decided to go this alone," Bruno said, adding that he did not expect to see a strong show of solidarity as the auto industry races to meet White House objectives.

(Reporting by Kyle Peterson and Andrew Stern, editing by Leslie Gevirtz)