Blue Collars in the Board Room

At Chrysler the U.A. W.'s Fraser prepares to become a director

When Chrysler shareholders gather this week for the beleaguered automaker's annual meeting at the Clock Tower Inn outside Rockford, Ill., they are expected to ratify a historic change in the management of American corporations. Among the 20 nominees for the board of directors is Douglas A. Fraser, 63, president of the United Auto Workers union. Never before has a representative of Big Labor joined the board of a major U.S. company.

Eraser's all but certain election by Chrysler's 213,158 shareholders is part of a deal worked out between the auto company and its workers to help the ailing auto company. Last fall the U.A.W. agreed to defer $203 million in wages and benefits in exchange for Eraser's appointment to the board of directors.

Whether a union voice in Chrysler management will have much effect on the company's desperate fight for survival is far from certain. Last Saturday, following all-night talks with Canadian officials in Toronto and extended negotiations in Washington, Chrysler finally tied up all the elements of its rescue plan. The company obtained a total Canadian contribution of $210 million in government-insured loans, which completed the conditions Congress had set out for approving $1.5 billion in U.S.-guaranteed loans. The money for the automaker is sorely needed. Chrysler's new-car sales were off 42% last month, and the firm lost a catastrophic $449 million during this year's first quarter.

A seat on the Chrysler board is a major milestone for the U.A.W., which organized auto-industry workers 45 years ago after a series of bloody picket-line battles with the major car companies. Nonetheless, Eraser's appointment has drawn little support from either corporate executives or other labor union leaders. Scoffed General Motors Chairman Thomas A. Murphy: "It makes as much sense as having a member of GM's management sitting on the board of an international union." Some rank-and-file members of Eraser's own union remain suspicious about his getting too close to management. "I'm afraid it's a sellout," said Maye Lean Amos, a sewing-machine operator at Chrysler's Detroit auto-trim plant. Some union leaders meeting in Washington last week for their regular spring session were sympathetic to the "special circumstances" of Eraser's appointment. But most supported AFL-CIO President Lane Kirkland, who says that workers are best represented "through the collective bargaining process and the adversary system that it represents."

Fraser, a tall, roughhewn man who began his union career while loading fenders for Chrysler in a De Soto plant in 1935, has a broad view of his new job. He intends to use his seat as a "pulpit of advocacy." In an unusual statement to Chrysler shareholders in this year's proxy statement, Fraser said he plans an active part in discussions on nearly all topics, including worker health and safety, plant closings, new products and major investments. But he says that he will not participate in any company discussions on pay negotiations. Says Fraser: "I believe my activities will advance the interests of the broad Chrysler community--shareholders, workers, suppliers, dealers, consumers and the public."

That is an unusual view of a company director's duties, and some experts in business law argue that it might even be legally vulnerable. In Delaware, where Chrysler is registered as a corporation, the law requires directors to have "undivided loyalty to the corporation." Chairman Lee Iacocca has pointedly stated that Fraser will be joining the board as an individual and not as a U.A.W. representative. But Harvard Law Professor Vern Countryman warns: "If certain Chrysler stockholders wanted to raise the point, they could create some trouble." As of week's end there were no indications that the point would be raised.

Nonetheless, Fraser is likely to find himself torn between his responsibility to the company and his loyalties to his union members. A board decision to close a plant, for example, might be necessary to ensure Chrysler's survival but could be denounced by union workers faced with losing their jobs. Confidential information will have to be closely guarded. And many skeptics worry about any tampering with the traditional arm's-length relationship between management and labor. Says Murray Weidenbaum, a member of TIME'S Board of Economists: "The consumer in me worries about any variation in the corporate state."

Despite these concerns, there is sound precedent for giving an auto-union leader a seat at the director's table. In West Germany, union officials for years have had a role in determining corporate decisions under a system called Mitbestimmung, or codetermination. Under this arrangement, West German union representatives in 1976 agreed to Volkswagen's decision to build assembly plants in the U.S. after they were convinced it would ensure the firm's survival and their own jobs in the long run, even though it meant limited union jobs at home. Says VW Chairman Toni Schmucker: "I don't claim to tell other people how to run their companies. But in my time here at Volkswagen, in the atmosphere of this company, codetermination has worked."

The auto industry clearly needs help in settling critical labor issues as it struggles to upgrade the quality of cars and to replace its gas guzzlers with a new generation of fuel-efficient models. Moreover, Eraser's new post could prove a trail blazer for management-labor relations in other American industries, ensuring that the worker's viewpoint gets an adequate hearing at executive levels. Says he: "Maybe the adversary relationship is precisely what is wrong with the American labor movement." In any case, Eraser's trial run in Chrysler's red brick headquarters in Highland Park, Mich., will certainly have an impact far beyond that troubled company.

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