(FORTUNE Magazine) – LET'S TRAVEL FORWARD in time a few years. Joe Jones, a union leader at Autoparts R Us Inc., is addressing his fellow members on the company's board of directors. He is wearing a hard hat. After consulting with the union's bankers at Laser Friars & Co., Joe reports that his brotherhood has decided that the company should accelerate its five-year factory-modernization program to two years; the union will help finance the speedup with cuts in overtime pay. In addition, says Joe, the union's strategic-planning group has spotted an opportunity: Eastern Europeans are developing a taste for flashy American hubcaps. If the sales force would get off their tails, the company might grab enough of the action to save a troubled hubcap plant and 500 jobs. Both proposals win quick endorsement. Meeting adjourned, Joe heads for the union hall to report to the rank and file -- and hoist a few beers. What is farfetched about this vision of the future? Only that Joe didn't doff his hard hat at the board meeting. The rest -- union members helping make management decisions, even at high levels, and slaughtering some of their sacred cows, such as never granting wage concessions, to help save jobs by making industries more competitive -- is already happening. You can see it among steel, rubber, textile, and communications workers, and at companies like AT&T, Goodyear, Xerox, and Ford Motor. If, as seems likely, this trend continues, the 1990s could prove a revolutionary -- and transforming -- decade for the American labor movement. Not everyone is cheering the change. To union traditionalists, the new approach borders on heresy. ''We already have a way to establish healthy relationships between workers and management,'' says Ron Carey, president of the Teamsters. ''It's called collective bargaining.'' Schisms have opened up, not just between unions but within them. The powerful United Auto Workers, whose labor agreement at GM's Saturn plant is a state-of-the-art example of flexible collaboration, is also home to a conservative rank-and-file movement, called New Directions, that rejects the whole team concept. Nor are most of these notions new ideas. A union leader served on Chrysler's board from 1980 to 1991 as part of a deal the company cut with then UAW head Douglas Fraser to win concessions that would help it avoid bankruptcy. What's different is the breadth and depth of the reform movement -- and the desperation that drives its leaders. Says Edward Clark, vice president for New England of the Amalgamated Clothing and Textile Workers Union: ''Our goal now is survival.'' The peril is real. Even though executives regularly decry labor's power to obstruct -- and that power remains formidable -- unionism has been growing steadily weaker for decades. In 1945, the high-water mark for the U.S. labor movement, union members accounted for 35.5% of all employed Americans. Today that share stands at 16.1%. The decline would have been sharper had unions in service industries and in the public sector not experienced rapid growth in recent years. For already hard-hit manufacturing unions, the 1980s were the cruelest decade. Many major employers went offshore, bankrupt, or out of business, and survivors responded to intensified global competition by accelerating efforts to produce more goods using fewer workers. As a result, some of the biggest unions lost almost half their members: The United Steelworkers of America, for example, shrank from one million in 1981 to 570,000 in 1991. Emboldened by President Ronald Reagan's success in firing and replacing striking air traffic controllers in 1981, companies also started taking a harder line on strikes. Partly out of fear that striking workers might be replaced and partly because unions recognized that employers were up against the wall, strikes at companies with 1,000 or more employees (the only tally the Department of Labor makes) fell from 187 in 1980 to 40 in 1991. More important, the number of elections held by workers voting to unionize their workplaces fell from roughly 4,000 a year in the early 1980s to 3,000 in 1991, according to the Bureau of National Affairs, a publishing firm that keeps statistics on unions. ''We have taken 12 years of busting and bashing,'' says George Kourpias, president of the International Association of Machinists and Aerospace Workers, whose membership has dropped from 950,000 to 729,000 since 1981. Bill Clinton's presidency may slow the erosion of union power. During the Democratic primaries, Clinton walked the picket line in the bitter UAW strike against Caterpillar, promised to push right-to-strike legislation that would make it illegal to replace striking workers permanently, and said he might support labor law reforms that could, for instance, make it easier for unions to organize at non-union sites. Even so, labor's realists are well aware that having a Democrat in the White House won't rid them of their two biggest problems -- foreign competition and their own rotten public image. That image explains why the public, rather than protesting when Reagan fired the air traffic controllers, instead responded with a collective ''serves 'em right.'' Says Jerome Rosow, founder of the Work in America Institute, a research organization in Scarsdale, New York: ''The U.S. work force is becoming better educated and more white collar. Unions haven't figured out what to do for people who don't picture themselves on a picket line and who view unions as too adversarial.''

IN THE VANGUARD of the reform movement is a small band of new but not necessarily young leaders. Among them are Kenneth Coss of the United Rubber Workers (which has shrunk from 170,000 members at its height to 102,000), Jack Sheinkman of the Amalgamated Clothing and Textile Workers (down from 350,000 to 237,000), and Lynn Williams of the steelworkers. Coss, a quick, gregarious man, became head of the Rubber Workers in September 1990. He explains the change in his union like this: ''In the 1980s foreign cars began pouring into the country with foreign tires on them. So we gave wage concessions of $2 or $3 an hour, about 10%. All the companies did with our sacrifice was lower their tire prices to try to get market share. - They should have used it for capital improvement. So the union became proactive, not reactive. Our goal, really, is to preserve the industrial base. We told the companies that this industry is self-destructing. We'd better work jointly using all our intelligence, our initiative, to make worldclass facilities.'' The steelworkers, whose industry contracts expire this year, have also just pledged to take a totally new approach to collective bargaining. Says Williams: ''When it comes to dividing up the pie, we'll be adversaries. But now we have to grow the pie, and that means working together.'' Worker cooperation takes many forms with many names: quality work-life teams, quality circles, employee involvement programs, and empowerment. By now, students of management are familiar with these critters, many of which exist in non-union as well as union workplaces. But when unions come to cooperate, they demand some quids for their quos. The deals that seem to be working well contain these simple elements:

-- First, the union agrees to loosen work rules, albeit gradually. Fast disappearing are the days when an electrician, taking a motor in for repair, needs a millwright to walk onto the factory floor and unbolt it for him. And anyone is allowed to change a light bulb.

-- Second, the union is more flexible about compensation, rarely agreeing to direct cuts in hourly wages but accepting downward adjustments in, say, vacation or overtime pay.

-- The old rule, often codified in contracts, was that managers made the decisions and, as the vernacular had it, workers ''checked their brains at the door.'' The third step is that union leaders are now willing to walk through the old invisible shield between workers and bosses and join with management in committees or teams aimed at improving quality, increasing production, or solving other problems.

-- For their part, what unions want companies to do is to open up the books more to them, particularly cost and profit data. Without that, they ask, how can we help lower costs and make our plant more profitable? They also demand some form of job security. No rational employee will suggest more efficient ways of working, they point out, if his idea results in his own dismissal. Even so, the security that union members get is usually limited to the life of a contract -- about three years.

-- Finally, unions demand that these new cooperative committees not be used to make an end-run around the collective-bargaining table when it comes to things like compensation and setting work rules. The Teamsters recently won a case before the National Labor Relations Board that accused Electromation Inc. of Elkhart, Indiana, of doing just that. To prevent such surprises, unions usually demand that they control worker appointments to these committees. ONE OF THE EARLIEST efforts at collaboration, one that has become a model for others, is at Xerox, whose factory workers are members of the clothing workers' union. In the early 1980s, Xerox was losing market share to the Japanese and closing plants. Fearing the worst, union leaders offered to explore ways to improve quality and efficiency. When they sat down with management, they busted a bunch of old shop taboos. To avoid the periodic layoffs and rehirings that follow manufacturing cycles, they agreed to let Xerox hire temporary workers for specified tasks, as long as their number did not exceed 10% of the work force and they worked for no more than six months. In exchange, management granted union members job security for the duration of their contract. The union also agreed to something called ''no-fault termination'': If a worker is absent on four occasions for two or more hours per year, he or she may be terminated. (Hospitalizations and vacations are not included.) Says Joe Laymon, Xerox's director of corporate industrial relations: ''No more sunny- day and hunting-season stuff. Our absenteeism has fallen from 8.5% to 2.5%.''

Union members threw themselves into the task of making Xerox a world-beating competitor. When the company announced that it would close its wire harness manufacturing unit (with 240 jobs) and buy those copier parts instead from Mexico, the union formed a cooperative team to identify ways to lower costs and make a competing bid. The goal was to locate $3.2 million in savings. They found $3.5 million. One way was a team-designed and -built production carousel, which resembles an assembly line mounted on a Lazy Susan. It's fast and compact, and the team standing around it can coordinate their work like women at a quilting bee. Now Xerox is winning back market share it lost in the 1980s and, most important for the union, increasing employment. Its manufacturing jobs have grown from a low of 2,600 in the early 1980s to 4,100. The union recently formed a cooperative team that bid for a $20 million contract to make parts that had been purchased from outside suppliers. It won the bid, which could add another 200 jobs. Says Anthony Costanza, the union's international vice president: ''The goal of our entrepreneuring is to make the company more profitable so we can ask for more.'' Indeed, Xerox's union believes things have already gotten so good that it has begun bargaining -- so far without success -- to remove the no-fault termination deal from its contract. National Steel, which is 70% owned by NKK, a Japanese steelmaker, and the United Steelworkers have embraced cooperative reforms that are unprecedented, at least in the U.S. industry. Union shops at National now operate their own safety inspection teams, which can shut down production if there is a problem, and management has promised neutrality -- meaning it won't campaign against the union -- during any organizing drives the USW makes in non-union parts of the company. As a result, the union recently gained the right to represent office workers at National's headquarters in Mishawaka, Indiana. In return, the company is getting labor peace and higher productivity, which has improved from six worker-hours per ton to fewer than three. Says Buddy Davis, a grizzled, gravelly voiced district director for the USW in St. Louis: ''We used to have war on the shop floor. Every negotiation was a bitchin' match. Now 100% of our members are on a committee, and because those committees work out day to day a lot of smaller problems that used be saved up for the bargaining table, the bargaining goes fast and smooth. It's the goddamndest thing I ever saw. And I took a lot of convincing.'' CONVINCING the rank and file can be the toughest part. When Union Camp's giant paper plant in Savannah was losing money in the mid-1980s, the company considered shutting it down. But the six local unions began a reform movement without much help from their national offices. They formed teams to agree upon new work rules, and the unions agreed to cut vacations and take lower pay for overtime. Workers also helped Union Camp install a giant, efficient new papermaking machine staffed by teams that operate in a radically new way. On No. 8 machine, as it is called, two of the three daily shifts run without supervisors. Workers are trained to perform more than one function, and teams select their own new members, based on competence rather than seniority. As the reform took shape, Mark Wilkins, who is spearheading the effort as president of United Paperworkers International Union Local 407, got phone calls from union members around the country warning him not to get bamboozled. When he addressed a union conference in Canada last January, the first question from the audience was: ''How does it feel to sell out everything we ever fought for?'' Wilkins responds to such charges with a country drawl and a withering glare: ''When the company wanted to make changes in another part of the plant, the union voted no. We have kept our identity. But we have also seen people come into this country eatin' our lunch in cars and textiles. We decided we're gonna adapt before we lose paper. So we're opening up new areas while we defend the traditional values too.'' Management can be hard to convince as well, even in companies that already have successful cooperative relationships with unions. At one such plant in the South, output per worker is up 30% and grievances are down more than 50%. But the top manager there confesses privately that if he were starting up a new plant, ''I would do everything I could to make it non-union.'' Why? ''The work rules are still too restrictive.'' On the other hand, this executive goes on to admit, ''based on what we have achieved, I don't see any reason why a union plant couldn't be as efficient as a non-union plant.'' Delivering on that potential, as the union reformers know, is the only way to ensure that their movement not merely survives but also thrives.

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