(FORTUNE Magazine) – John Wilhelm knows that soon he'll be playing hardball with hotel owners from Philadelphia to Las Vegas to Honolulu. Contracts with thousands of unionized hotel workers in those and other cities are set to expire in the coming months, and as the man who represents cooks, bellhops, and maids, Wilhelm will be under pressure to make painful concessions. After all, the hotel industry has been devastated by the falloff in travel since Sept. 11.

But for the moment Wilhelm is the hoteliers' friend. On a late-September afternoon, while driving to a union meeting in New Haven, Wilhelm is placing calls to a trio of industry chieftains--Bill Marriott, Barry Sternlicht at Starwood, and Jonathan Tisch at Loews. They're finalizing plans for an upcoming field trip to Capitol Hill, where together they'll lobby for tax incentives that Wilhelm hopes will "help the companies get through this."

Wilhelm is lining up with the industry in order to save jobs for members of his organization, the Hotel Employees and Restaurant Employees (HERE) union. The situation is dire. An astonishing 40% of his 275,000 members in North America have been laid off since the attacks, he says; another 20% are working short weeks. He figures that the same ratio applies, more or less, to the much larger non-union work force. Under the circumstances, Wilhelm is happy to hold hands even with a longtime foe like Bill Marriott, whose work force is 93% non-union. Whatever it takes to jump-start the industry.

But Wilhelm's support is not unconditional. He saw what happened to the airline workers, who were left out of the federal government's $15 billion emergency bailout of the airline industry. So he has made it clear to the hotel owners that he expects reciprocal support on key issues of his own, like federal payments to extend health-care coverage for those who've lost their jobs.

It's a classic Wilhelm maneuver--part of a broader m.o. he describes as "walking down both sides of the street at once." That sounds impossible, but how else to explain the praise Wilhelm garners from all corners of the political and ideological landscape? "I made a friend for life that has changed who I am," says Kay Coles James, Bush's director of the U.S. Office of Personnel Management, who served with Wilhelm on a government commission. "The most talented labor leader in America," says Bruce Raynor, president of the Union of Needletrades, Industrial, and Textile Employees (UNITE). "An uncommonly fine dude," says Las Vegas hotelier Steve Wynne.

This uncommon man--a square-built 56-year-old with a loose-skinned face and a fondness for dark suits--looks the part of an old-line union leader. He's anything but. Unlike most union bosses, Wilhelm is committed first and foremost to bringing new members into his union. And unlike most unions, his is actually growing. After decades of slow, steady decline, HERE's total membership stood at 238,000 in 1996. Since then, it's risen 15%.

The threat of extinction--not the aftershocks of Sept. 11 or the near-term outlook for recession--is Big Labor's real crisis. In case you quit paying attention, union membership as a percentage of the overall work force has been falling steadily for years. In absolute terms, the peak was 21 million members in 1979; last year it was 16 million. Just 13.5% of the work force is now enrolled in unions, down from 35% in the '50s. In the critical private sector, less than 10% of employees are unionized, which is practically invisible. Yet despite all this news, which seems positively life-threatening, most union leaders are more concerned with tending to the needs of their own dwindling membership than in expanding labor's market share.

Not Wilhelm. At a closed-door meeting of the AFL-CIO executive council this past February, he made a radical (and unheeded) proposal to President John Sweeney regarding the federation's $105 million budget. "I said I think we ought to spend money on organizing and on politics and on nothing else," says Wilhelm. To underscore his point, Wilhelm cited the grave need in his own industry for work on health and safety issues. "As a union, we don't do a whole lot about that," says Wilhelm, "and I am mortified and embarrassed and horrified by that fact. It's terrible. But if we're dead and gone as an organization, we're not going to be able to do anything for anybody's health and safety or anything else."

There's some irony in all this. Sweeney himself was elected president in 1995 after pledging to commit 30% of the federation's resources to organizing. A spokesman for the AFL-CIO says that goal will be met "by the end of the year." Critics insist that the real number is far less--as little as 10%. In any case, the list of major unions that everyone agrees commit 30% or more to organizing is not long. It includes HERE, UNITE, the service employees, the steelworkers, and the carpenters, which pulled out of the AFL-CIO in March, citing Sweeney's retreat on organizing.

Sweeney may not be entirely to blame. "Heading up the federation is like being the king of England in 1200," says one union insider. "The barons all have more power than the king." Still, there was talk last summer in union circles that maybe it was time for Sweeney to go and for Wilhelm to replace him. That's not going to happen, at least not right away. Sweeney is up for reelection to a four-year term at Big Labor's biennial convention in Las Vegas in December, and as Wilhelm told FORTUNE, "I'm happy to support him."

For the time being, Wilhelm will continue as needling insider--a role in which he has had some success. He has wide support within the progressive wing of the AFL-CIO, as well as within the more conservative building trades unions. Even Jimmy Hoffa's Teamsters invited Wilhelm to address their national convention last summer. Two years ago Wilhelm engineered an abrupt about-face in Big Labor's anti-immigration stance, resulting in a call for blanket amnesty and an end to employer sanctions. (That, too, was driven by Wilhelm's fixation on growth. While many unions--HERE included--have traditionally viewed immigrants as a cheap-labor threat to their members, Wilhelm saw them as the core of his new constituency.) As the economy falters, the question becomes, Will the labor barons pull back and set up defenses around their fiefdoms, or will they join Wilhelm in his attempt to save not just union members but unionism?

If Wilhelm has credibility with labor leaders, it's because of his remarkable organizing successes, notably in rough-and-tumble Las Vegas. Wilhelm landed on the Strip in 1987, having spent the past two decades in New Haven. There he'd been a brilliant student at Yale (Phi Beta Kappa, magna cum laude in history), a community activist, a union organizer, and eventually an elected union official. With HERE Local 34, Yale's clerical union, he had led a groundbreaking ten-week strike in 1984 that won the support of Yale's blue-collar union and inspired a string of successful organizing drives at other universities.

But Las Vegas is not New Haven. Wilhelm's arrival there coincided with a low point in labor-management relations in the casino industry. Trust was nonexistent. Bitter strikes were the norm. Union leaders had lost touch with members. Over the next ten years Wilhelm transformed Las Vegas into a proving ground for a new model of trade unionism. He made grooming rank-and-file leaders a goal--for example, by winning contracts that allowed employees time off to work for the union. He showed casino owners he could be flexible on issues that mattered to them, like work rules and job classifications.

Above all, he made organizing his No. 1 priority. Riding the wave of the city's growth, Local 226 in Las Vegas became the fastest-growing private sector local in America under Wilhelm, adding 30,000 new members in the '90s. There were battles, to be sure, notably a six-year strike at the Frontier and a relentless pre-opening drive for union recognition at the MGM Grand, fought with raucous demonstrations and an effective behind-the-scenes corporate campaign. In most cases, though, Wilhelm persuaded casino owners that the union was an ally, not a foe.

His favorite tool, then as now, was what's known as a card-check and neutrality agreement, which amounts to a fast-track union vote bypassing the nasty charges and countercharges that usually go along with a formal election. The odds of a union victory go way up with card check, but employers can benefit too. "If you're likely to end up union anyway," says Stuart Korshak, a management-side labor attorney in Los Angeles, "it makes sense to agree to card check and neutrality and try to create a positive, mutually beneficial, and respectful relationship from day one. That's hard if you fight and lose."

The upshot: peace on the Strip. A level playing field (today only one hotel and casino, the Venetian, is non-union). A stable, well-compensated work force. And prosperity for all. "We have prospered as an industry during these past ten years more than at any other time," says Mike Sloan, senior VP with Mandalay Resort Group, whose Las Vegas properties include Luxor and Circus Circus. "The notion that unions have held us back is simply not true."

Wilhelm's success in Las Vegas helped him earn HERE's presidency three years ago. He came into office following a lengthy federal investigation that led to the resignation of his predecessor and several local union officials. Wilhelm, never a target, was specifically absolved. His challenge now is to prove that the Las Vegas model is transferable. That won't be easy. HERE has been growing steadily in recent years, but even so, its market share in all four of the biggest luxury hotel chains--Hilton, Starwood, Hyatt, and Marriott--is down slightly. It has yet to make significant inroads into the fastest-growing segment of the gaming industry, Indian casinos, which aren't governed by U.S. labor law. And because laid-off workers don't pay dues, HERE is facing a severe cash crunch since Sept. 11. Wilhelm has taken a 20% pay cut (he now earns $217,000 a year) and urged other union officials to do the same; even so, staff and program cutbacks are inevitable.

But Wilhelm is determined to stay focused on growth. Back in July, during an interview with FORTUNE, Wilhelm was reminded of a prediction he had made three years earlier that the labor movement would disappear without better organizing.

"Look, I think it's a crisis," he said. "You know, we're below 10% in the private sector, and I think it shows up in everything we do. Take politics. In the elections last fall, labor probably did about as good as you can do in terms of producing a vote for union households. It was far ahead of the average turnout in the population. If we had 5% more union members, the outcome of the election would have been the opposite.

"If we fail to organize, I don't know what plays out. To me the best reading of labor history says the needs of workers causes the reinvention of things. The CIO grew up because the AFL couldn't deal with the Great Depression and couldn't organize. Will something like that happen? I have no idea. But something will happen." That was three months ago. These days Wilhelm has even more reason to worry. But he's not backing down. His organizing budget--now 40% of expenditures--is only going up. "I don't care what's happened," he said four weeks after Sept. 11. "Our goal is to get to 50% by our 2006 convention, and we're not going to be deterred."

FEEDBACK: dwhitford@fortunemail.com