UAW agrees to concessions
Written on December 5, 2008
DETROIT — Leaders of the United Auto Workers agreed Wednesday to suspend the program where laid-off workers can get up to 95 percent of their wages and benefits, a concept that came to symbolize the stereotype of overpaid, underworked factory workers.
At an emergency meeting, hundreds of local UAW leaders agreed to clear out the controversial jobs bank, defer payments to a new health care trust fund and consider modifying other parts of its landmark 2007 labor agreement. Several UAW officials and analysts said those changes likely mean wage cuts.
"Concessions, I used to cringe at that word. But now, why hide from it?" said UAW President Ron Gettelfinger.
The concessions are being made to prevent the Detroit Big Three from collapsing. On Tuesday, the automakers submitted restructuring plans to Congress, outlining how they would use $34 billion in requested emergency government loans.
GM has offered to eliminate up to 31,000 jobs, shut nine plants and either shrink, sell or possibly kill three brands in addition to Hummer, which already is up for sale. Ford’s plan said the automaker needs to bargain with the UAW on wages, benefits and work rules. Chrysler’s plan called for "meaningful concessions from each of its major constituents."
The changes UAW leaders agreed to Wednesday are "substantive and painful," made on top of deep concessions granted by the UAW in recent years, said Harley Shaiken, a University of California-Berkeley labor professor.
Yet Shaiken says he’s not sure it’s enough to persuade Congress to bail out Detroit. "The perception of Detroit is driven in part by stereotypes and myths," he said.
Leaders of the automakers and the UAW are to appear before Congress today.
Democratic congressional leaders say they want to act to prevent one or more of the automakers from collapsing, but they have made no commitments to approve an unpopular bailout at a time of economic peril.
Senate Majority Leader Harry Reid, D-Nev., said Wednesday that a Democratic plan to tap the Wall Street rescue fund to save U.S. automakers does not have the votes to pass. The Bush administration has suggested that aid to the automakers come from a $25 billion loan already approved by Congress for fuel-efficient vehicles.
Members of Congress last month criticized the automakers for paying workers who are not on the job. About 3,500 autoworkers across the three companies are currently in jobs bank programs.
The decision to cut the jobs bank could have broad effects in the St. Louis area, which has assembly plants for both Chrysler and GM cash advance.
Last month, media reports put Chrysler’s Jobs Bank enrollment at about 700 workers. But Chrysler spokeswoman Mary Beth Halprin said that number is actually less today, as workers have replaced those who took retirement or severance packages. However, Halprin could not specify national or local numbers for the automaker’s minivan and pickup operations in Fenton.
GM, the largest of the Detroit Three, has about 1,000 enrolled workers nationally, but spokesman Tony Sapienza didn’t have local numbers. The automaker has a plant in Wentzville where the GMC Savana and Chevrolet Express full-size vans are made.
Ford spokeswoman Marcey Evans could not say whether any St. Louis-area workers remained in the jobs program. The automaker shut down its Hazelwood plant in 2006.
Besides suspending the jobs bank, the union will help the automakers’ cash flow by deferring required payments into the health care trust fund, called voluntary employee beneficiary associations, or VEBAs. Gettelfinger declined to put a new date on the payments.
Ford already has paid $2.7 billion into the fund as required by the terms of the 2007 agreement. GM and Chrysler did not make their initial payments. But the Dearborn automaker still welcomed the offer of deferred payments, which will delay Ford’s next payment of more than $6 billion due next year.
The next step is for the bargaining committees to review the various national agreements, which were intended to last four years. The union won’t open the entire contracts, but there are provisions to make modifications. Those changes would have to be ratified by the union’s 139,000 workers.
"Everything is on the table," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. "That, of course, includes wages and benefits."
Cole described the UAW concessions, while substantive for UAW members, is "almost symbolic" in the uphill battle to convince Congress that the Detroit automakers deserve taxpayer billions.
"The real problem is the absolute collapse of the credit market. But manufacturing is a high fixed-cost business, and you cannot cut your way to success in manufacturing," he said. "The UAW is making significant steps, but the larger issue is that a lot of smart people don’t know what’s going on in manufacturing."
Post-Dispatch reporter Angela Tablac and The Associated Press contributed to this report.
Filed in: management.