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UAW agrees to Concessions With Automakers

4 minute read
Joseph R. Szczesny

The United Auto Workers has scrapped the jobs bank and is looking to modify other aspects of its existing labor agreements with General Motor Corp, Ford Motor Co. and Chrysler as part of the effort to secure federal aid for the three automakers.

UAW President Ron Gettelfinger said Wednesday afternoon that the union was taking two immediate steps to help bolster the three struggling automakers, which he said are suffering a triple calamity of collapsing sales, tumbling consumer confidence and the frozen credit markets. (See pictures of the recession of 1958.)

The UAW’s concessions would permit the automakers to delay payments to the retiree healthcare trust [VEBA] due during 2009 and cancel the controversial jobs bank immediately. The union also plans to re-open contract discussions with all three automakers and will consider what Gettelfinger describes as “modifications” to the current contract.

All three automakers have included additional concessions by the UAW as part their broad case for government bridge loans totaling $34 billion. After meeting with the UAW, GM management issued a statement: “We are pleased to see these changes and the willingness of the UAW to help improve our competitiveness. The UAW has shown they are willing to work with us on tough issues. We look forward to continuing to work with our union partners to transform our business as we are in this together.” (See the 50 worst cars of all time.)

Gettelfinger didn’t specify what the possible contract modifications might entail but they potentially could include changes to wages schedules, work rules and benefits such as raising medical co-pays and deductibles.

UAW Vice President Jimmy Settles, who negotiated a $4 per hour wage cut in return for new investment at a Mitsubishi plant in Normal, Ill. said he wasn’t sure the modifications to the Big Three contract should include major wage cuts. “Mitsubishi represents less than 1% of the U.S. market,” he said. Gettelfinger, however, made it plain that the situation was dire. “Even if all of our members were willing to work for nothing, it wouldn’t help the automakers out of the situation they are in,” Gettelfinger told reporters after a union meeting in Detroit, also noting that the union already made major concessions in 2005 and 2007. But the automakers’ managements clearly want more. “They told it’s not about concessions, it’s about the survival of the companies,” said Bill Parker, president of UAW Local 1700, which represents workers at Chrysler plant in Sterling Heights, Mi.

To reinforce the urgent need for progress, Gettelfinger brought in Steve Girsky, managing director of Centerbridge Partners, who briefed the joint meeting of the Union’s General Motors, Ford and Chrysler councils about the situation. “They asked me to explain how they got into this situation and I did,” Girksy told TIME. He declined to offer any details of the sobering briefing but said the situation was “grim.”

Gettelfinger also said while he was concerned about the impact of the end of the jobs bank, where workers on long-term layoff basically collect almost all of their wages while not working. The jobs bank had become a hot-button issue that was impeding the domestic carmakers’ efforts to obtain federal assistance before the end of the year. Fewer than 4,000 workers at the three companies now collect wages through the jobs bank, which applies only after the workers have been on indefinite layoff for more than 48 weeks.

“The important thing is to secure these loans,” Gettelfinger said. “We’re just in a major economic downturn,” he said. “We’re willing to take an extra [cut] here to make sure that they survive long term,” he said.

Gettelfinger indicated that the union also expects the combination of concession and federal aid to prevent automakers from shifting more jobs out of the United States. “We support the creation of an oversight board to make sure the investment stays in this country. We would not support using taxpayer money out of the United States,” he said.

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