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GM and Chrysler Seek Union Concessions

4 minute read
Joseph R. Szczesny

The United Auto Workers is engaged in delicate discussions with Chrysler LLC and General Motors Corp. on a new round of concessions from 90,000 autoworkers that will be critical to the survival of both companies.

Meanwhile, union members are growing more vocal, saying the UAW has been singled out to shoulder an unfair burden in the automakers’ survival plans. “Management got us into this mess and now we’re supposed to get them out of it,” griped one union official familiar with the bargaining. “I’m hoping Obama’s going to step in.” (See pictures of the remains of Detroit.)

UAW chief Ron Gettelfinger is trying to mute public criticism of auto executives, blaming domestic carmakers woes on a global recession created by the financial meltdown. However, he has also noted repeatedly that union members already made sacrifices in 2005 and 2007; he refuses to say whether the UAW would agree to wage cuts at this time.

The union has shut down the “jobs banks” that allowed idled workers to collect pay indefinitely after they exhausted other unemployment benefits. But the UAW is balking at any deeper cuts that might jeopardize the generous supplemental unemployment benefits that union members have gotten for more than half a century on top of state benefits.

However, Chrysler chairman Robert Nardelli stressed in a letter to employees this week that more concessions are needed from the union if the company is to produce a credible viability plan. Chrysler has also noted that it will cap executive compensation as part of an overall plan.

Meanwhile, GM, rather than pushing for wage cuts, is demanding sweeping changes in work rules that would make it easier for the company to staff its plants with temporary workers as well as changes to the funding of the retiree healthcare trust or VEBA. Both GM and Chrysler agreed to fulfill their obligations to fund the VEBA with stock as well as cash, as required by the terms of the Bush bailout. But the automakers cannot unilaterally change the terms of the trust, so it’s on the negotiating table.

Both companies want at least some commitment on the extent of the union concessions by Feb.17 when GM and Chrysler are scheduled to submit drafts of their new “viability plans” to the Treasury department. The automakers are supposed to show they have labor costs that are “competitive” with foreign car companies operating in the U.S. (See the 50 worst cars of all time.)

Gettelfinger, however, says the terms of loan agreement are vague. “What’s ‘competitve’?” he asks, adding that he wants to be able to examine the books of Japanese companies such as Toyota, Honda and Nissan to see what they actually pay employees. “I’m not going to take somebody else’s word for it,” he said after his speech.

Gettelfinger also said he believes several of the loan provisions were especially punishing to the UAW. The reason for such harshness, he says, is that Republicans in Congress were angry over the GOP’s defeat in November. “We didn’t sign the term sheet,” Gettelfinger says, defiantly.

Could the UAW dig in its heels? Sean McAlinden, vice president of research for Center of Automotive Research in Ann Arbor, Mich., says that for past 25 years the UAW has succeeded in avoiding rollbacks in wages and benefits. The union may do it again. “I don’t think there is going to be a wage roll-back,” McAlinden says, despite the GM’s bridge-loan agreement with the White House that gave GM $13.4 billion.

For its part, the UAW seems to be counting on a new friend in Washington. “During the eight years George W. Bush was in the White House, (AFL-CIO) President John Sweeney wasn’t invited to the White House once,” Gettelfinger notes. Now, he says, “You just can’t believe the change in Washington.”

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