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Gettelfinger No UAW Wage Concessions for Bailout

Union chief says automaker executives have indicated publicly that wage concessions would not be required of the UAW as part of federal bailout provisions being demanded of General Motors and Chrysler.

January 22, 2009
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The United Auto Workers union will sacrifice to help General Motors and Chrysler get their federal loans, but doesn’t expect to take lower wages, president Ron Gettelfinger said Wednesday, January 21, at the Automotive News World Congress.

He cited several concessions the union already has made to help the automakers become more competitive. But he also said that the effort to revive the automakers has a long way to go.

“We’re not out of the woods yet,” he said.

Gettelfinger also said automaker executives have indicated publicly that wage concessions would not be required of the union as part of federal bailout provisions being demanded of GM and Chrysler. “We’re not expecting lower wages,” he said.

The federal government made union concessions a major condition of a $17.4 billion loan package to GM and Chrysler. The UAW is required to take automaker equity instead of cash for half the funding of retiree health care trusts that the union will create in 2010. Those trusts will take $100 billion in those obligations off the books of Detroit’s Big 3 automakers.

The union also is being asked to bring UAW compensation in line with that paid by the Japanese transplants.

Gettelfinger said if the union made concessions, it would expect any agreement to have a mechanism to recoup the sacrifices if other stakeholders eventually benefit from the companies’ return to health. Dealers, suppliers and investors are all being asked to take “a haircut,” in the words of House Speaker Nancy Pelosi, D-California.

In his keynote speech Wednesday, Gettelfinger said changing retiree health care benefits in 2005 took $18 billion in obligations off the Detroit automakers’ books, while saving the companies $3 billion annually, including $1 billion in cash.

But he said that was the single-hardest professional decision he had ever made. Union members had retired with the promise and expectation that those benefits wouldn’t change.

The 2005 changes created smaller versions of the voluntary employee beneficiary associations that paved the way for the larger VEBAs in 2007 that moved all retiree health care benefits to the union trusts. Retirees have to pay higher co-payments and deductibles under the VEBAs.

To take stock now to fund the VEBAs, instead of the cash the union was expecting, will be difficult, Gettelfinger said. He questioned how GM stock could be properly valued when common shares of the company have fallen 90 percent in 15 months.

“Just because we’re a union doesn’t mean we’re stupid,” he said.

Gettelfinger has argued that UAW wages are comparable to those of the transplants. Including bonuses, workers at Toyota’s Georgetown, Kentucky, plant earned $30 an hour in 2007, or $2 more an hour than veteran hourly Detroit automaker workers, he said.

Gettelfinger said that the union expects to meet a February 17 deadline for laying out its role in the loan package if those provisions are still operable at the time.

Gettelfinger also tried to clarify what he called a misperception about how much Detroit automaker pensioners earn. The average UAW-represented retiree earns a pension of $17,000, he said. A large number of people earn less than $8,000.

Gettelfinger admitted that he and the Detroit automaker CEOs were unprepared for the hostility they incurred when they appeared twice before congressional committees to seek the bridge loans.

The executives didn’t expect that kind of reception, in part because financial institutions earlier had received $700 billion in emergency loans without the sort of restrictions that were attached to the automaker loans.

“The banks came in and pushed wheelbarrows of cash out of town,” he said.

Republican senators that shot down carmaker loans after the House had approved the funds were “a political lynch mob,” Gettelfinger said. President George W. Bush approved the loans in December as one of his last major decisions in office.

Gettelfinger also said he didn’t expect special treatment from the administration of President Barack Obama. The UAW campaigned hard for Obama’s candidacy in the fall.

Filed by David Barkholz of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter.

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