UAW: Now's the time to work with GM

Beleaguered union appears ready to help ailing automaker before contract expires in 2007.

By Brett Clanton / The Detroit News

CHICAGO -- Given General Motors Corp.'s financial woes, the United Auto Workers may have to work with GM to lower health care and other costs before the two sides renegotiate a major labor contract in 2007, a top UAW official told local union leaders Monday.

In frank discussions at an annual meeting here, UAW Vice President Richard Shoemaker said the union wants to help GM become more competitive but will only consider moves that do not require it to reopen its contract with the automaker, according to UAW officials who attended the meetings.

Shoemaker didn't outline possible solutions that the union and GM have discussed in closed-door meetings in Detroit this summer, or any timetable for reaching a deal.

But his comments suggested to some that a strike is not a realistic option and the union may be better off reaching an agreement sooner rather than later.

"He said (GM is) not going to be in any better shape in 2007 than they are today," said James D. Kaster, president of UAW Local 1714, which represents workers at a GM small car plant in Lordstown, Ohio.

The meeting, which includes top UAW officials and union leaders from GM and Delphi Corp. plants, is taking on special significance this year because of mounting financial troubles at GM and Delphi.

Both companies are losing money in North America and are seeking financial relief from the UAW to stem losses.

GM, which has lost $2.5 billion in North America and burned through $3 billion in cash this year, wants immediate relief from soaring health care costs that equal $1,500 per vehicle.

It is seeking to cut UAW health care costs by as much as $1 billion a year. Delphi, which has reported four consecutive unprofitable quarters, said it would consider filing for bankruptcy if it does not reach a deal with GM and the UAW that lowers U.S. factory wages and health care expenses.

"We can no longer afford to continue to pay all-in wage and benefit costs of approximately $130,000 per year per U.S. hourly worker," Steve Miller, Delphi's chairman and CEO, said during a second-quarter earnings conference call Aug. 8.

The UAW has launched an independent review of GM's financial position and hired a team of outside financial experts led by Lazard Ltd. to study the automaker.

But what shape a deal will take with GM or Delphi -- if one is made -- is still unknown.

Union officials came to Chicago this week hoping to hear an update that they could carry back to members, but the lack of specifics in Shoemaker's presentation left some with more questions than answers.

Shoemaker's "down-from-the-podium" presentation Monday was described as an earnest "fireside chat" focusing on GM's deteriorating financial condition. He plans to meet with Delphi union officials today.

He declined to comment for this report.

Gordon Drennan, a shop committeeman at UAW Local 659, which represents workers at a GM plant in Flint, said he left Shoemaker's talk with little encouragement that GM's outlook was going to improve soon and that the pressure would be lifted from the union to make concessions.

"It's a big problem," he said, shaking his head outside a hotel conference room after the mid-morning meeting. "And I don't see it going away."

In June, GM announced plans to close plants and eliminate 25,000 jobs in North America by 2008. The moves will generate $2.5 billion in annual savings.

GM executives have pressed hourly workers to accept higher out-of-pocket costs for health care that are more in line with those paid by its salaried workers.

But GM will not be able to make radical adjustments to health care costs and still remain within the bounds of the UAW contract. What is more likely, say union officials, is that the UAW will consider modest increases in medical co-payments and deductibles, moves that could save millions, but not the billions of dollars the automaker says it needs.

"It would be in the m's, not the b's," UAW Local 1714's Kaster said.

The UAW is likely to fare better by reaching a deal now rather than later, given the difficult road GM faces in turning its North American operations in coming years, said Walter McManus, director of the Office for the Study of Automotive Transportation at the University of Michigan.

"They need to make a deal. Their situation is not improving," he said.

But some union leaders say that U.S. automakers have been cutting jobs for years and that it is unfair for rank-and-file workers to be hit with extra costs when the company's management is making poor decisions.

"They keep wanting more," said Drennan, who has seen the number of workers at his plant cut in half over time. "I know we got to make changes, but when is it enough?"

Still, others seem to be more willing to give if it means helping GM out of its current crisis.

Roy Nievierowski, president of UAW Local 362, which represents workers at a GM engine parts plant in Bay City, said his members are nervous about the situation. But he believes the union leaders will make the right decision.

"They say the way GM goes, the country goes," he said. "I still believe that's true."

http://www.detnews.com/2005/autosins...A01-289735.htm

Given General Motors Corp.'s financial woes, the United Auto Workers may have to work with GM to lower health care and other costs before the two sides renegotiate a major labor contract in 2007, a top UAW official told local union leaders Monday.

Sunday, August 28, 2005


UAW can't meet all of Delphi's demands

GM supplier threatens bankruptcy without concessions; union wants others to share the pain.

By Brett Clanton / The Detroit News

In his first face-to-face meeting with United Auto Workers President Ron Gettelfinger, Delphi Corp. Chairman Robert S. Miller got right down to business.

A restructuring expert, Miller produced a list of his opening demands. They included wage cuts of at least $5 an hour, benefit reductions and work rule changes that together total roughly $2.5 billion in givebacks, according to people familiar with the situation. Otherwise, Delphi likely would seek federal bankruptcy protection.

Miller's message, delivered Aug. 3 at the UAW's Solidarity House in Detroit, didn't play well. Last week, Richard Shoemaker, a UAW vice president, told local union leaders assembled in Chicago that there was no way to give Delphi all it wants.

"The question becomes how much can we do and if that will be enough to avoid bankruptcy," said Shoemaker, according to a UAW memo dated Aug. 25 and obtained by The Detroit News.

The stage is now set for a difficult, contentious and time-constrained round of negotiations that could fundamentally reshape Troy-based Delphi and the UAW's reputation for preserving Big Auto wages and benefits.

Not only is the future of Delphi, the world's largest auto parts supplier, at stake, but so are thousands of high-paying jobs in Michigan and the industrial Midwest.

The two sides appear to be far apart with a relatively short time to close the gap. Delphi signaled that it could file Chapter 11 before new bankruptcy laws go into effect on Oct. 17.

Delphi, which was spun off from General Motors Corp. in 1999, posted a $338 million loss in the second quarter and has struggled in the face of recent production cutbacks at GM, rising raw material costs and the increasing costs of health care and retiree benefits.

Both Delphi and GM are in separate discussions with the UAW in hopes of reaching some cost-cutting solutions ahead of the 2007 expiration of their current national contract. Representatives from GM, Delphi and the UAW have yet to meet together to discuss their issues.

The UAW leadership says it will not be strong-armed into concessions. The union says it will consider only solutions that do not require it to reopen its national contract and that blue-collar workers should not be the only ones asked to make sacrifices.

"If anybody does anything, everybody has to do something," Gettelfinger told reporters at a union-sponsored reception Friday.

The UAW, which has seen its membership decline as Detroit automakers have downsized, is at a critical juncture.

While committed to protecting jobs, the 70-year-old union also recognizes the depth of financial troubles besieging the Detroit-based auto industry. Its leaders say they understand that refusing to cooperate could speed the demise of both the auto companies and the union.

But it also knows that whatever it gives to one company, it will be pressured to give to others.

At the UAW's annual meetings in Chicago last week, Shoemaker told union leaders from GM that the UAW will not consider concessions until it completes an independent review of the automaker's finances. The union has said the review would wrap up by summer's end, which has fed speculation that a deal may be near.

But Shoemaker was at a loss on how to respond to Delphi's threat of a bankruptcy filing by Oct. 17 if it doesn't get union concessions.

"He stated that he had no idea what would happen, but they would continue to meet with Delphi and as soon as there was a solid proposal we would all be called together to discuss it," according to the union memo sent to local union leaders, which summarized Shoemaker's comments at the meeting.

In a sign the union may be preparing for the worst, the UAW last week had a bankruptcy lawyer explain to union leaders what a Chapter 11 filing by the supplier could mean. But it also sought to reassure union leaders that worker pension and benefits are guaranteed by GM as a condition Delphi's spinoff from the automaker, the memo said.

It's unclear how much support GM could lend to Delphi if the supplier filed for bankruptcy.

GM lost $2.5 billion on its North American auto business this year and may not be in a position to bail out its troubled former parts division. At the same time, it needs a healthy Delphi to keep supplying parts for many GM vehicles -- a responsibility that has Wall Street convinced some kind of deal is imminent.

"In our view, discussions between GM, the UAW and Delphi will lead to GM being convinced by the union to offer one-time financial assistance to Delphi in return for lower ongoing employee costs and compliance with capacity reductions," Prudential Equity Group analyst Michael Bruynesteyn said in a Friday report.

On Friday, the Wall Street Journal reported that the UAW wants GM to take back 7,000 Delphi workers. But GM already has as many as 5,000 laid-off workers in its "jobs bank."

Workers caught in the crossfire of the talks are less optimistic.

More here: http://www.detnews.com/2005/autosins...A01-295391.htm