UAW Opens Door for GM Cuts
Further cuts may be on the table--but will the rank and file agree?

Car Connection 04/04/05
author: Joseph Szczesny

The United Auto Workers, which has been under pressure to help domestic automakers, has made what union officials describe privately as a key concession to General Motors Corp.

The union has basically allowed GM to eliminate more than 6600 blue-collar positions as workers have quit and retired since the current contract was signed in the autumn of 2003. Under the terms of its labor contract with the UAW, the union could have insisted that GM replace the workers as they retired.

The tacit understanding, which freezes new hires, has allowed GM to trim its blue-collar workforce by 10 percent, from 124,000 in 2003 to 112,000 today.

The jobs cuts, in a stable cost climate, would have been enough to help GM cover the rising cost of healthcare benefits. GM's management, however, has said the rising cost of healthcare benefits, particularly for blue-collar employees and retirees, has put an extra burden on the company. GM also is now under intense pressure from credit rating services, analysts, and lenders to pressure the union for more concessions on healthcare.

Gary Cowger, president of GM North America, said during the New York Auto Show it would help GM if the contribution of unionized workers matched that of salaried employees.

Stefan Weinmann, GM spokesman, said Tuesday GM's blue-collar workers pay only about seven percent of their health-care costs, while salaried employees pay about 27 percent of their costs. Nationwide, corporate employees generally pay 32 percent of their healthcare benefits, Weinmann said.

Paul Krell, spokesman for the United Auto Workers, declined to comment on the possibility of changes in the union healthcare plans and Weinmann declined to comment on whether GM had asked for any changes in talks with union representatives.

Richard Wagoner, GM's chairman and chief executive officer, is scheduled to meet with local union leaders in mid-April. The GM chairman is expected to zero in on the company's financial problems, which could include having its credit rating reduced to junk unless its sales show sign of turning around.

UAW considers

Healthcare issues did come up during a recent meeting of the union's GM Council, which is made up of local union officials from GM plants around the country.

During the discussion, council members were told that to protect the healthcare benefits for active and retired employees, the union had elected not to press the company to hire those 6600 new employees. A union official, who asked not to be identified, said the formula requiring GM to hire new employees is complicated and not a widely understood part of the contract. But similar provisions have been used in the past to force GM, Ford, and Chrysler to bring on new workers as other workers have retired.

The UAW had decided not to press GM since the company was under stress in recent months, union officials said. We've been told that we've already paid for our healthcare, said another union official.

The new demands for concessions for healthcare have sparked something of a backlash among union members. GM's management is avoiding its own failure, pointing at the rising healthcare cost problem, some members say. What's Bob Lutz done since he's been at GM? Nothing, said one irate retiree. But he can shoot his mouth about our healthcare, he added.

In addition, GM's management has done virtually nothing to address the quality problems that have badly hurt GM sales over the years, noted David Yettaw, a former UAW official from Flint.

They never want to talk about the quality problems or all the money they've wasted at Fiat, Yettaw added.

In February GM agreed to pay Fiat more than $2 billion to get out of a contract that could have forced GM to buy the ailing Italian automaker. GM said the contract was unenforceable but elected not to contest Fiat's claims in court.