UAW Offers Concessions

Just in time for the second congressional hearing with the big-three automakers CEOs, the UAW has offered to make substantial concessions if part of a government rescue plan.  The UAW's president, Ron Gettelfinger, has long been willing to work with automakers (no doubt due, in large part, to necessity) and this time is no different as the union is offering to accept changes to its current collective-bargaining agreement.  According to the New York Times:

Currently, the average U.A.W. member costs G.M. about $74 an hour in a combination of wages, health care and the value of future benefits, like pensions. Toyota, by comparison, spends the equivalent of about $45 an hour for each of its employees in the United States.

Base wages between the Big Three and the foreign companies are roughly comparable, with a veteran U.A.W. member earning $28 an hour at the Big Three compared to about $25 an hour at Toyota’s plant in Georgetown, Ky. (Toyota pays less at its other American factories.)

But the gap in labor costs becomes larger when health care, particularly for thousands of retirees and surviving spouses, and job security provisions are considered.

Mr. Gettelfinger said Wednesday that the union would suspend the much-criticized “jobs bank” program, which allows laid-off workers to continue drawing nearly full wages.

He also said the union would agree to delay the multibillion-dollar payments to a new retiree health care fund that the automakers were scheduled to start making next year.

Beyond those two concessions, Mr. Gettelfinger said the U.A.W. would be open to modifying other terms of its contracts. Changes could include reductions in wages, health care or other benefits, and would require approval from union members.

As the figures show, one of the big labor costs that the Detroit automakers face that their competitors don't are those associated with a large number of retirees and the promises made to them.  The extent to which that can be cut back remains to be seen.  Moreover, note the lack of noise about job security.  The American auto industry is still bloated and job losses are going to have to occur.  The UAW is obviously hoping to limit the pain of those cuts and, more important, ensure that one or more companies don't go belly up and cause even worse job losses. 

Gettelfinger sums up the situation faced by the union with this comment:  “Concessions, I used to cringe at that word. . . .  But now, why hide it? That’s what we did.”

-JH