The Freep reports that the newest UAW deal is similar to the recently-approved Ford deal in terms of economics, but is “drastically different” in other areas. How drastically? There are”no mandatory physical examinations in the UAW GM agreement,” according to the Freep’s union source. Also, “with regard to employee placement, other parts of the agreement are different to better fit the UAW GM culture.” Which doesn’t exactly sound encouraging. The Freep wanted to know more (don’t we all), but when asked, “A GM spokeswoman declined to comment. A UAW spokesman didn’t respond to questions.” Great. But it’s probably not worth losing sleep trying to discover the details (not that we wouldn’t love to have someone send us a copy). Locals won’t have the opportunity to approve the contract modifications until GM completes its debt restructuring anyway. Which has been dragging on for months now with no end in sight. If the locals even approve the deal which, based on Ford’s 58 percent approval showing, is hardly a foregone conclusion.
Manny Lopez is Motown’s head cheerleader. So when the Managing Ed of The Detroit News‘ auto section sits down to pen an opinion piece on the Employee Free Choice Act—the Orwellian federal legislation eliminating secret ballots for unionization—you know you’re in for a good time. As Stevie Ray Vaughan was wont to croon, who do you love? “Michigan’s business environment can’t afford the Employee Free Choice Act.” So that’s it, then. I’m not quite sure how Manny can square his opposition to the legislation with his support for the United Auto Workers. But I’m all ears.
For sure, the UAW helped make workplaces safer and increased wages and benefits. But we have to carefully examine the economic impact this special interest legislation would have on Michigan.
“This could have tremendous consequences for the auto industry,” Paul Kersey, director of labor policy at the Mackinac Center for Public Policy, told me Tuesday. “And the costs could be very substantial.”
Best. Headline. Ever. But then Canada’s Globe and Mail threw out their word mincing machine sometime around the turn of the last century. The paper shows its stones by revealing that the new deal between Generous Motors and the Canadian Auto Workers isn’t what you’d call onerous. Not by a long chalk.
The extra holidays remain intact in the new, cheaper version of GM Canada’s deal with the CAW, negotiated over the weekend. So does the child care subsidy (up to $2,400 per kid per year) and the car purchase discount (up to $2,600), which GM Canada – despite being on the brink of crisis – generously extended last spring to some 30,000 retired workers. Of course, current GM workers who think their jobs might vanish will want to hold off on buying that new GMC Sierra, to take advantage of the $35,000 vehicle voucher they would receive as part of their $100,000 restructuring allowance.
There will be no more Easter Monday holiday for Ford’s UAW employees, as ABC reports that the Blue Oval’s unionized workers have approved proposed modifications to their labor contract. Voting was close (and divisive) though. According to the UAW, 59 percent of production workers and 58 percent of skilled-trades workers voted for the agreement. The concessions could give the UAW a 25 percent stake in Ford, as its VEBA benefits fund will receive $1.6B in (non-voting) Ford equity.
The Detroit News reports that the UAW vote on Ford’s proposed modifications (full summary in PDF) to the union contract is “tight,” as locals wrap up balloting by Monday. Eight union locals have approved the modifications while four have rejected them, but margins of victory were in the “low 60-percent level to the mid-50-percent range.” Modifications must be approved by a simple majority of Ford’s UAW workers, meaning “no” votes in locals that passed the measure still count and vice versa. And though the Freep has uncovered a letter from Ford to the UAW detailing the carnage that has already been wrought upon Ford’s hapless contract employees (possibly the great unsung victims in this mess), and suggesting that perhaps contract modifications aren’t the end of the world, the video above proves that the old UAW zero-sum perspective is alive and well.
The Freep reports that Ford’s deal with the UAW, which could have signaled a way forward for all the Detroit automakers, has been rejected by two locals. Local 892 of Saline, Michigan, rejected modifications to the union contract with 76 percent opposing. Local 1219 of Lima, Ohio, also rejected the changes by a mere 14 votes. Two Michigan locals are known to have approved the changes, 900 of Wayne and 228 of Sterling Axle Plant.
Covering Detroit’s massive health care liabilities is perhaps the single greatest challenge facing those working on the auto industry bailout, reports the Washington Post. Detroit retirees in particular represent a huge commitment, as current health care benefits include dental, vision and prescription drug benefits for the low price of $11 per month. And as the automakers burn through their cash, they must come up with some way of maintaining or cutting benefits in the face of rising health care costs. GM currently carries $20B in health care obligations, over ten times its market capitalization. Chrysler owes $10B and Ford owes $3.2B of its total $13.2B VEBA commitment this year alone. With bailout plans calling for automakers to inject equity rather than tight cash into the VEBA system, a number of unintended consequences are being forecast.
Sunday? Sunday! That’s the day The Detroit Free Presschose to tell the world that GM’s recent accounts contain a time bomb: the revelation that the company raided—sorry, “borrowed from”—its employee pension fund to buy out United Auto Workers employees and pay into their health care fund. Even though we’ve become used to gigantic numbers, the sums involved are staggering. “Details are emerging about how General Motors Corp.’s U.S. pension funds went from a $20-billion surplus at the end of 2007 to a $12.4-billion deficit 12 months later.” I make that a $32.4-billion swing. It’s also approximately $11.4 billion more than GM’s CFO estimated its pension deficit, as declared in The General’s December pre-bailout report.
Automotive News [sub] reports that Ford CEO Alan Mulally and Executive Chairman Bill Ford will take a 30 percent pay cut as part of a package of management cutbacks aimed at easing passage of a recent Ford-UAW agreement. Additionally, Bill Ford’s entire compensation package will be “set aside” until the company returns to profitability and the Board will forgo all cash compensation this year. Finally, 2009 performance bonuses for global salaried employees and senior executives have been canceled. Read Bill Ford and Alan Mulally’s memo to Ford employees at the Detroit Free Press. And what of those UAW concessions? A UAW memo on the Ford agreement is also up at the Freep (PDF), and it includes the jaunty assurance that “there is no loss in your base hourly pay, no reduction in your health care and no reduction in your pension.” So what are the concessions?
Well, the headline is there and the news is there. But is it? The Freep reports that a UAW-Ford deal on VEBA has been announced by the UAW, but there’s nothing there that you can’t find in the UAW’s press release. Go figure. Sure, it may be the first reported agreement on the future of VEBA, but there’s basically nothing to go on. “We appreciate the solidarity, understanding and patience the members have demonstrated throughout the bargaining process,” says UAW President Ron Gettelfinger in his press release and nearly every news report on the item. “The modifications will protect jobs for UAW members by ensuring the long-term viability of the company.” But how? The UAW rejected stock for VEBA out of hand a few short days ago, as VEBA became the sticking point that kept union concessions out of last Tuesday’s viability plans. And like all UAW “concessions,” this one has to go to the membership for ratification. Furthermore, according to the Freep, “proposed changes to the VEBA will require court approval.” Meanwhile the only possible insight we have into the UAW’s strategy comes from a boilerplate Gettelfinger op-ed in the Washington Times. And there’s little there to indicate a VEBA deal.
The Daily Mail reports on a warning by the UK’s Unite union to Chancellor Alastair Darling. The union told Darling that 100k jobs are at risk by the “imminent” closure of a car factory. “We made it absolutely clear that the prospect of a plant closure will have a devastating effect on UK manufacturing,” Unite’s Derek Simpson told the paper. “Immediate and effective intervention is required from the Government.” That would be a £13b bailout. Yes, yes. Who’s in danger of going belly-up, then? As, the Brits would say, that would be telling. Keep in mind, that the union boys are throwing around the 100k number in the same way that the infamous CAR study claimed 3m U.S. jobs would be lost if Detroit didn’t receive a federal bailout. You know, counting anyone even remotely affiliated with the car biz, like gas station attendants. Anyway, according to the Mirror, “All the major car manufacturers denied they are considering shutting down factories in Britain.” So I’m thinking . . . Vauxhall told its UK CEO to “send the boys ’round.”
The Detroit Free Press is reporting that the United Auto Workers have reached a “tentative” agreement to modify its 2007 employment contract. But wait! “The UAW is withholding the terms of the tentative understanding pending completion of the VEBA discussions and ratification of the agreements,” says UAW boss Ron Gettelfinger. But give them the money anyway, is the clear subtext. Or, as the Freep puts it “the announcement by the UAW on Tuesday shows that the union and the companies are making significant progress.” When asked by the Freep, GM’s Rick Wagoner couldn’t even give a number just now. Wagoner claims that they went into talks with “ambitious” plans. And now there are now details. But everything’s peachy! GM’s take (from the viability plan): “As of February 17, the Company and the UAW have made significant progress on costs/work rules, which represent major steps in narrowing the 8 competitive gap. However, these revisions do not achieve all of the labor cost savings comprehended in the Company‘s financial projections.”
The United Auto Workers (UAW) contracts are facing unprecedented public scrutiny. It could have something to with the fact that it’s now OUR money the automakers are pissing away—sorry, “lavishing upon” union members. Or it could be that the normally passive—sorry, “pro middle class” MSM’s smells blood in the union boss’ water. In any event, here’s one for working class heroes: free legal advice. The Freep: “Established in 1978, the UAW Legal Services Plan provides ‘personal legal services,’ to about 725k workers, spouses and retirees from several companies, according to the program’s Web site. It is the largest pre-paid legal services program in the country. Before I give the jumpers the inside dope (in a non Michael Phelps kinda way), you wanna guess how much 290 attorneys cost the Big 2.8 et al.? Seriously, you gotta guess. ‘Cause the Freep doesn’t even estimate the cost. Blood boiling? Ready for the jump then . . .
That’s TTAC Ken Elias earlier today in Bailout Watch 394. And lo, it did come to pass. Just hours later, Automotive News reported: “General Motors is expected to identify more than $1 billion in savings from additional plant closings and factory work-rule changes when it files a viability plan with the US Treasury on Tuesday, said a source familiar with ongoing stakeholder negotiations.” And no, it wasn’t Ken. Of course, Elias goes on to say big whoop. “[It’s] not enough to right a ship that’s losing $2B+ a month in cash flow.” Somehow that perspective didn’t make it into the AN piece. Still, the article’s well worth a read—if only for a laugh. Ladies and gentlemen, we have a new (yet old) straw man to set alight: True North.
Fourteen percent of GM’s global salaried workforce will lose their jobs by the end of the year, reports Automotive News [sub] as the General flails to slash costs. GM’s salaried ranks will drop from 73k to 63k by the time the current cuts are completed. 3,400 of GM’s 29,500 US salaried employees will lose their jobs by May 1, and remaining workers will see their pay cut by between three and ten percent. These cuts will bring GM’s salaried workforce to a lower level than the 65k-67k called for in their initial December 2 viability plan. DId we mention that these fine folks will be losing their jobs without any buyout offers, just as GM slashes its severance pay? Sometimes it doesn’t pay to be a salaryman.
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