Chicago Tribune, July 21, 2007, Saturday

Copyright 2007 Chicago Tribune Company

Chicago Tribune

July 21, 2007 Saturday

Chicagoland Edition

SECTION: NEWS ; ZONE C; Pg. 1

HEADLINE: UAW talks start with whiff of change;

Some wonder if union will assume retiree health benefits

BYLINE: By Rick Popely and Stephen Franklin, Tribune staff reporters

BODY:

As the United Auto Workers union kicks off contract talks with the three domestic automakers, ideas considered unthinkable four years ago seem not only plausible, but likely.

One of the most intriguing is the UAW's possible assumption of retiree health-care responsibilities from the car companies, shouldering a burden that the automakers say adds $1,500 to the cost of every car they build in the U.S.

Such a dramatic shift of financial responsibility may not be possible before the contracts expire Sept. 14, but the fact that it will be on the bargaining table says much about what has happened to the union and its employers since the last contract was negotiated in 2003.

The union that once could demand and receive greater wages and benefits in each contract is fighting to keep what it has. At least, that's the view from Vanderbilt University sociologist Dan Cornfield, who said the UAW's decline in numbers and power reflects a long-term trend in U.S. employment as much as the demise of the domestic auto industry.

Still, there are labor experts such as Harley Shaiken at the University of California at Berkeley who dismiss the notion that the UAW is too weak to stand up for its members. That's why he doesn't see the UAW agreeing to massive wage and benefit cuts.

The union "has been pretty clear that it doesn't want" companies to become more competitive at the expense of workers with no health care, he said.

In the last two years alone, however, more than 80,000 UAW members have accepted buyouts or retirement offers from General Motors Corp., Ford Motor Co. and Chrysler Group. UAW membership has declined to about 500,000 from a peak of 1.5 million in 1979.

About 35 percent of U.S. workers were union members in the early 1950s, but that representation has fallen to 10 percent today as the economy shifts to service industries from manufacturing. Factory automation and the industrialization of countries such as China have only accelerated that decline.

But the U.S. carmakers and UAW do have common enemies, such as Japanese and Korean manufacturers who oppose organizing efforts at their U.S. plants as they steal market share from the domestics. And there's the looming threat of competition from China. Chrysler, for one, plans to import cars from there in 2009, and others -- including Chinese manufacturers -- are sure to follow.

UAW President Ron Gettelfinger posed with Chrysler Group Chief Executive Tom LaSorda on Friday at the automaker's headquarters outside Detroit in the traditional opening ceremony for negotiations. Gettelfinger will similarly make nice Monday at GM and Ford.

Gettelfinger reiterated Friday in remarks to reporters that the union is not in "a concessionary mode."

But that is contrary to previous actions. Workers at GM and Ford in 2006 agreed to pay more of their health-care costs and force retirees to pay more out of their pockets. And the union has let automakers hire hundreds of part-time and temporary workers at about half the pay scale of a permanent worker, a move that dissident UAW members say undermines the union's strength.

Not so, says Harry Katz, dean of the School of Industrial and Labor Relations at Cornell University, who calls Gettelfinger's statements Friday typical posturing. Without the lower-paid part-timers, more senior UAW members could lose jobs.

"The union is giving primary attention to retirees and those near retirement. It's not worried as much about younger workers who might be hired at a lower wage," he said.

Indeed, UAW members who agreed to leave received incentives up to $140,000 and those who retired did so with full pensions and health-care benefits.

"One of the ways the UAW stands out is that the union and the car companies have a good working relationship during a really difficult time. The union no longer has radical leaders who want to strike. Overall, there are moderate leaders on both sides," Katz said.

"That's more important as a tone setter for negotiations. They've learned to work through their problems."

Among those problems, according to the automakers, is the need to further reduce health-care and pension costs to narrow a claimed $30-per-hour difference between their manufacturing costs and those at Japanese-owned assembly plants in the U.S., which pay roughly $45 an hour in wages and benefits. Wages are similar at the Japanese plants, but they have hundreds of retirees compared to hundreds of thousands in the UAW. At GM alone, retirees outnumber hourly workers 4-1.

Analysts suggest that retirees are the key to the talks. They see automakers following the lead of other unionized industries in shifting pension and health-care liabilities -- estimated at $90 billion for the three companies combined -- into trust funds the UAW would manage, thus assuming responsibility that there will be enough money to pay future costs.

Goodyear Tire & Rubber Co. cut such a deal with the United Steelworkers Union, and the UAW agreed to a trust fund with bankrupt supplier Dana Corp., though the unfunded liability was only $1 billion.

Hal Stack, director of labor studies at Wayne State University in Detroit, doubts such an arrangement can be negotiated with the Big Three in less than two months, when the UAW contracts expire.

"I think it's going to be hard to do because it's so complicated and so difficult politically to sell to union members," Stack said.

"It's not a situation you want to be in as a union leader to have to go back to your members every 2 or 3 years to raise their health-care costs," Stack said.

rpopely@tribune.com

sfranklin@tribune.com