Detroit Free Press (Michigan), September 26, 2007, Wednesday

Copyright 2007 Detroit Free Press
Detroit Free Press (Michigan)

Distributed by McClatchy-Tribune Business News

September 26, 2007 Wednesday

SECTION: BUSINESS AND FINANCIAL NEWS

HEADLINE: UAW leader backs health fund

BYLINE: Katie Merx and Tim Higgins, Detroit Free Press

BODY:
Sep. 26--On the second day his members picketed General Motors Corp. facilities across the nation, UAW Presi-dent Ron Gettelfinger said Tuesday the creation of a retiree health care trust would be in the best interest of his mem-bers and he hoped it would be part of the new labor contract being negotiated with the automaker.

Gettelfinger's rare public statements appeared to be part of the union's efforts to increase pressure on the automaker and to better define its position publicly regarding why the UAW launched its first nationwide strike against GM in 37 years.

Although he said no one wanted a strike, "it may be a good thing because it will bring an end to this thing quicker -- we hope."

The impact of the strike, which involves 73,000 GM workers, began to ripple across the auto industry Tuesday with some Canadian GM plants idling, auto dealers missing service parts and suppliers laying off workers.

Talks between GM and the UAW continued Tuesday, 11 days after the previous 4-year contract was set to expire Sept. 14.

People familiar with the talks said the two sides discussed on Tuesday health care for active workers; a two-tier wage system in which those who do non-production work would be compensated at a lower level, and tapping into GM's overfunded pension fund, an idea analysts have said might make UAW members more receptive to the creation of a health care trust fund.
Most are hoping for a short-term strike, believing it will be less damaging to all parties.
But Aaron Sandlin, 33, an employee at the GM truck assembly plant in Pontiac, said workers "will be out on the picket lines for as long as it takes to get GM to realize the true value of its hourly workforce."

UAW Local 276 near Arlington, Texas, told members Tuesday through its Web page that the local's leaders had "been advised that 'some movement is being made' but it is still moving at a slow pace."

Gettelfinger reiterated his stance Tuesday that the creation of a voluntary employee beneficiary association, or VEBA, to rid GM's books of more than $50 billion in retiree health care costs was not the reason the union took to the picket line at 11 a.m. Monday.

"The VEBA, that's off the table for right now, and it was prior to us going out on strike," Gettelfinger said during a radio interview on WJR-AM (760). "In all honesty, in this day and age, a VEBA is in our best interest and I am looking forward to an opportunity to make that case sometime, I hope as part of this agreement, that we can get this ironed out."

Job security is the No. 1 issue for the union in the talks. In exchange for giving in to the creation of a VEBA, which the union likely would grant at a significant discount to GM, the UAW is believed to want commitments on saving U.S. jobs and landing company investments in U.S. plants and new products.

"The union feels it was willing to accept a journey into uncharted waters on one of the most pivotal items to auto-workers -- their health care security, particularly when they're retirees. But when it came to seeing something reciprocal it wasn't there," said Harley Shaiken, a labor expert from the University of California, Berkeley.

"I suspect from the union's point of view, it's akin to being told you've got to help bail the water out of the ship when there is no guarantee you'll be on the ship when it is done."
In a new memo to local union leaders, the UAW's national leadership reminded members of the sacrifices the union has made in recent years.

The UAW modified its formula for cost-of-living increases in 2003 and changed the health care plan in 2005 in part by deferring a 3 percent wage increase to help pay for coverage. GM cut its workforce by 34,410 in a special attrition program in 2005.

It was during negotiations over that mid-contract health care concession that Gettelfinger said he first proposed the creation of a VEBA to rid the company of its long-term health obligations.
Gettelfinger estimates the plan would have saved the company $2 billion annually but GM rejected the idea of a full VEBA, going with a partial one instead.

"We are not unreasonable," he said. "We stepped up. We've offered things to the company ... that they basically pushed back on, and some of it we think would have been in their best interest."

Gettelfinger declined to elaborate on what specific issues the two sides are at odds over.
CSM Worldwide, an automotive consulting firm, issued a report this week that said core issues beyond health care costs include pensions, investment in U.S. facilities and workplace rules.
The so-called jobs bank is a controversial issue, a way for hourly workers to continue to get paid even if an auto-maker no longer needs them. Automakers are sometimes referred to as original equipment manufacturers, or OEMs.

"As further capacity reductions are made, the OEMs will seek to rewrite language to preclude idled workers from the costly jobs bank unless the layoff is temporary," CSM said in the note to clients. "At issue is the ability for manufac-turers to win the flexibility to relocate employees to facilities over an extended distance."

In addition, CSM said GM wants two-tier wage agreements "to alleviate some of the 'manufacturing' disadvantage."

GM and the other U.S. automakers would like to cut the average wage-and-benefits costs of their workers to be in line with those at rival Toyota Motor Corp. The Detroit automakers are estimated to pay between $20 and $30 more per hour than foreign automakers that manufacture vehicles in the United States. It's believed that a new VEBA would cut that gap by about half.

From GM's standpoint, the negotiations now are believed to focus on where to get the rest of the cost savings in or-der to maintain GM manufacturing jobs in the United States.
GM, which lost $12.5 billion over the past two years, has been trying aggressively to cut costs not only in North American operations but around the world.

"I was just at a conference in Germany with all of the European unions for General Motors and they called it the 'horror catalog' as how General Motors dealt with them," said Arthur Wheaton, a labor expert from Cornell University.

He said GM is trying to outsource many jobs in an effort to dramatically reduce pay. "They are talking about eve-ryone who is not a production" worker with "hands on the car," Wheaton said.

Global Insight estimated Tuesday that GM has a 65-day supply of vehicles on hand, citing Autodata numbers. CSM Worldwide figured GM is losing the production of more than 11,000 vehicles per day, a figure that jumps to 18,000 if the strike continues past 72 hours.
A short-term strike might cost GM less than $1 billion, but a two-month strike could cost $15 billion, Lehman Brothers said.

Rod Lache, a Deutsche Bank analyst in New York, wrote in a report to investors that the strike could cost GM $880 million a week, Bloomberg News said.
GM shares dipped 32 cents, or 0.9 percent, to $34.42 Tuesday.

By Katie Merx and Tim Higgins
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