TMCnet, December 15, 2008, Monday

TMCnet

December 15, 2008, Monday

TMCnet

Waterloo-born labor expert predicts Big 3 bailout

(Waterloo-Cedar Falls Courier (IA) Via Acquire Media NewsEdge) Dec. 15--WATERLOO -- Domestic automakers will be bailed out, but the shot clock's running, a Waterloo-born labor relations expert says.

"There's no question they're going to get it done. It's a question of whether they can do it fast enough to avoid General Motors' bankruptcy filing," said Ron Seeber of Cornell University in Ithaca, N.Y.

There also is the question of what concessions will be sought from the United Auto Workers and how much they're willing or able to give, Seeber said.

"If they're asking the UAW to concede $2 or $3 an hour in direct wage costs, I think they, the UAW, might go along with that," Seeber said.

"If they're asking to reduce total wage costs" including pension and benefit contributions "by $20 an hour, they (lawmakers and company officials) are going to find (UAW leaders) can't do that," and would have to take that issue back to the membership. "They're a democratic union."

A major portion of those total wage costs includes what current employees of older domestic automakers are paying toward retirees' health insurance, as opposed to their import competitors, which are comparatively younger firms.

Seeber said University of Michigan studies indicate total costs for a UAW-Detroit automaker employee are about $74 an hour when benefits and health insurance are included, "plus the share they pay of all the retirees' health insurance."

In comparison, he said, costs for an employee of an import automaker are about $52 an hour. "They don't have all those retirees yet," Seeber said. "They don't have the 'legacy burden' of very few workers supporting those who are no longer working."

Seeber, a former John Deere Waterloo worker and UAW Local 838 member here, is a professor and associate dean of Cornell's Institute for Industrial Relations and the university's vice provost for land grant affairs. He is the son of Jack Seeber, a former Waterloo City Council member who served as president of UAW Local 838 in Waterloo from 1971-75 and was a leader in the local and its retirees group for more than 40 years until his death in 1995. Local 838 is the largest UAW local within Deere and in Iowa, with more than 2,700 members.

Deere and the UAW will be negotiating a new contract next year. Seeber said the Deere-UAW situation is far different than it is with domestic automakers.

"In some ways, they're kind of insulated in the ag economy from what's going on in the rest of the economy," Seeber said.

While Deere experienced layoffs at its construction-equipment manufacturing operations in Dubuque and cut back in other sectors, the company recently enjoyed its fifth consecutive year of record profits and its first $2 billion profit year for the fiscal year ending Oct. 31. That's largely on the strength of its ag equipment operations, including sales of its large row-crop tractors designed and manufactured in Waterloo.

While Seeber agreed UAW negotiators may cite that performance in seeking enhancements to workers' pay and benefit package, he suggested Deere may take a more austere stance, citing overall economic conditions. Despite setting an earnings record for the recently complete fiscal year, fourth-quarter earnings were down from a year ago and the company is predicting flat sales for the coming year. The current Deere-UAW pact was for six years and a number of workers and local leadership have retired and been replaced by younger employees.

Contact Pat Kinney at (319) 291-1426 or pat.kinney@wcfcourier.com.

To see more of the Waterloo-Cedar Falls Courier, or to subscribe to the newspaper, go to http://www.wcfcourier.com/.

Copyright (c) 2008, Waterloo-Cedar Falls Courier, Iowa
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