New York Times, April 1, 2009, Wednesday

New York Times

April 1, 2009, Wednesday

New York Times

Workers Share in the Pressure on Carmakers
By MICHELINE MAYNARD and STEVEN GREENHOUSE

DETROIT — Ron Gettelfinger, president of the United Automobile Workers union, has never worried much about deadlines.

He has bargained for days beyond contract expiration dates. And the Obama administration’s deadline came and went this week without the union budging an inch for the restructuring plans of General Motors and Chrysler.

But now he is facing deadlines that will be hard to ignore. In 60 days, President Obama’s auto task force will decide whether G.M. can restructure on its own or have to file for bankruptcy protection. A time frame of 30 days is even tighter for Chrysler, which is trying to complete a deal with Fiat of Italy.

There is virtually no chance that the companies can make the necessary cuts without the U.A.W.’s surrendering some hard-won benefits for its members.

“What we’ve worked for, for 25 years, can be gone in 25 days, basically,” said Bob Vistinar, an assembly inspector who has spent a quarter-century at the General Motors Technical Center in Warren, Mich. “That’s how fast this is moving.”

If he does not act, Mr. Gettelfinger could imperil the workers he has fought to protect. In bankruptcy, companies can seek to persuade a judge to set aside labor contracts and terminate pension plans, by making a case that they are too expensive, forcing workers to rely on smaller government-provided retirement checks. But Mr. Gettelfinger also has to persuade his members that any cuts would be vital for the companies’ survival.

Pressure is mounting. G.M.’s new chief executive, Fritz Henderson, said Tuesday it was “certainly more probable” that G.M. would file for bankruptcy. Mr. Obama, on Monday, left no question that the government would not hesitate to go that route if necessary.

One strategy under consideration, according to people familiar with the discussions, is to create a new version of G.M. that will hold its most valuable assets, leaving a company whose pieces could be sold or reorganized.

But Mr. Gettelfinger, who declined to be interviewed, shows no signs he is in any rush. That may reflect his confidence that he has at least some support from a Democratic president, and the backing of others in the labor movement.

Leo W. Gerard, president of the United Steelworkers union, said he believed Mr. Gettelfinger and his union held powerful cards.

“They’re in a unique position, in that everybody needs the support of the U.A.W. for this to succeed,” Mr. Gerard said. “They are also in a position where, if they save the auto industry, they save it for their members and for American workers.”

At G.M. and Chrysler, Mr. Gettelfinger has managed thus far to protect workers from another round of wage and benefit cuts that have already been accepted by workers at Ford Motor, which is not seeking federal assistance. The workers there made that choice to help maintain Ford’s position as the healthiest of the three Detroit auto companies.

Although long-held income guarantees for all laid-off union members are largely gone, the most veteran senior U.A.W. workers still have healthy wages and pensions, generous health care benefits (although not the fully paid premiums the union once enjoyed), ample vacation time, and cost-of-living allowances on top of hourly wages, a benefit given up at Ford.

The U.A.W., possibly in its favor, can also count two advisers to the Obama administration who, at least on paper, appear open to labor’s concerns: Ronald Bloom, a former official with the United Steelworkers who is an expert in restructuring, and Edward Montgomery, a dean at the University of Maryland who was named this week to handle matters concerning auto workers and communities with car plants.

Mr. Gettelfinger knows “he can get a better deal with the government outside bankruptcy court than he can in bankruptcy court,” said Harry C. Katz, dean of the School of Industrial and Labor Relations at Cornell. “He doesn’t want a judge making the decisions. He wants the moderate and liberal Democrats in the Obama administration to decide.”

Even in bankruptcy, though, it is not always automatic that labor contracts and pension plans are terminated — something Mr. Gettelfinger doubtless knows by studying other companies.

Although its workers granted deep cuts in other areas, Northwest Airlines froze but did not end employee pension plans while under bankruptcy protection, for example. It subsequently merged with Delta Air Lines, creating the world’s biggest airline.

Legal experts say Mr. Gettelfinger could demand government protection for worker pensions and other benefits as a condition for the U.A.W.’s support of any bankruptcy filing.

And, if the federal government were to guarantee the funds that the companies need to operate while under bankruptcy protection, as is expected, the Treasury Department could make it a condition that such benefits are left intact. Such a provision, however, might face a challenge from the auto companies’ creditors.

The concessions granted by Ford workers provide a starting point for what G.M. and Chrysler are asking from the union.

Along with cost-of-living adjustments, Ford workers lost some holiday pay and a $3,000 bonus achieved in the 2007 contract, and now earn overtime only after working 40 hours in a week, rather than after an eight-hour day. They have also lost college scholarships for their children, and thousands of dollars a year in tuition assistance (which Ford’s white-collar employees also lost).

But Ford’s situation is not as dire as those of its crosstown rivals. A crucial issue in the G.M. talks is the $20.4 billion that G.M. owes to a health care fund that will assume its enormous liability for retiree medical benefits. With the government looking over its shoulder, G.M. is likely to ask the U.A.W. for even deeper cuts.

In response, Mr. Gettelfinger might make demands of his own, like the ouster of more top G.M. executives, said Mr. Gerard, the Steelworkers’ president. Rick Wagoner stepped down as chief executive and was succeeded by Mr. Henderson.

“Why keep the people who got you into the mess in charge of getting you out of the mess?” Mr. Gerard said.

Mr. Gettelfinger will have to decide whether to support a bankruptcy filing, and beyond that, what remains sacred in the U.A.W. contract, long the envy of the labor movement, and what is expendable.

While calling him a “remarkable labor statesman,” Representative John D. Dingell of Michigan said Mr. Gettelfinger was “severely limited by what his membership will accept.”

Brett Ward, who has spent 15 years at Chrysler, said he was disheartened by the idea of more cuts. The union “told us in our last contract that this was what we had to do to make the company viable,” he said. “Two years later, they want to go in and carve it like a turkey.”

For Russ Gregg, the prospect of bankruptcy could not have come at a worse time. He retired Tuesday, after 40 years at G.M., where he helped build prototype models of future G.M. vehicles. He is worried about his pension.

“They could end up taking a big chunk,” he said, sipping on what should have been a celebratory beer in Dillard’s Tavern, a suburban bar. “The company would return, but not before a lot of lives are devastated.”

Micheline Maynard reported from Detroit and Steven Greenhouse from New York.
Mary M. Chapman contributed reporting from Detroit.