Autoworkers Forced to Take Concessions in Industry Bailout

By Tiffany Ten Eyck, Labor Notes. Posted December 20, 2008.

President George W. Bush announced on Dec. 19 a $17.4 billion bridge loan for General Motors and Chrysler, a day after he hinted that the companies could be forced into "orderly" bankruptcy.

Autoworkers, who advocated for short-term aid to the auto industry's crisis, bristled at the conditions attached to the loan. The Bush administration's requirements mirror demands from anti-union Republicans who torpedoed congressional action last week. They would decimate United Auto Workers contracts and place retiree health care funds into company stock.

The plan hinges on a demand that UAW autoworker wages and work rules become "competitive" with wages and work rules in foreign-owned, nonunion transplant factories in the South.

Lost in the discussion, autoworkers said, is any recognition that wages and benefits are less than 10 percent of the cost of a vehicle and can't pull the Big Three back to profitability.

"We've already taken concessions to help the industry become viable," said Brett Talbot-Ward, a UAW Local 1700 member, who works at Chrysler's Sterling Heights [Mich.] assembly plant. "Why are they asking for more from us, when there are all sorts of other costs in the vehicle-production process, much less the CEO pay, that haven't even factored into the debate?"

Bush's terms will eliminate the jobs bank, a concession the UAW signaled it would accept two weeks ago. The program gives laid-off workers income and sends them into communities to provide public services. Foreign-owned auto firms have similar programs and often use production downtime to train workers.

"The jobs bank was our safety net," Talbot-Ward said. "That in and of itself is a huge sacrifice, when we know that there will be a huge amount of safety needed."

Chrysler announced plans this week to suspend all production for a month, two weeks longer than its usual holiday break.

The bridge loan calls for auto retirees to sink half of their retiree health care fund, the UAW-administered Voluntary Employee Beneficiary Association, into company stock. Autoworkers questioned the wisdom of putting the remaining VEBA payments into stock, having watched GM's stock plunge from $29 a share in February to $2.79 in November.

"It's not worth the paper it's printed on," said Tom Brown, a member of UAW Local 600, who works at the Ford Dearborn [Mich.] Truck Plant. "They're going to attack the retirees badly on this one."

VEBA began as an underfunded vehicle: financial analysts predicted at its outset that General Motors was only willing or able to offer less than $35 billion of the estimated $50 billion that it owes retired workers.

The underfunding could lead to a simple, grim arithmetic: each dollar shortchanged translates into a dollar that can't be spent on health care premiums, co-pays, deductibles or quality of care. Under VEBA, the remaining costs of maintaining health care benefits will have to be shifted back to the workers.

"I don't think the rank-and-file will go for it -- to bring our wages down, to put our benefits into (company) stock -- that'll be too risky," said Tony Browning, UAW Local 1700 member at Chrysler's Sterling Heights Assembly.

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Tiffany Ten Eyck, a veteran of the successful Taco Bell Boycott campaign, is promotions coordinator for Labor Notes.

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