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General Motors is looking for
help from the United Auto Workers and is hoping the union can deliver it soon,
given the company’s deepening financial crisis.
The auto giant already has
received critical concessions from UAW on healthcare. Now it is looking for more
assistance in encouraging more GM and Delphi workers to accept buyout offers and
Richard Wagoner, GM’s chief
executive officer, said last week during a conference call following the release
of the automaker’s 2005 financial report that the company is talking with the
union about ways to speed up the company’s restructuring.
The discussions revolve around
putting in place an accelerated attrition program that would encourage workers
to quit or retire sooner rather than later, he suggested. “We think it
makes sense” for the company and the union to reach an agreement sooner rather
than later, Wagoner added.
GM’s disastrous financial results during the fourth quarter laid bare the fundamental weaknesses of its North American operations, including the company’s huge legacy cost burden and its inability to cut structural costs when production declines, Wagoner said. Both healthcare issues and structural costs are linked to the company’s union contracts, which have become more and more burdensome since GM has had to slash prices all across its product line in an effort to attract customers.
GM’s turnaround plan calls for
eliminating 30,000 jobs and closing twelve facilities by 2008 and the company
also has negotiated healthcare reductions with the UAW in a deal worth some $3
Several analysts have said they
considered it a positive sign that GM had opted to include special charges to
cover the jobs bank, which pays the salaries of idled workers. A separate charge
of $2.3 billion against earnings covered GM’s potential liability for the
pensions and healthcare of thousands of employees of the bankrupt Delphi Corp.
GM also disclosed that its minimum liability for Delphi is around $3.8
The union has not yet tipped its
hand on the talks with either GM or Delphi. UAW president Ron Gettelfinger
recently declined to describe the discussions as negotiations, and the union has
not replied to company proposals with any kind of counteroffers. The union’s
basic position is that it already has contracts with both GM and the UAW,
A union spokesman declined to discuss the comments from Wagoner and GM chief financial officer Fritz Henderson on the need for swift action.
The union’s cooperation will not
come without a price. That price could include pushing GM to move some
production back from Mexico and new investments in small vehicles and hybrid
And on its part, the UAW will have
to deal with questions about what its members will accept. Nearly 100 members of
Soldiers of Solidarity (SOS), the union group that has protested concessions to
Delphi, picketed outside the bankrupt supplier’s headquarters in Troy, Mich. The
group’s Web site is also directing plenty of heat towards union leaders.
When and if a concession deal is
ever negotiated at Delphi, Gettelfinger will need the support of local union
officers to get it ratified. However, many of the local union officers are
discouraged or simply want no part of a fight with SOS, which picked up a huge
amount of energy from the backlash against Delphi chairman Robert “Steve”
Miller’s call for a huge wage cuts.
Members of the UAW’s top executive
board have said it will be very difficult to undo the damage from Miller’s
assaults on the union contract back in October and November.
More importantly, the threat of
bankruptcy and the uncertainty surrounding any future benefits is prompting many
workers to put retirement on hold. While GM and Delphi executives insist the
pace of retirements in near normal, the swelling numbers in the jobs bank are
telling a different story. Any change in the so-called attrition curve would be
another blow to the credibility of GM’s management, which is one of the reasons
Henderson refused to divulge the number of workers parked in the bank per the
requirements of the union’s contract with GM and Delphi.
Meanwhile, the UAW secured a small victory in its court fight with Delphi. The union was awarded an ex-officio seat on the Official Committee of Unsecured Creditors. The union doesn’t get a vote — but it does have the right to comment on anything Delphi submits to the bankruptcy court and gains more access to confidential information.