GM Asks UAW for More

January 30, 2006

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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 retirement.

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 billion.

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 billion.

Tipping point

 

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, Gettelfinger said.

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 technology.

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.

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