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Union joins effort to save automakers

GERALD HERBERT/THE ASSOCIATED PRESS
General Motors CEO Rick Wagoner rides Wednesday in the passenger seat of a black hybrid Chevrolet Malibu, heading to Washington to testify to Congress on the auto industry bailout. Last time, auto executives rode in corporate jets.
Published: 12/04/08  12:05 am
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WASHINGTON – The United Automobile Workers union said Wednesday that it would make major concessions in its contracts with Detroit’s Big Three auto companies to help them lobby Congress for $34 billion in federal aid.

The surprising move by the UAW could be a critical factor in the automakers’ bid to not only get government assistance, but also to help them become competitive with the cost structure of nonunion plants operated by foreign automakers in the United States.

At a news conference in Detroit, UAW President Ron Gettelfinger said his members were willing to sacrifice job security provisions and funding for retiree health care in order to keep the two most troubled car companies of the Big Three, General Motors and Chrysler, out of bankruptcy.

“Concessions, I used to cringe at that word,” Gettelfinger said. “But now, why hide it? That’s what we did.”

Labor experts said the ground given by the union underscored the precarious financial condition of the Detroit companies, as the UAW’s own prospects for survival are also in doubt.

“It is an historic and awfully difficult moment for the UAW,” said Harley Shaiken, professor of labor studies at the University of California at Berkeley.

The union’s willingness to reopen its 2007 contract came a day after GM, Chrysler and the Ford Motor Co. submitted business plans to Congress in support of their loan requests. GM and Chrysler have both said they’re dangerously close to running out of cash to fund their operations by the end of the year. Ford is somewhat healthier, but is also seeking government loans.

Sent home empty-handed last month, executives from all three companies knocked on doors on Capitol Hill and made television appearances Wednesday, hoping the detailed plans they submitted Tuesday would convince hostile lawmakers to help.

The chief executives of the Big Three, along with Gettelfinger, are scheduled to appear at congressional hearings today and Friday in hopes of building support for emergency financial assistance.

Democratic congressional leaders have said that they want to help the automakers and that they were heartened by the gesture of contrition that the executives made by driving hybrid cars to Washington – rather than flying on corporate jets, as they did two weeks ago – and by the more comprehensive plans submitted by the companies.

President-elect Barack Obama also praised the automakers for offering “a more serious set of plans.”

But the political climate on Capitol Hill is still dreadful for the automakers, and only seemed to worsen Wednesday with a new CNN poll showing a majority of Americans oppose a taxpayer rescue.

As a result, there’s growing concern among the Democratic leadership that they won’t be able to drum up enough votes to pass an aid package next week, and that doing so will require a major lobbying effort by President George W. Bush and Obama.

“We don’t have a good sense from our members that this is something they want to do,” a senior House Democratic aide said. “It’s going to take Bush and Obama calling people.”

Many conservative Republicans remain staunchly opposed to any further corporate bailouts by the government, and some are openly calling for Congress to let one or more of the Big Three fail.

“Not only should bankruptcy be an option for domestic automakers, but it is considered by most experts to be the best option,” Rep. Jeff Flake, R-Ariz., said in a statement Wednesday.

Senate Majority Leader Harry Reid said there wasn’t enough support in Congress to use that fund to help the auto companies.

“I just don’t think we have the votes to do that now,” he told The Associated Press.

Two weeks ago, the Detroit executives left Washington empty-handed after skeptical lawmakers refused to approve federal aid until they received detailed plans from the companies.

In its plan to Congress, GM said it would significantly reduce jobs, factories, brands and executive compensation in a broad effort to become more competitive with American plants operated by Toyota, Honda and other foreign auto companies.

But GM President Frederick Henderson said it was also important that the company get help from the UAW.

Currently, the average UAW member costs GM about $74 an hour in a combination of wages, health care and the value of future benefits, such as pensions. Toyota, by comparison, spends the equivalent of about $45 an hour for each of its employees in the United States.

Base wages between the Big Three and the foreign companies are roughly comparable, with a veteran UAW member earning $28 an hour at the Big Three. compared to about $25 an hour at Toyota’s plant in Georgetown, Ky.

But the gap in labor costs becomes larger when health care, particularly for thousands of retirees and surviving spouses, and job security provisions are added to the equation.

Gettelfinger said Wednesday that the union would suspend the so-called jobs bank, a much-criticized program that allows idled workers to continue drawing nearly full wages.

He also said the union would agree to delay multibillion-dollar payments to a new retiree health care fund that the automakers were scheduled to start making next year.

Beyond those two concessions, Gettelfinger said the UAW would be open to modifying other terms of its contracts. Changes could include reductions in wages, health care or other benefits, and would require members’ approval.

 

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