Auto Workers Told to Take Concessions, Abandon Retirees

Auto workers from five states traveled to Washington to talk to Congressional representatives, including Republican staff of the Senate Banking Committee. Photos: Pete Vargas.



Auto workers from five states traveled to Washington to talk to Congressional representatives, including Republican staff of the Senate Banking Committee. Photos: Pete Vargas.

President George Bush announced December 19 a $17.4 billion dollar bridge loan for General Motors and Chrysler, a day after it hinted that the companies could be forced into “orderly” bankruptcy.

Auto workers 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 UAW contracts and place retiree health care funds into company stock.

The plan hinges on a demand that UAW auto worker wages and work rules become “competitive” with wages and work rules in foreign-owned, non-union transplant factories in the South.

Lost in the discussion, auto workers 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 3 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 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. Auto workers 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 by 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 Truck Plant. “They're going to attack the retirees badly on this one.”



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The 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 under-funding 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 a VEBA, the remaining costs of maintaining health care benefits will have to be shifted back to the workers themselves.

“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.

Browning said that his fellow union members are well aware that non-union auto workers make similar wages, and predicted that UAW leaders will have a tough sell convincing workers to take yet another round of concessions.


The deal proves President George Bush is ready to extract from auto workers what Republican senators were unable to secure last week, when they blocked a $14 billion loan package for the industry over demands to cut wages and benefits for unionized auto workers and retirees.

Republicans refused to hand over the loan without promises of even more UAW concessions. Republicans, apparently expert enough about auto to renegotiate contracts in a matter of hours, blamed the UAW for refusing to drive down wages to parity with non-union, foreign-owned auto facilities in the South by next year.

Auto workers, of course, already agreed to similar concessions in November 2007, when they voted up contracts that put starting wages lower than those in non-union plants. The major cost difference between non-union and union auto makers in the U.S. is not wages but retiree benefits, particularly health care costs. In demanding that the UAW reduce costs to the auto makers, the Republicans were insisting that more than a million auto retirees—40 percent of whom are not yet eligible for Medicare—put their health care coverage at risk.

The UAW made a last-ditch effort to save the bridge loan and placate viciously anti-union Southern senators. That wasn’t enough for Republicans, who—along with four Democrats—voted down the bill.

“It’s part of the right-wing agenda to do away with unions or to severely cripple any kind of labor struggle in this country,” Talbot-Ward said. “Or maybe it’s a little payback for union support of the Obama campaign.”

Fast disappearing is an era when workers on assembly lines can afford to buy the vehicles they make. When the UAW agreed to a mid-contract opener in 2005, and a 2007 agreement that lowered new-hire wages to $14.50 an hour, the union struggled to squeak out approval from an angry (and increasingly financially unstable) membership.


UAW President Ron Gettelfinger himself later said his decision to negotiate with a lone Republican senator was a mistake, especially when the whole pantomime seemed like a warm-up act for Republican opposition to the card-check bill, the Employee Free Choice Act. But the administration’s insistence on linking the bridge loan to wage cuts angered auto workers even more.

Jim Theisen, a member of UAW Local 212 who joined the auto worker caravan to D.C., said the caravan brought the message to Capitol Hill that rank-and-file wages aren’t the industry’s problem, and that cutting union wages harms everyone.

“Our Southern brothers and sisters don’t get $24 an hour out of the kindness of the auto owners’ hearts,” he said. “If there wasn’t a union in the North they’d be getting $10 an hour.”


jamie (not verified) | 09/28/09

we should not blame them.. after all their employees had been done to their companies.. Giant companies from auto parts dealers and car dealers should take necessary actions to solve this problem.

Frank Brown (not verified) | 03/20/09

Louis, I don't think isolationist policies will benefit our country. Yes Nissan, Toyota, and Honda are producing cheaper/efficient products then we are. Why is this? Most believe it's because of cheap labor costs. This does hurt our automotive costs relating to manufacturing, yet does not take into account the lack of innovation America is bringing to the global market. The reason our cars aren't selling is because we are creating new appealing products for consumers. American car companies did not invest enough into r&d to compete with foreign innovation...leading to the recent government bailout. Hopefully with government oversight, we will be able to produce the efficient car of the future (electric/hydrogen).


garyro (not verified) | 01/22/09

I am a retired steelworker and the vice president of the Retired Steelworkers in St. Louis (Soar 11-3). I can attest that retirees of the various steelworker container companies had hits to retirement insurance and benefits. Some had total cancellation of benefits even though they were promiced life long benefits.

Rexam for instance sued individuals over retirement rights and unilaterally cancelled retirement insurance benefits. Crown-Cork did something very simular. National Can retirees saw total cancellation. Silgan raised co-pays/deductables/limits to in essance effectively deny some folks medical coverage. On and on

Yes, companies lied to us and courts/others back the companies and sticking-it-to retirees so the bosses get a big bonus seems common. Unfortunately, this is a common story in other industries as well.

If the unions had done something like this (collectively conspire to deny rights), we would be facing RICO indictments or at least a "bad faith" charge.

Wolfman (not verified) | 01/08/09

For all those that are watching the abandonment of the UAW retirees, be very afraid. The race to the bottom is accelerating. Those that think this will not happen to them had better think twice. Global trade pressures will force us to compete with the dollar-an-hour wage.

Anonymous (not verified) | 01/06/09

Surely the CEOS don't need all the luxuries they have. Congress doesn't have to worry about their health benefits. Unions provide a better living wage, better protection at work. If anyone needs to take a cut it is CEOS who having been living high on the hog for many years. They need a taste of reality.

Randall Downey (not verified) | 12/30/08

As a Medicare counselor here in Nevada, I have had to assist retired GM workers scramble for health care coverage after they have been notified that starting January 1, 2009 they will no longer have company/union health benefits.

This betrayal of promises made and benefits earned over many years flies in the face of whining by company executives appealing to Congress to bail them out. Shame on GM and the UAW. Where is the union's backbone and sense of outrage.

Demanding that foreign manufacturers meet reasonable standards for wages and benefits is a good start. More can and should be done.

Louis (not verified) | 12/19/08

Congress should call in Toyota, Honda, and Nissan, to their hearings, and demand that they increase their wages to parity with UAW wages. They have taken advantage of their employees long enough. We are all consumers. We should increase the purchasing power of consumers in this country. A healthy economy depends on it.