February 19, 2009

Lee Sustar explains how auto company managers--backed by politicians--are shifting the blame from their own mismanagement onto autoworkers.

AUTOWORKERS WILL take sweeping cuts in their paychecks and the elimination of key union work rules if they vote to accept the terms of concessions negotiated as part of $17.4 billion in government loans to the Detroit Three automakers.

The negotiations were conducted under duress. Under the terms of the government loan granted by the outgoing Bush administration the United Auto Workers (UAW) was prohibited from striking against concessions, which were mandated under terms of the deal.

What's more, retiree health care and pensions would be severely underfunded if General Motors (GM), Chrysler and Ford bosses get their way. According to the government's Pension Benefit Guaranty Corp., pensions at the Detroit Three are $41 billion short of the companies' obligations to workers and retirees.

Now, the companies are trumpeting the UAW's concessions as well as sweeping job cuts in their bid to get further government loans. GM, which plans to close 14 plants in the U.S. over the next three years, wants an additional $16 billion from the government, on top of the $13.4 billion it received in the waning days of the Bush administration.

Workers leaving a shift at the General Motors Powertrain Plant in Warren, Mich. (Rebecca Cook | Reuters)

Chrysler, which took a $4 billion loan in December, wants another $5 billion by the end of March. It plans to cut another 3,000 jobs and further cut production.

The other member of the Detroit Three, Ford, didn't take a government loan, but says it may have to tap a line of credit with the government if its business continues to deteriorate--so Ford is seeking union concessions as well.

The UAW already granted huge concessions in the 2007 contract, which is still in force. Under that deal, the union agreed to allow new hires who work off the assembly lines to be paid just $14 per hour, about half the current rate.

But when the auto crisis worsened dramatically following last fall's financial crash, Detroit Three managers and union-hating congressional Republicans piled on to demand further cuts--making workers pay for decades of bad management by U.S. auto executives.

THE UAW has so far refused to comment officially on the latest concessions to the Detroit Three. But the Automotive News reported February 18 that the union agreed to concessions so steep that they all but eliminate the differences between pay and working conditions at union and non-union auto plants in the U.S. owned by foreign companies.

According to those reports, the UAW has surrendered overtime pay that kicks in whenever a worker's eight-hour shift is complete. Instead, overtime pay will only be paid when a UAW member works more than 40 hours in a given week.

This will have a major impact on take-home pay. Because hourly wages for UAW members have essentially been flat since 1980, most workers have boosted their income by working overtime. Management has encouraged this, since it was cheaper to pay existing workers the higher overtime rate than hire new workers.

Also, the UAW reportedly agreed to eliminate lump-sum bonuses over the next two years, and to allow Chrysler to cancel the $600 Christmas bonus.

A further major giveback was a limitation of supplemental unemployment benefits (SUB). Workers with 20 or more years of seniority can collect pay equivalent of 72 percent of gross pay for 52 weeks, and receive half pay for an additional 52 weeks. But workers with less than 20 years on the job will get 72 percent pay for just 39 weeks and half pay for another 39 weeks.

What's more, the automakers--and the union-busters in Congress, like Sen. Bob Corker (R-Tenn.)--succeeded in getting the UAW leadership to abandon work rules built up over decades.

Management has long hated these work rules because they give workers power and dignity on the job, enabling them to resist unsafe work practices, bullying supervisors and relentless speedups of production. At Toyota's Georgetown, Ken., plant, for example, some 2,000 workers were forced off the job by injuries between 2002 and 2007, according to pro-UAW activists in the plant.

The concessions don't end there, however. The companies are trying to force the UAW to accept drastic cuts in funding for retiree health care, which is set to shift to a union-controlled funds known as the Voluntary Employee Beneficiary Associations (VEBAs) in 2010.

The health plans were already badly underfunded in the original agreement to create the VEBA in the 2007 contract. Then, GM agreed to hand over to the UAW some $35 billion in cash and securities to cover $55 billion in retiree health obligations. The UAW's VEBA fund managers, it was claimed, would make up the shortfall through wise investments.

The picture was similar at Chrysler, which agreed to pay the UAW $8.8 billion to cover health care obligations of $18 billion. For its part, Ford got the UAW to accept just $13 billion to cover retiree health care liabilities of $23 billion.

Now the Detroit Three want the UAW to accept less cash and more stock to fund the VEBA--even though GM's stock, which traded for $40 per share in 2007, is now worth only about $3. "The government also wants the automakers to pay half of what they owe a UAW health care trust in company stock rather than cash, a move that could save them billions of dollars," the Detroit News reported.

If the UAW agrees to accept that much stock, it ties itself even more closely to management. If GM or Chrysler were to go bankrupt, the stock would become worthless and retiree health care would be eliminated.

In any case, UAW President Ron Gettelfinger has sought to do whatever it takes to keep the automakers profitable--on their terms. The UAW has barely challenged the media propaganda that workers make $72 per hour--a figure that includes health care costs. And the union hasn't challenged job cuts that have seen the number of UAW workers at GM fall from 265,000 in 1992 to just 73,000 in 2007--even though the number of vehicles produced each year actually increased from 4.4 million to 4.5 million.

As retired autoworker Gregg Shotwell put it in his Live Bait & Ammo newsletter: