It's UAW Concession Time

National Review Online: The Autoworkers Union Must Give Up Its Demand For Job Security

(National Review Online)  This column was written by Stephen Spruiell.

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The United Auto Workers union called an emergency meeting for December 3 to decide what it is prepared to concede to help the Big Three U.S. automakers stay solvent.

Up until now, the UAW has argued that it shouldn’t have to make additional concessions. After all, the union agreed in 2007 to new contracts that brought wages and benefits down to more realistic levels. Once the health-care provisions of these contracts take effect in 2010, union officials say, the Big Three will be out from underneath the crushing labor liabilities that have saddled them with so much debt.

While it’s true that the new contracts took steps toward closing the compensation gap between the Big Three and their foreign competitors, the contracts left in place the job-security guarantees and work rules that have rendered the Big Three sclerotic and unable to adjust to shifts in demand. Imagine the U.S. auto industry as an emergency-room patient with a severed artery and cholera. The 2007 contracts stopped the bleeding, but the Big Three are still very sick.

Any successful business must be able to respond to fluctuations in demand for its products, but the Big Three’s job-security agreements with its unions make that process burdensome and costly. Earlier this year, I visited a General Motors assembly plant in Moraine, Ohio, that is scheduled to close on December 23. The Moraine assembly plant made SUVs, and since demand for SUVs has fallen sharply, GM decided to shut down the Moraine plant.

Of course, it’s not that simple. The workers at the Moraine plant belonged to IUE-CWA, an electrical workers’ union with contracts similar to those the UAW has negotiated. As a result of those agreements, IUE-CWA members in Moraine were offered buyouts of $70,000 to $140,000 for any worker who voluntarily quits. Other workers were made eligible for early retirement.

GM employees who don’t opt for a buyout or early-retirement package will qualify for GM’s supplemental unemployment benefits, meaning that GM will make up the difference between their former wages and their state unemployment checks. When the unemployment checks run out, GM will pay these workers 95 percent of their former wages for up to two years, depending on seniority. Workers with at least ten years of seniority are eligible for the Job Opportunity Bank Security program. This is the notorious jobs bank that allows laid-off workers to receive their regular hourly pay while sitting around doing crossword puzzles or reading the paper. If GM offers these employees an opportunity to transfer to another plant, they have the right to turn down a limited number of such offers. And if no offer is made, they can stay in the jobs bank until they retire. GM currently has around 1,400 workers nationwide in the jobs bank.

Peter Morici is a professor of international business at the University of Maryland. In late November, he testified before the Senate Banking Committee, alongside the CEOs of the Big Three automakers and United Auto Workers president Ron Gettelfinger. “The real problem here is that [Banking Committee chairman Chris] Dodd doesn’t understand the scope of the severance payments that the UAW gets,” Morici tells me. “They go in the jobs bank and they stay there forever. My feeling is that [the Big Three] are at fault for letting the jobs bank continue after these last labor negotiations and agreeing to $105,000 buyouts. The whole situation is absurd.”

John Heitmann, an automotive historian at the University of Dayton, agrees. “We can’t really compete when we have those kinds of contracts,” he says. “It’s the health care, it’s the seniority, and it’s the work rules. In flush times, when life was good and you could sell many different vehicles and particularly trucks at very high profits, GM could survive like that. But it was just a matter of time before things caught up with them.”

Whatever sacrifices the UAW agrees to make at Wednesday’s meeting, it will probably be too little, too late. GM and Chrysler are rumored to be weeks away from running out of cash. Unless a federal bailout is forthcoming, the Big Three’s labor pains will be settled in bankruptcy court. Even if Congress does give them the cash to keep operating, they are going to have to reduce capacity in the face of shrinking demand. They cannot do so unless their labor unions give up their unrealistic demands for job security.

[zzgp5x]

I think if gm would make another buyout offer at this time alot of the senior workers would take the offer.

The overtime has stopped which kept alot of the workers there, this would let the younger workers with young families to stay and the ones who are at least close to 62 to go with some help pay off bills that were made before the slow occured

[hitoyou11]

It''s UAW Concession Time. Like, they could do some "work" that would be new. 1 person doing the work of one person, not 10 people doing the work of one.

[joepack61]

After Consumer Distorts dropped the "recommend" rating for the Chrysler Pacifica, Mercedes under DaimlerChrysler at the time, improved the engine from 19-21 mpg highway to 24 mpg highway with more torque and pickup. The CR eggheads reason for dropping the "recommend" was that "the window beltline was too high", something that did not ever change on the vehicle and which didn''t bother some 60,000 consumers each year. Another thing about Consumer Distorts is that they aggreagte too many items into one category. The Pacifica had owners reporting problems with the dashboard tire pressure guage in the first year (2005?), and the problem almost amounted to operator error and was easily fixed at the tire valve stem. The car had no other significant electrical problems, yet the CR eggheads reported the highest level of electrical problems for the vehicle for that year.

[joepack61]

Consumer Distorts magazine carries some blame in this. They seem biased towards the imports. They compared a Pontiac G6 to a Nissan Altima in one issue. The two were almost identical in the numbers comparison, and the G6 exceeded in some categories like braking distance. Yet the CR eggheads gave the nod to the Altima because the G6 "had a small backseat." It is only up to the consumer to decide if the backseat is too small. I rented a G6 3.5l on vacation with my wife and it was a fantastic car and the back seat was never an issue for us. These same eggheads gave the Chrysler Pacifica a "recommend" rating in an early model year, but then revoked that same "recommend" in later years while nothing in the car had changed.

[joepack61]

Starting around 2010, new UAW workers will start at $14.00 per hour pay. Illegal and legal Mexican landscapers and construction workers average around $18.00 per hour pay. Labor accounts for only %10 of the cost of a vehicle.

[hitoyou11]

Casey from PA. I should have know. Only a PA IDIOT would be for a bailout. I know who is telling all THE LIES. CASEY from PA. Do not vote for this IDIOT again.

[hitoyou11]

Does any one know who the IDIOT that is on the bailout hearing. He is calling the wage of the uaw a LIE. This guy is for giving them the money. He is an IDIOT. this type og person is going to run the U.S. tax payer into Bankruptcy. Get this IDIOT out.

[noloyalisti]

It''s so half witted right wingery to blame the unions for anything regarding this. They already agreed to have new workers come in at $14 per hour so they could create wealth for the greedy right wing executives.

I agree who heartedly with Michael Moore: the entire management should be fired and replaced with people who can run a business. The government should TELL them what to build and provide SEVERE oversight. We the People?

[lfdyer]

I am trying to look at this as rationally and as unbiased as I can. First, let us look at this as if we could put all auto manufactures on the same playing field. How do we do that? Let%u2019s say for the sake of argument that all cars sold in the United States over the past 5 years, were 100% made in the United States. What would this have changed in the auto industry?

Would it be likely that the consumer reviews and ratings of any autos would have changed? No. If it changed would this indicate that foreign workers were better workers?

Would it be likely that consumers would have changed their buying habits for the different class of autos? Full size trucks? No. Mid size trucks? No. Small size trucks? No. Full size cars? No. Mid size cars? No. Compact cars? Maybe.

If the tax payers are to share in the cost of saving the auto industry, let them share in the potential benefits. Present a plan that will;
%u2022 Cancel all contracts and open up all jobs for bids from any United States citizen. There are plenty of educated and non-educated workers that would be more than happy to apply.
%u2022 Present a plan that will in the next 10 years diversify, manufacturing and assembly plants, equally across the United States. Manufacturing plants for most parts could be moved sooner.

[ramos937]

However they do it, the big 3 have to become competitive with the "foreign" car makers. Otherwise, they will ultimately fail.

Ford is supposed to be in good shape financially. It wants the loans as "insurance". Chrysler is owned by Cerebus, a firm based in EU. Ford can withdraw from this with no real ill effects. Chrysler can be rescued by its parent company. If Chrysler is helped, then we are doing what Cerebus is supposed to do.

GM is a different story. But GM should immediately go under the protection of Chapter 11. This neither management of the UAW want because GM would then have to answer to the Court for any major decisions.
This stuff about folks not buying because of Chaper 11 is not true because Chrysler proved different in the 70s.

[marxistnow]

As a Marxist, I find the behavior of the Unions to be nothing more than cynical trappings to further immiserate the workers. By having bourgeois UAW executives play with the futures of the auto workers, we see nothing more than one group of imperialists attempting to supplant another. The UAW needs to be disbanded immediately. The workers need no representation other than themselves as individuals. Our US economy needs to be freed of the chains of trade unions and made internationally competitive. In this way we can promote the ideals of Marxism by properly promoting the development of capitalism here and abroad. Remember, communism is not to be realized for many, many generations yet to come. Build Capitalism so that we may build toward communism.

[marxistnow]

As a Marxist, I find the behavior of the Unions to be nothing more than cynical trappings to further immiserate the workers. By having bourgeois UAW executives play with the futures of the auto workers, we see nothing more than one group of imperialists attempting to supplant another. The UAW needs to be disbanded immediately. The workers need no representation other than themselves as individuals. Our US economy needs to be freed of the chains of trade unions and made internationally competitive. In this way we can promote the ideals of Marxism by properly promoting the development of capitalism here and abroad. Remember, communism is not to be realized for many, many generations yet to come. Build Capitalism so that we may build toward communism.

[marxistnow]

As a Marxist, I find the behavior of the Unions to be nothing more than cynical trappings to further immiserate the workers. By having bourgeois UAW executives play with the futures of the auto workers, we see nothing more than one group of imperialists attempting to supplant another. The UAW needs to be disbanded immediately. The workers need no representation other than themselves as individuals. Our US economy needs to be freed of the chains of trade unions and made internationally competitive. In this way we can promote the ideals of Marxism by properly promoting the development of capitalism here and abroad. Remember, communism is not to be realized for many, many generations yet to come. Build Capitalism so that we may build toward communism.

[notopennshut]

It''s never too late for anything. First things first. ALL MUST DECLARE BANKRUPTCY! That means the end of the status quo, jobs banks, benefits for life, such as pensions and medical. Aaaah, then everyone will be on equal footing. No more paying hundreds of thousands of workers to sit around doing nothing, retirees should make a beeline for the social security office to check out their benefits, sign up for medicare, no more hundreds of thousands for each buyout. There is no money now. No more corporate jets too, of course. Aaaah, The joys of bankruptcy. Then these companies should come out with leaner, better and more progressive plans, without the costs of all the above overpayments and waste. Only one way to survive and come out better -BANKRUPTCY FIRST.

[rjs1955]

Adios GM

Adios Chrysler

Ford will figure it out....

[infe5]

What''''s the point in having a good job if you give up everything youv''''e worked hard for. A 50% paycut seems a little absurd and no health benefits? I guess we could all go work at walmart.

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Posted by c-mo6 at 03:43 PM : Dec 03, 2008

Because it was only a "good job" when it was structured around ridiculous UAW contracts. For example, we could artificially inflate every U.S. citizen''s paycheck so they had a "good job" but the economy would collapse near instantaneously. Sadly the UAW overplayed their hand, and now the very workers they are supposed to help will be left with nothing because the big three cant sustain labor costs. To be fair, it''s not just labor costs that have ruined the auto industry, but it is a major contributor.

[c-mo6]

Not enough concessions UAW. Dump the health care plan, reduce wges by 50%, and no job security. Then, and maybe only then, will you survive. If the Big Three dies, you die with them.


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Posted by Koyt1 at 03:29 PM : Dec 03, 2008
+ report abuse


What''s the point in having a good job if you give up everything youv''e worked hard for. A 50% paycut seems a little absurd and no health benefits? I guess we could all go work at walmart.

[koyt1]

Not enough concessions UAW. Dump the health care plan, reduce wges by 50%, and no job security. Then, and maybe only then, will you survive. If the Big Three dies, you die with them.