Two years ago, the UAW gave some health care concessions to struggling GM and Ford in an effort to help the Detroit giants save billions of dollars and stay afloat. At the time, Chrysler was relatively well-off and so the union rejected a similar package for them. UAW President Ron Gettelfinger says that it's time to make up for that omission. Since 2005, the Chrysler Group went from a profit of $1.8 billion, to a loss of $618 million last year, and on to a $1.98 billion loss so far this year. Gettelfinger said a review of Chrysler's finances shows there's a problem that needs to be addressed, so talks are ongoing.More after the jump.
[Source: Detroit Free Press]
The health care issue is a big one because U.S. automakers have more than $100 billion dedicated to health care for retired workers. If they can reach an agreement, the revised plan with Chrysler is likely to mimic the one with GM and Ford, where retirees would have a deductible placed on their policies and have higher co-pays on prescription drugs. Current workers would have to contribute part of future wage increases towards a trust fund for health needs, too.
Since DaimlerChrysler announced Cerberus would be taking a controlling stake in Chrysler, they are somewhat out of the deal. The negotiations are apparently in the Chrysler Group's hands even though Cerberus is likely to be involved. Cerberus is expected to demand more from the unions than Daimler would have. Some of this is a sort of pre-negotiation, getting ready for the big round of contract talks that will take place with the big three next month. Hopefully some type of compromise can be reached.
More coverage of the upcoming UAW labor talks can be found at BloggingStocks.
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Reader Comments (Page 1 of 1)
Tyk @ Jun 19th 2007 1:55PM
Wow, deductibles on on policies and higher co-pays... completely foreign concepts to the UAW. How are the remaining members ever going to cope.
Whats next... getting rid of the job bank and having to work for your pay?
KT @ Jun 19th 2007 2:05PM
If you get a chance read the WSJ article from yesterday regarding the UAW's stance on the upcoming contract talks.
It amazes me that they are still taking a defiant stance towards making the domestic's labor cost more competitive. Even in the face of losing more jobs to overseas operations they want to fight for wages and benefits which are above the majority of their skill levels. If they would agree to pay for their healthcare like everyone else they could probably keep their over-priced wages and quarterly COLA's.
One point made is they are afraid if they give in too much they risk the opportunity to organize Toyota plants in the future. You best be worrying about the job you have and nothing else. If these neanderthals don't do what's needed I hope GM/Ford/Chrysler start making all their cars in Mexico or overseas.
mavkato @ Jun 19th 2007 2:06PM
is the UAW actually thinking about helping an automaker? what is his counterpart at the CAW going to say about this? is he going to declare Gettelfinger the enemy along with GM?
Travis Rassat @ Jun 19th 2007 2:19PM
I'm no expert on this stuff, but my initial reaction is that this is an attempt to get themselves some sort of leverage in future dealings with Cerberus, who don't have the long-standing history with the UAW that Chrysler does. They probably see the Cerberus private equity model as a threat to their business.
spencer @ Jun 19th 2007 2:23PM
I'm sick of hearing about the "overpaid" autoworkers. Do they make a lot of money, yes they do. The thing is thatt hey are not overpaid, everyone else is severley underpaid.
I know someone who started a job in 1976 making $7.00 an hour, a good wage then. That same position still pays around $9.00 an hour now. If that wage would have simply increased with inflation it would be paying $25.00 an hour today.
UAW members don't make too much, they make what everyone else should be making.
smartmlp @ Jun 19th 2007 2:59PM
Your point is? I dont think its so much that they get paid more then they are worth (although true in some cases), its that the big 3 pay more per employee than say Toyota or Honda does, and as a result they can not be as competitive. If Toyota/Honda was forced to organize and pay the same rates as say GM was, the playing field would be a lot more level.
The Other Bob @ Jun 19th 2007 7:39PM
It says a lot about the people who post here that Spenser received a "lowest rank" after making a comment that is supports everyone getting a raise. I am guessing everyone is just jealous of those who are paid fairly.
Auto aasemby is not a job that's easy on the body. That's why most of us choose other, less demanding, and often lower paid jobs.
It says a lot about the people who post here that Spenser received a "lowest rank" after making a comment that is supports everyone getting a raise. I am guessing everyone is just jealous of those who are paid fairly.
Auto assembly is not a job that's easy on the body, nor is it a job that requires no skill or training. That's why most of us choose other, less demanding, and often lower paid jobs.
When workers in different careers attack each other, it just hurts everyone. International corporations laugh all the way to the bank with pay you should have received. We should all work together to make sure all Americans, and everyone else in the world, gets a wage that can support their family. Let’s not tear down others, let's left up everyone.
Vinny @ Jun 19th 2007 2:38PM
My opinion of unions sucking now has changed. They suck less.
jeffinToronto @ Jun 19th 2007 2:55PM
Interesting that the unions wait until a company is on its death-bed before they realize they will have nothing if it actually dies. Pure genius.
Spencer: I can say that this is the first time I have heard anyone claim the the autoworkers don't make too much money, it is beacuse every other sector is severly underpaid. Your sense of logic and economic understanding is mind blowing...lol
Steve C @ Jun 19th 2007 3:04PM
Just stop!
What Chrysler (and America) needs is new management and no UAW.
Pep Boys Sux @ Jun 19th 2007 3:15PM
DOWN WITH THE UAW!! Free lynchings!
bernie @ Jun 19th 2007 3:40PM
How proactive of the UAW to hold each of the automakers' heads under water until they're almost daed, then lift them up and expect a return to prosperity.
I'm sure Gettlefinger has already made a plan to re-instate job banks and torpedo the man once again the millisecond they make any money. UAW=socialism.
iQuack @ Jun 20th 2007 12:37AM
Seems that UAW workers earn (including benefits) about $30 more per hour than non-union auto workers.
This disparity can't continue if domestic cars are expected to compete with the Toyota, Honda, and other car companies building vehicles in the U.S.
Unions are parasites that eventually kill their hosts unless a strong dose of sanity intervenes to repel the unions.
Aki @ Jun 20th 2007 1:27AM
The problem of unions is that they don't care about the wellbeing of a company. And if a company has *any* spare money, unions immediately start demanding better compensation, more pay raises. Hence, a dangerous equilibrium is set where either a company breaks even from compensation, or falls under a mountain of debt when the prosperous times fall through.
Those who blithely defend unions usually don't give an iota of thought about the companies themselves. They don't have unlimited resources. In some union-based companies here, they actually have to HIDE their assets, because as soon as the union catches wind of a surplus of money, they demand better pay under the threat of strikes.
Unions have long since stopped caring about the wellbeing of employees. This isn't Oliver Twist, and the industrial revolution has ended long ago. They're in the business of swindling. cajoling, coercing. Not all unions are like this, but the UAW especially falls under this category.
Gettelfinger should be afraid. After all the crap he put the Big 2.5 under, why would anyone want to put up w/ their crap? Job cuts and outsourcing to Mexico will continue if he thinks he could continue to get away with killing domestic auto manufacturers.
Cas Rad @ Jun 20th 2007 6:41PM
Unions - are they still relevant? Some argue no, while others argue yes. Back in the day - my grandfather worked in the GM Flint "sweatshops" pre-union. It was no picnic. He participated in the sit down strike because it was needed. However, 30 years later, he was oft quoted as saying that union members had long since forgotten where their paycheck came from. It came from the company - not the union.
Most of my family is still in Flint and tied to GM - trust me, I heard the screams of "unfairness" when GM asked for a simple co-pay. My dad, retired white collar, sat there and said nothing because over the years - he's had his share of copays. He just couldn't believe the whining and sense of false entitlement.
Unions are still needed to keep a check and balance to management. Absolute power in either direction corrupts absolutely. Management is supposed to make great business decisions. And for doing so they deserve every last penny in their big bonus. (Risk = Reward). Conversely - stupid decisions should not be rewarded. We've lost accountability in the system.
The same accountability goes for the union -- stupid decisions (e.g., not going along with healthcare concessions for DaimlerChrysler) helped cause the name to change to Cerberus-Chrysler. Ooops. Now the rhetoric advances to a middle ground.
It may be hard to fathom but nobody outside of southeast MI cares about the automotive industry. Nobody cared when the textile industry failed down south (unless you were personally affected - but you probably shop at costco, sams or walmart which helped send the business overseas but that's another discussion), nobody cared when the steel industry tanked (unless you had an OH or PA zip code).
And the same is true here in southeastern michigan. I grew up in Flint and live in Detroit. It's sad when I look around at a lot of really smart people who can't seem to rally together, make the hard decisions, and work to get healthy again. It's not a quick fix situation -- it's a long term systemic solution that needs to be implemented. Or before long you will have only 1 US automotive company left. Which one? Not sure but the volume can only support one. Who is willing to step up and do what is right?
airport krishna @ Jun 21st 2007 4:49AM
So the last piece of plywood will be going up over the last factory window and the UAW will suddenly wonder, "wha' happin'?"