Retirees wait and hope
Lattanzi, 55, who calls his North Jackson family a ??frequent flier of his health care benefits,?? gave up physical therapy treatment for a slipped disc pinching a nerve in his neck because of $200 co-payments.
Now, he says he doesn?t know what to think as GM and the UAW discuss the automaker?s proposal to pay into a Voluntary Employees Beneficiary Association, or VEBA. GM would use the fund to address $51 billion in unfunded retiree health care liabilities.
A labor expert believes the automaker needs to put up more cash for the union to take on the risk. Lattanzi just feels nervous.
??It just irritates me that when you retire ? and I don?t want to sound selfish or greedy ? there?s a promise that you?ll be taken care of the way you were when you gave (the company) concessions or givebacks. It hits hard. I don?t think GM has a heart because of that,?? Lattanzi said last week.
Lattanzi, like thousands of other local GM-Lordstown plant retirees, is watching closely the news on GM-UAW labor contract negotiations. While the existing contract expired a week ago, workers have stayed on the job while management and labor leaders inch toward a new pact.
The latest proposal has the sides discussing the automaker?s proposal to pay the union to form the trust and take over the company?s huge retiree health care obligation, sources have said. All economic issues, including pay, work rules, job security promises and health care contributions, are contingent on whether a VEBA is agreed to, so the negotiations have slowed.
Whatever is agreed to in the GM-UAW negotiations likely is to be the pattern for labor talks with Ford Motor Co. and Chrysler LLC. The union has tabbed GM as the potential strike target of the three automakers.
It?s possible that things could turn ugly for GM?s 540,000 retirees if the union shoulders the company?s health care liabilities, according to local labor expert John Russo of Youngstown State University?s Williamson College of Business Administration. But Russo agrees with another union spokesman that the fund could act as a safety net in case the worst happens and the company closes.
Russo said the major obstacle the VEBA has to pass is the gargantuan amount of money it would take to create. An independent party is studying each side?s position on the proposal with the major issue being how much money GM will put into the fund, according to reports.
??The future liability is enormous ... It?s going to take a lot of resources and money to fully fund that,?? Russo said.
Recent reports state that UAW president Ron Gettelfinger turned down an offer on the fund Tuesday, though it still is being negotiated. Russo said GM may need to make the fund more appetizing before the union would bite. He said GM could offer moratoriums on plant closings and promises of investing in American plants, though paying a hefty sum to kick off the fund is the key. Recent reports say the automaker planned to pay between 65 to 70 percent of its obligation to retirees.
Though he said the offer represents an enormous amount of money, it may not be enough according to Russo. A smaller VEBA which covered only out-of-pocket expenses for workers barely passed in 2005, he said. But with the union taking all the risk, Russo said the proposal?s survival hinges on how much GM is prepared to give the union.
??Unless the company puts up more money to prefund the VEBA, I don?t think it will pass ... That?s not to say it wouldn?t work at a certain level,?? Russo said.
Russo said that if GM is able to get health care off its books, the company would become more profitable and would be able to borrow money more cheaply. The union could benefit by having control of their own health care, which is important if the company starts closing plants. Russo said the government has allowed troubled companies to shed liabilities like health care.
Joseph Smolka, who retired in 2006 after 38 years at the Lordstown plant, is apprehensive about the deal, but he seemed to agree with Russo?s assessment.
??Sooner or later the people out there are going to retire. If the plant closes, they?re screwed,?? he said.
Which is precisely why the United Steelworkers International union benefits from a VEBA with tiremaker Goodyear Corp. which began in 2006, according to spokesman Gerald Dickey.
??By and large our workers feel better, at least in our circumstance. I?m not going to speak for the UAW. But they?re much more comfortable knowing there?s a fund there secured by union oversight and not the company doing whatever they want with it,?? Dickey said.
Dickey said his union had a troubling history of sudden plant closings and bankruptcy. He used LTV Steel as an example, saying that when the company declared bankruptcy, there was a run on health benefits, which sucked the fund dry in less than a year.
??Whatever ailments retired people had, they knew they had better take care of them as soon as possible ... It lasted half as long as they predicted,?? he said.
But an unfunded liability is just that, according to Russo. Once the union takes it, there?s no going back.
If the fund runs into trouble because of rising health care costs, the UAW would be forced to decide between raising deductibles and co-pays for their retirees or going to their current employees for more money. Russo said this could create an internal conflict which pits workers against retirees. Some retirees who may no longer bring in any money to pay for health care may already feel bitter.
??You take a lower wage in expectation that you?ll be taken care of at the end and suddenly you?re not. It breeds a powerful type of resentment,?? Russo said.
Should the deal go through, the UAW would become one of the nation?s largest consumers of health care, according to recent reports. But Russo was doubtful when asked if that kind of money could give the union any political clout.
??I think that sort of stuff could be true in a perfect world, but the risks are too high for the union and I think that?s why they?re balking,?? he said.
But as negotiators quibble back and forth in Detroit on an hour-by-hour basis, people like Smolka are left to sit back and watch.
??It?s going to be interesting. When I started in 1968 everything was covered and there weren?t any limitations. Now it?s pfft. I wouldn?t want to be starting over,?? Smolka said.