Signing bonuses [read bribes] may seal UAW deal
A substantial signing bonus for active workers could be a key part of
reaching a deal on a contract between General Motors Corp. and the
United Auto Workers.
By promising a one-time cash payment to workers, the automaker could
give union leaders a contract they can sell to members without making a
long-term commitment that locks GM into something it can't afford down
the road, sources familiar with the negotiations said.
The idea of a deal sweetener emerged as core economic factors of a
potential deal began to take shape, with negotiators in talks for a
third straight day since a contract deadline passed with no deal. Talks
are set to resume this morning after negotiators broke for the night
around 9 p.m. Monday.
Some of the talk has turned to alternative compensation models that
could help shield workers and retirees from future uncertainty, sources
familiar with the talks said. Both sides want a deal they can say has no
negative effect on workers and retirees.
After a wild Sunday of rumors that either a deal was close or talks were
breaking down, both sides hunkered down Monday to work on grinding out a
Bargaining has taken on a cautious, methodical tone as company and UAW
leaders go to painstaking lengths to analyze the numbers and politics
behind every facet of every proposal. As of Monday evening, people
involved in the talks said the dialogue continues, but a deal did not
GM's Chief Executive Officer Rick Wagoner, who has been actively
involved in negotiations, canceled an appearance today in Washington at
a Commerce Department summit, as well as a meeting with Michigan's
congressional delegation, to focus on the talks. A regular quarterly
meeting among the CEOs of Detroit's Big Three scheduled for Monday also
"It's really make-or-break for the union right now," said Ron Harbour,
president of Harbour Consulting Inc., a Troy firm that tracks auto
factory productivity. "They're thinking now, 'Whatever we do come up
with, we have to sell.'"
Any deal reached by GM and the UAW will shape contracts between the
union and Ford Motor Co. and Chrysler LLC. The three contracts cover
180,000 active U.S. hourly workers and more than 400,000 retirees.
Tension at the table
A signing bonus for workers is a typical tool used to win contract
ratification. The 1999 and 2003 contracts between the UAW and Detroit
automakers included signing bonuses of $1,350 and $3,000, respectively.
But with what's shaping up this year to be a historic and highly complex
labor contract, the union faces a tougher-than-usual sales job, and the
payments would likely be significantly higher.
GM wants to create a massive company-funded, union-run trust that would
be responsible for covering more than $50 billion in health care costs
for retired hourly workers and their dependents. Ford and Chrysler have
asked for a similar arrangement, called a voluntary employees'
beneficiary association, or VEBA.
There has been tension at the bargaining table in recent days over two
key issues, the VEBA and competitive operating agreements that would cut
the number of factory job classifications and change work rules in
plants. Part of the tension related to the VEBA may be GM's stand that
it won't fund it at more than 65 cents on the dollar.
An agreement on a VEBA is being held up as the two sides struggle with
the complexity and toughness of the issue, said labor expert Harley
Shaiken of the University of California-Berkeley.
"The VEBA involves risk. There's no getting around it," he said. "You're
projecting how fast health care will rise, which is tough to do. You're
also projecting what the stock market will do, which is an equally tough
thing to do.
"A VEBA will be a lot more sellable if what union members receive won't
change much at the outset. That is certainly the goal for the union."
Amid the talk about a VEBA, ideas are emerging that could change the way
retirees and workers are paid.
Sources familiar with the talks said the automaker is looking at
long-term ways to compensate workers based on the company's performance.
Among those concepts are flexible compensation methods that don't accrue
as long-term pay, but are tied to how the company succeeds.
GM's overfunded pension also could factor in, as there has been
discussion of increasing pension benefits for retirees to put more money
in their pockets. That would protect retirees from a shortfall in health
The ideas of a bonus, performance-based compensation and a pension hike
each present an alternative to more expensive wages that would incur
long-term costs for the automaker.
Workers, retirees on edge
As bargaining continued, UAW locals representing plants around the
country tried to return to business as usual, but several local
presidents said they've been getting a steady flow of calls and visits
from rank-and-file members and retirees.
"I have just been getting lots of questions from our members, but no
information from Detroit," said Enrique Flores Jr., president of UAW
Local 276 in Arlington, Texas. Flores and five other local presidents
said they had not received any update on the talks as of 5 p.m. Monday.
"I'd like to think that's a good thing and that progress is being made,"
Some GM Powertrain workers in Flint say the mood at their plant was a
bit edgier than normal Monday, which for many workers was the first day
back to work since the national contract expired.
"Friday, a lot of people had real concerns we could go out" on strike,
said David Streit, a 47-year-old tool setter at the facility, based on
the information they were given by local UAW officials.
"Today, there's some apprehension they could take us out, but my
committee man in the plant says if they are going hour by hour,
something must be going forward. I hope that is true," Streit said. "But
people are still nervous."
Despite the uncertainty and Sunday's turmoil, GM stock continued to
rise. Shares were up $1.01, or nearly 3 percent, to close Monday at
$35.23. GM stock has jumped more than 13 percent since a Thursday report
that UAW President Ron Gettelfinger is amenable to a VEBA.