UAW sets 11 a.m. strike deadline
Walkout threat comes as carmaker, union close in on deal but still
wrestle with wages, job security.
Sharon Terlep / The Detroit News
The United Auto Workers set a new strike deadline for 11 a.m. today if a
deal is not reached with General Motors Corp., according to plant-level
UAW leaders who received phone calls from union leadership late Sunday.
Nine days have passed since the contract expired with no deal; the two
sides have been negotiating every day since. The new deadline comes two
days after UAW President Ron Gettelfinger sent a letter to members
saying the union hoped to avoid a walkout.
Over the weekend, GM pressed the UAW for significant concessions,
including controversial two-tier wages, in addition to a deal that would
shift responsibility for retiree health care costs to the UAW.
The two sides closed in on a new labor pact over the weekend, but
continued to wrestle with some major issues after nearly three weeks of
In addition to wages, GM is pushing the union to give ground on factory
competitiveness and job security.
As of late Sunday, bargainers were still discussing pensions, GM's U.S.
investments and outsourcing, along with retiree health care, sources
familiar with the negotiations said. The talks were expected to continue
through the night.
"We will continue focusing our efforts on reaching an agreement as soon
as possible," GM spokesman Dan Flores said moments after the new
deadline was set.
A company-financed, union-run trust to pay for retiree medical expenses
is expected to be the core of a new contract, with GM and the UAW
agreeing last week on a framework for the trust, known as a voluntary
employees' beneficiary association. Through the weekend, the two sides
were still negotiating financial agreements related to the VEBA.
But retiree health costs represent only about half of GM's estimated
$25-to-$30-per hour labor cost gap with Japanese automakers and GM is
looking for other ways to save money.
"If the union sets a deadline, that tells me they've got a deal," said
David Cole, chairman of the Center for Automotive Research in Ann Arbor.
GM wants structural changes in the way plants are run, how workers are
paid, and what they are entitled to when they're laid off, sources close
to the talks said.
GM also wants changes to the jobs bank -- a program that allows laid-off
workers to continue collecting pay and benefits -- that would make it
easier for the company to place those workers into new jobs.
The jobs bank isn't the hot-button issue it used to be for either side
after tens of thousands of UAW workers accepted buyout offers and early
retirement as part of GM's restructuring, but the automaker is still
expected to push for some changes.
And GM wants to cut the number of factory job classifications and make
it easier to hire nonunion labor for jobs not directly tied to building
In years past, any of those demands could have been a flashpoint issue
in negotiations. But this year, they've been overshadowed by the VEBA,
which has been at the center of intense debate and was the cause last
week of a two-day standoff between the GM and the union.
GM wants to shift $50 billion in retiree health care obligations to the
union through the VEBA. Before a deal can be finalized, the two sides
must agree on key aspects of the trust, including the level of funding
GM will contribute, where that money will come from and what happens if
the fund goes dry or health care costs drop significantly. To resolve
those issues, GM and the UAW must strike deals on the key economic
issues of wages, benefits and job security.
Armed with a litany of statistics, both the union and GM have laid out
their arguments on cost competitiveness.
GM points to retiree obligations and medical costs as barriers to its
ability to compete with foreign automakers that operate in the United
States. GM estimates its $5 billion annual health care bill is growing
by almost 15 percent a year.
In addition to health care and retiree costs, GM estimated it spent more
than $300 million in 2006 on cost-of-living allowances, where foreign
automakers paid none. GM gives its workers 20 days vacation, compared to
Toyota Motor Corp.'s 16. And GM's active workers contribute about 7
percent to their medical coverage, compared to 25 percent for Toyota
The UAW contends that labor costs account for only 10 percent of the
cost of building a vehicle.
That reality alone will make GM's push for deep concessions beyond the
VEBA a tough sell to the union. Add rich executive pay packages and
sacrifices made by the union in recent years, including health care
givebacks, and a contract offer that includes significant concessions on
top of a VEBA likely would be shot down, said Harley Shaiken, a UAW
expert at the University of California-Berkeley.
Additionally, GM likely will have to agree to a certain level of
investment in its U.S. plants to ease auto workers' primary concern:
keeping their jobs. Members connected to a dissident union group on
Sunday circulated an anti-VEBA, anti-concessions flyer.
Meanwhile, the automaker and union are discussing a signing bonus that
could help sell a tough contract to members.
"If GM had the same incentive structure as Toyota, it would be making
money now," Shaiken said. "Ultimately, the work they're going to need to
do is in the marketplace, not simply at the bargaining table."
"GM needs cars that people are excited about buying and are willing to
pay full sticker price for."