Posted on 12/03/2008 5:25:29 PM PST by 2ndDivisionVet
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.
according to a recent wsj article,
there are a combined 190,000 big 3 auto union employees
supporting 600,000 retired union employees.
and how do the big 3 compete with the euros and asians?
How about throwing off $50/hour to start?
Correction of title: What will the UAW through off to keep their jobs and union afloat?
sorry, throw not through.
Unions are a microcosm of socialism on a per-company basis. They are bleeding their hosts dry and are too greedy to acknowledge it.
What ever happened to pride in an honest day’s pay for an honest day’s work?
http://www.gopetition.com/petitions/we-demand-true-conservative-leadership.html
Just wait - SS is on the same road ... pretty soon there will be more people on SS than working people supporting it ...
Have you noticed how fast democrats turning on Big-3 publicly when the polls showed the bailout was unpopular, and republicans decided not to get setup again?? Now they are demanding stuff. The delay is killing them because now they want 45B, but a few weeks they demanded 25B and democrats claimed it was just a loan/investment. See, post GWB, post-McCain wont be that bad. Democrats finally have to explain their actions.
Every member of the UAW, management on down, should get on their knees and apologize to those 600,000.
“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.”
The buyouts of that size ($105,000) are one time only, come from the pension fund and equal three years of pension, with no continued health care after leaving the automaker. If a person agrees to take that amount that is the only pension they will get. In the long run the large payouts are, of course, less expensive than paying the pensions for life.
No one "stays in the jobs bank forever." They really don't exist anymore.
Can't wait until the MSM asks for bailouts. They are fear mongers and liars.
So...giving up company health care? Or pension? Only if the Feds step in to take it's place.
Whats’ worse — it's going to happen..
So...giving up company health care? Or pension? Only if the Feds step in to take it's place.
Whats’ worse — it's going to happen..
Are you saying that $70/hour is not fair for putting a bumper on a car? If the auto workers want to keep their companies solvent, take a pay cut. If they don’t care, they will loose everything.
If the job banks don’t exist, as you claim, then why did the unions just propose that the UAW would allow the job banks to be scaled back?
Beats me. The jobs bank was a stupid idea in the first place. Relocating, or driving to another plant, for a short time should have been a requirement with the sort of pay the autoworkers are/were getting. No reason for them to be sitting on their butts.
I know people who write highly advanced software for less money and FAR less job security. Could they put bumpers on ? Heck yea. Could the bumper screwer guy write software ?
Well then. In free markets, people are paid by the size of the problem they solve. If you mess with that, the inefficiency sooner or later catches up with the business model.
Margaret Thatcher broke the unions in the UK. Who will be our Maggie?
The UAW was very cunning when they negotiated the jobs bank idea.
They took Roger Smith’s grand projections for the future and told him “of course your sales will continue to improve, so you’ll never need to pay us anything on this promise, and we can sell it to the rank and file in place of some other benefit”
GM has monstrously high overhead ~ hundreds of thousands of retirees receive pensions and medical insurance form GM.
The guys working on the the don't earn the big bucks like they used to.
In Washington D.C. by any chance?
Everyone else is having them there these days...
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