Auto workers on strike against General Motors

I'm watching the UAW/General Motors labor negotiations with great interest--Mr. Noddy's retiree health benefits could be affected.

Detroit, Mich. -

The United Auto Workers and General Motors have reportedly reached agreement in their contract negotiations less than an hour after employees at an unknown number of plants walked off the job following a strike deadline.

Television news channels in Detroit, citing sources in the union, said both sides had reached agreement. A 12:25 PM ET news conference has been scheduled. Neither the company nor the union could be reached for comment, and the report could not be confirmed by Forbes.com.

The two sides spent much of the time discussing retiree health care. Health care liabilities add more than $1,000 to the cost of each vehicle made by General Motors. Detroit automakers want to trim these expenses to compete better with foreign rivals, but workers are reluctant to give up benefits as their medical costs skyrocket. (See: "GM To Union: Trust Us")

The two sides are considering a type of health care trust fund called a voluntary employee beneficiary association, or VEBA. Such a fund could save General Motors billions of dollars in retiree costs. In a VEBA, GM would provide the initial money to fund the trust. The UAW would assume responsibility for managing and investing the money, which would be used to pay for retired employees' health care costs.

Dys--

Thanks--and keep your fingers crossed.

September 24, 2007 Updated 1:30 pm
G.M. Workers Begin Walkout Over Contract Impasse
By MICHELINE MAYNARD and NICK BUNKLEY
New York Times

DETROIT, Sept. 24 ?- Members of the United Automobile Workers union walked off the job today at General Motors plants across the country after union leaders and company officials failed to reach an agreement in contentious talks on a new contract.

It is the first national strike by the union against G.M. since 1970. That strike lasted for two months. The U.A.W. last struck G.M. at two plants in Flint, Mich., in 1998, in a strike that went on for seven weeks.

The union's president, Ron Gettelfinger, said the union would return to the bargaining table today. "This is nothing we wanted," Mr. Gettelfinger said. "Nobody wins in a strike."

The two sides apparently hit a stalemate over the union's demand for job protection for its work force at G.M., which is one-fifth its size in 1990. G.M., in return, had pushed for the creation of a trust that would assume responsibility for its $55 billion liability for health care benefits for workers, retirees and their families.

Although the two sides agreed last week on the framework of the trust, they could not reach an agreement without addressing other contract issues, which in turn would determine how much money G.M. could invest in the trust.

Workers left their jobs at 11 a.m. Eastern time, after a strike deadline set by the union late Sunday passed without a deal.

G.M., in a statement, said it was disappointed by the union's decision to strike.

"The bargaining involves complex, difficult issues that affect the job security of our U.S. work force and the long-term viability of the company," said Tom Wickham, a G.M. spokesman. He said company officials would "continue focusing our efforts on reaching an agreement as soon as possible."

At a news conference shortly after noon, Mr. Gettelfinger said the union was "very concerned" about the long-term outlook for G.M., which was passed this year by Toyota as the world's biggest auto company.

"We've done a lot of things to help that company," he said. "But look, there comes a point in time where you have to draw a line in the sand."

He said the union discussed sending individual local unions out on strike, but decided a national strike would give it the "quickest opportunity" to get this thing resolved.

Mr. Gettelfinger said job security measures were one of the major issues facing negotiators. He said the strike was not connected to G.M.'s push for the health care trust, called a voluntary employee benefit association, or VEBA. Because the proposal is not part of the G.M. contract with the union, the U.A.W. could not strike G.M. over the idea.

"We were eager to discuss it," Mr. Gettelfinger said. "This strike is in no way about VEBA discussions."

In fact, Mr. Gettelfinger said the union had proposed such a trust during negotiations in 2005 on health care cuts, but G.M. chose a more modest proposal. He said the union knew by Friday that negotiations were bogged down but did not want to strike G.M. over the weekend.

"They made it very clear as we moved closer to the deadline that they had no intention of sitting down and negotiating something that was equitable for both sides," he said.

The U.A.W. had made it clear to its 73,000 members at G.M. that they were to strike the company unless local leaders received calls from their headquarters in Detroit, telling them to stay on the job.

Those calls did not come, and workers streamed out of plants once the deadline passed.

Some immediately picked up picket signs and began to march in front of their factories; others headed for their cars to go to union halls or head for home.

Chris Sherwood, president of U.A.W. Local 652 in Lansing, Mich., said there was no announcement of a strike made by the union's leadership. "We got no call not to go, so we went," Mr. Sherwood said. "Hopefully it won't last long."

He added, "A lot of people, including myself, thought this deal would get done, but apparently not."

Officials at the union hall were telling workers on the afternoon shift not to report to the plant today.

Workers streamed out of G.M.'s plant in Hamtramck, Mich., a Detroit enclave, moments after the deadline passed. Carole Garcia, who displayed a picket sign through the sunroof of her white Cadillac CTS sedan, said she was most concerned about preserving pension and health care benefits.

"Nobody wanted this strike, but we're tired of taking concessions," Ms. Garcia said. She has 30 years' experience at the plant, making her eligible to retire with full benefits.

Another 30-year employee, Sylvia Hill, said she approved of union leaders' decision as she walked on a picket line outside the plant.

"It's about time the union stood up against the company and stood for the people," Ms. Hill said as she gave a thumbs-up sign to horn-blowing motorists. "If I can keep my health care, I'm going to retire as soon as I can."

The union be well prepared for a strike. It has nearly $900 million in a strike fund, which pays workers $200 a week if they take shifts on the picket line. At that rate, the union could endure at least a two-month strike.

G.M.'s contract with the U.A.W. expired on Sept. 14, and was extended hour by hour. Late last week, Mr. Gettelfinger said leaders were trying to reach an agreement without a strike.

But late Sunday, the U.A.W. told workers to be prepared to walk off the job at 11 a.m. Eastern time if no deal had been reached. In a statement early today, the union said it had set the strike deadline because G.M. had failed to address job security and other "mandatory issues of bargaining," which it did not name.

Union officials criticized G.M. for continuing to pay bonuses to its executives while pressing U.A.W. members to make concessions. (G.M. did not pay cash bonuses to its top officials last year, but gave them stock awards and other perquisites.)

"This is our reward," said Cal Rapson, a union vice president and director of the union's G.M. Department, adding that G.M. was demanding that "our members accept a reduced standard of living."

The tough tone of the statement was in sharp contrast to the silence that had surrounded the talks until then. The U.A.W. had not commented publicly on the negotiations since they began in July, although it has sent updates to its local unions.

In addition to the issues of job guarantees and the health care trust, the U.A.W. has wanted G.M. to pay workers a bonus of several thousand dollars apiece once the contract is approved, in an effort to defray any other concessions sought by the company.

Even after a deal is reached at G.M., the union must still come to agreements at Ford Motor and Chrysler, where the issue of a health care trust is likely to be discussed.

Together, the three auto companies have a collective liability of nearly $100 billion. The health care trust would take over responsibility for paying benefits to workers and their families.
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Mary M. Chapman contributed reporting.