Diary

UAW Walks Out on GM During Bailout Negotiations

When the Auto Bailout was approved by Congress one of the stipulations was that the automakers had to get concessions from the unions.

So, in an attempt to abide by Congress’ demands, GM has been in negotiations with the United Auto Workers to make the requisite deals. Unfortunately, it doesn’t seem as if the UAW is in the mood for making any deals, at least if it involves any cuts for them. Consequently the UAW has decided to walk out on further negotiations.

Sadly, instead of trying to arrive at a fair package with General Motors, the UAW would rather stubbornly fight them at a time when everyone is being asked to trim expectations in this faltering economy.

At issue is the UAW administered retiree health care fund. This fund is one of the biggest reasons that GM workers see a total per-employee labor cost of $69 per hour while its competition, such as Toyota, only is saddled with hourly costs of $53. This higher cost makes the U.S. automakers less competitive.

GM says they have a solution to this exorbitant health-care fund.

GM says it owes $20.4 billion to the fund, and the loan terms set a target of giving the union half of the value in cash and half in GM stock. The trust fund would take over health care payments for GM’s roughly 500,000 blue-collar retirees and spouses starting Jan. 1, 2010.

The trust, called a voluntary employees beneficiary association, would let GM move about $46.7 billion in retiree health care costs off its books, making it more cost-competitive with Asian automakers. It is the key feature of a new four-year contract signed in 2007 with the UAW.

Not good enough say union bosses.

It appears the unions won’t bend even if the whole company goes down the tubes. I expect they imagine that with their guy in the White House they don’t have to make the same sort of sacrifices the rest of the country has to make?