Saturday, November 22, 2008

Overdrawn at the Job Bank

United Auto WorkersImage via Wikipedia

Automotive Bad News

GM, Honda, and Toyota will cut production significantly between now and the end of the year. The inpact will be less stressful on the Japanese auto makers than it will on General Motors.

The layoff just means GM will be paying fewer people NOT to work.

What they need to be able to do is to layoff people at the Job Bank.

The Job Bank was created during contract negotiations with the United Auto Workers in the 1980's. The premise was to create a "retraining program" where laid off auto workers could be retrained for new jobs in the company or outside the auto indiustry.

Workers would be paid almost their full work wage, while attending the training. Unfortunately, this laudable idea was allowed to become simply a welfare program where workers were paid to report to "work" and play cards, read the paper, and watch television.

Some workers have done nothing else for years. GM and the UAW are still operating this program today. Only now, after the bailout in Washington D.C. was washed out by corporate jets are they beginning to discuss elimination of the program.

According to the Detroit Free Press, the UAW is looking at this program as part of concessions by the UAW that may help induce Washington to rethink the proposed bailout.

DIsmantling the jobs bank is among many measures the automakers are actively discussing with the union as they hustle to prepare a plan to convince Congress to approve $25 billion in federal loans for the automakers, the Free Press reported exclusively Friday.

"It's not a bad idea that it's at least dawned on them that they have an image and public relations problem," said Harry Katz, dean of Cornell University's School of Industrial and Labor Relations. "But they're going to have to go much, much further and deeper."

Asked Friday if further UAW concessions would help pass a federal aid package for Detroit, House Speaker Nancy Pelosi, D-Calif., said: "I think everybody has to participate in ensuring the viability of the auto industry."

General Motors Corp., Ford Motor Co. and Chrysler LLC all have reported spending operating funds faster than they collect them for the last several months as financial turmoil has pushed U.S. auto sales to their lowest level in 25 years. GM and Chrysler have said their cash reserves could fall below the level necessary for operations by the end of the year.

Congress asked the automakers to deliver plans by Dec. 2 that detail how much they need and how they would spend federal loan money. Several members of Congress said any plan should include sacrifice from all levels of the organizations.

The jobs bank, a much-maligned program under which laid-off autoworkers are paid long after their jobs are cut, is one of the sacrifices the UAW may make.

In one proposal that has been discussed, workers would get near-full pay for 18 months during a layoff period, but there would be no jobs bank program after that.

Perception is everything

A UAW spokesman declined to comment Friday.

UAW President Ron Gettelfinger, who joined the auto executives in testifying before Congress, bristled this week at the notion that the union hasn't given concessions on the program before.

Gettelfinger said there is a lack of appreciation for how the program has been scaled back to almost being gone.

Until the union's 2007 contract, workers could remain in the jobs banks for years. But under the new contract, the union conceded to tighter conditions, under which workers' jobs are protected by the jobs bank for just two years, and less if employees turn down transfers.

"Going back to the '07 negotiations," Gettelfinger said, "we took that language and stripped it down to where it's the mere shadow of what it used to be."

Asked Thursday if the UAW would be willing to give up such a provision as part of conditions for government aid, Gettelfinger said, "It's premature for me to answer a speculative question. ... Let's wait and see what they come down with."

The jobs bank may now be a minor program, but it stands tall as a symbol of excess and inefficiency to those outside Detroit, experts say. And for that reason, as much as any other, it may have to go, experts say.

"It seems like folks are getting paid for waiting. That doesn't seem to be following the American way of rugged individualism," said James Cashman, a management professor from the University of Alabama who spent several years working as a consultant for GM.

Jobs banks come from an era when automakers' manufacturing processes were being modernized to include technological improvements and the companies needed to win labor support for such innovations that seemingly would mean a loss of jobs.

"The jobs bank notion was created long ago with the idea of being a temporary location for people who were being displaced by upgrades in technology," Cashman said. "That whole premise seemed to have died long ago, and jobs banks have been, from the perspective of folks down here, kind of abused ever since."

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