Is the UAW Doing Enough To Save Detroit and its JObs?

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Is the UAW doing enough to help the American auto industry survive and to save the jobs of its members? I don't know, but they may be doing more than many people think.

I recently had a chance to read notes from the prepared testimony of Ron Gettelfinger when he appeared before Congress earlier this month as part of the request for automotive bailout funds.

Gettelfinger on union concessions:

Some commentators have asserted that "overly rich contracts" negotiated by the UAW are to blame for the companies’ current situation, and suggested that workers and retirees should be required to take deep cuts in their wages and benefits. This totally ignores the recent history in the auto industry and the facts regarding wages and benefits at the Detroit-based companies.

The truth is that in 2005 the UAW agreed to reopen the contracts mid-term, and accepted cuts in workers’ wages and in health care benefits for retirees.

Then, in the general 2007 collective bargaining negotiations, the UAW agreed to what industry analysts have called a "transformational" contract that fundamentally altered labor costs for the Detroit-based auto companies. This contract slashed wages for new hires by 50%.

Furthermore, new hires will not be covered by the traditional retiree health care and defined benefit pension plans.

In addition, this contract stipulated that beginning January 1, 2010 the liability for health care benefits for existing retirees would be transferred from the companies to an independent fund (a Voluntary Employee Beneficiary Association, or VEBA).

This agreement has subsequently been approved by federal courts, which have appointed a majority of the trustees who will be independent of the UAW and responsible for managing the VEBA. Taken together, the changes made by the 2005 and 2007 contracts reduced the companies' retiree health care liabilities by fifty percent.

As a result of all these painful concessions, the gap in labor costs that had previously existed between the Detroit-based auto companies and the foreign transplant operations will be largely or completely eliminated by the end of the contracts.

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