Union aims to save jobs

Analysts expect the UAW to agree to GM’s cost-cutting demands.

By DON SHILLING

VINDICATOR BUSINESS EDITOR

Union leaders are bargaining to save jobs in Lordstown and other car plants in exchange for accepting General Motors’ demands for concessions, industry analysts say.

“The United Auto Workers has to get something back,” said Dennis Virag, president of the Automotive Consulting Group in Ann Arbor, Mich.

The issue is critical at GM plants in Lordstown; Spring Hill., Tenn.; and Kansas City, Kan., because they are scheduled to be losing vehicles, the Automotive News said Friday.

Production of the Chevrolet Cobalt and Pontiac G5 are scheduled in Lordstown only through June 2009.

Virag said that schedule was made with an eye on negotiations. GM didn’t want to make long-term commitments without knowing its cost structure in those years, he said.

GM’s reaction to the UAW’s demands for job commitments is unclear because it isn’t commenting on the negotiations.

Retirees’ health care issue

Since the previous labor contract expired Sept. 14, the two sides have been bargaining a proposal that would shift responsibility for retirees’ health care to the union in exchange for a sizable contribution from GM.

The UAW’s reluctance to accept the health care plan so far has opened the door for GM to seek concessions, including wage cuts of $5 an hour and higher medical co-payments, and possible plant closings, The Detroit News said Friday.

GM also would like a lower pay scale for new hires and new work rules to give plants more flexibility, Virag said.

David Cole, director of the Center for Automotive Research in Ann Arbor, said GM isn’t going to back away from its demand that its costs be brought in line with those of foreign automakers with plants in the U.S.

“I believe this line in the sand is real,” he said.

Virag and Cole both said they think union leaders understand that because of GM’s financial condition and will agree to concessions.

Possible outcomes

The analysts disagree on what will happen if the union doesn’t agree to GM’s demands.

Virag said GM would be left with uncompetitive costs and it would close plants over time.

He expects that Lordstown would survive in that scenario because GM would need its small car production to meet a rising demand created by escalating gasoline prices. Virag said plants that make large vehicles would be more threatened.

Cole said he expects GM to take swift action if it can’t cut costs in this country.

He thinks it would abandon much of its production in the U.S., cut 20,000 to 30,000 jobs and rely more on production in other countries.

Lordstown would among the first to close in that case because GM can make small cars more profitably in Mexico, he said.

“That could happen, but I don’t think it will,” he said.

He expects union leaders to work out a plan to help GM cut its costs because they understand it would be a “total disaster” for them if they don’t.