UAW agrees to cutbacks, eyes more

Concessions are distasteful but necessary, a Lordstown labor leader says.

STAFF/WIRE REPORT

The United Auto Workers is giving more concessions to help prevent one of the U.S. automakers from collapsing, an event that a Chrysler leader said could trigger a depression.

Hundreds of UAW leaders voted overwhelmingly Wednesday to make concessions to the struggling Detroit Three, including all but ending a much-derided “jobs bank” program that let laid-off workers collect up to 95 percent of their salaries.

Union leaders also agreed to let the cash-starved automakers delay billions of dollars in payments to a union-administered trust set to take over health care for blue-collar retirees starting in 2010.

Union leaders were called to an emergency meeting in Detroit on Wednesday to hear about the concessions. Everything discussed was distasteful but necessary, said Ben Strickland, shop chairman of UAW Local 1112 at GM Lordstown.

“We’re fighting for survival, and we’re trying to keep everybody employed without going into bankruptcy,” Strickland said.

He noted that industry analysts were praising the UAW a year ago for taking steps to make the U.S. automakers more competitive, but some in Congress now say that the union hasn’t done enough. The 2007 labor contracts included lower pay and benefits for new hires and a retiree health-care fund that would be operated by the union.

Wednesday was an emotional day for union leaders because they had to return to members and say more concessions are needed, Strickland said.

Plus, uncertainty remains about production levels at the Lordstown complex, which produces the Chevrolet Cobalt and Pontiac G5.

Strickland said union leaders have been told that more cutbacks may be needed if sales don’t pick up. GM already plans to lay off 1,100 hourly workers next month and has added two weeks to the Lordstown complex’s holiday shutdown.

GM said Tuesday that Cobalt sales in November were down 54 percent from November 2007. That followed a 60 percent drop in October.

UAW President Ron Gettelfinger spoke only in broad terms at a press conference.

No timetable was provided on when the jobs bank would end or how long the suspension would be. It allows laid-off workers to be paid up to 95 percent of their salaries while not working.

Members of Congress criticized the automakers last month for paying workers who are not on the job. About 3,500 autoworkers across the three companies are in jobs bank programs.

Gettelfinger stopped short of saying the union would reopen contract talks with GM, Chrysler and Ford Motor Co. but said it would be willing to return to the bargaining table to change some terms.

Talks with GM will begin immediately, but additional bargaining officials must be elected for Ford and Chrysler, Gettelfinger said.

Strickland said the UAW is looking to wrap up the bargaining by March 31. He said officials are researching what changes would have to be approved by members.

Delaying the health-care trust payments will help the companies survive their cash shortages, which they say were brought on by the severe economic downturn and the worst U.S. sales climate in more than a quarter century.

GM had been scheduled to pay more than $7.5 billion early next year to the union-administered fund which will take over retiree health-care payments on Jan. 1, 2010. Ford owes $6.3 billion to its trust fund at the end of this year. Chrysler figures were unavailable.

The delay will have to be approved by federal courts, which already have blessed the trusts’ formation.

Meanwhile, Jim Press, Chrysler’s vice chairman, said the U.S. automakers were “down to months left,” as industry officials ratchet up a fierce lobbying push to persuade Congress to approve as much as $34 billion in emergency aid.

“We’re on the brink with the U.S. auto manufacturing industry,” Press told The Associated Press. “If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it’s a huge blow. It could trigger a depression.”

Fritz Henderson, president and chief operating officer of General Motors Corp., took to the TV airwaves to stress that bankruptcy isn’t a viable option on the eve of a new set of congressional hearings on the auto bailout. He said that choosing the bankruptcy route would further erode consumer confidence in the automaker and the manufacturers want people to have confidence in their ability to buy from them.

As a further sign of the companies’ dire straights, Moody’s Investors Service on Wednesday downgraded its ratings for GM and Chrysler, sending them further into non-investment, or “junk,” status. Moody’s affirmed its ratings for Ford, but said the outlook for the three automakers is “negative,” implying further downgrades are possible.

Congressional leaders are reviewing three separate survival plans from the automakers in preparation for hearings today and Friday, as they weigh whether to call lawmakers back to Washington for a special session next week to vote on an auto bailout.

Officials at the White House and the Treasury and Commerce departments are also scouring the automakers’ plans. White House press secretary Dana Perino said it is “too early to say” whether the companies have outlined a path toward viability that justifies new federal assistance.

In blueprints delivered to Capitol Hill on Tuesday, GM and Chrysler said they needed an immediate infusion of government cash to last until New Year’s, and both said they could drag the entire industry down if they fail. Ford is requesting a $9 billion “standby line of credit” that it says it doesn’t expect to use unless one of the other Big Three goes belly up.

But Chrysler said it needed $7 billion by year’s end just to keep running. And GM asked for an immediate $4 billion as the first installment of a $12 billion loan, plus a $6 billion line of credit it might need if economic conditions worsen.

Democratic leaders voiced concern and a desire to do something to avert an automaker collapse, but they made no commitments about helping an industry that’s made few friends lately on Capitol Hill.

House Speaker Nancy Pelosi, D-Calif., has said she hopes Congress acts to help the automakers. Senate Majority Leader Harry Reid, D-Nev., said he would advance a bill Monday in preparation for a possible auto bailout vote later in the week.

Sen. Arlen Specter, R-Pa., said the mood in Congress “candidly is not supportive” of the automakers, although he called the consequences of just one of them failing “cataclysmic.”

Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said the automakers still need to prove they can survive and be profitable.

“If these companies are asking for taxpayer dollars, they must convince Congress that they are going to shape up and change their ways,” Dodd said.