Vol. 72/No. 50      December 22, 2008

Under a bill drafted by House Democrats, the government would extend immediate, short-term loans to the Big Three and directly supervise the long-term restructuring of the industry. The Wall Street Journal reported the initial loans would be about $15 billion to GM and Chrysler. In return for the loans, the companies will give the government stock equal to 20 percent of the money borrowed. Ford has declined a short-term loan and is asking for a $9 billion line of credit instead.

Further government aid to the Big Three would be contingent on government approval of restructuring plans. An “auto czar” would be appointed by the president to review each company’s reorganization plan by March 31. As part of the deal the auto bosses would submit a plan to “rationalize costs, capitalization, and capacity with respect to the manufacturing workforce,” code words for layoffs, speedup, and wage and benefit cuts.

The czar would have authority to extend more loans or demand repayment and would convene meetings of the auto companies, unions, and creditors to negotiate further reorganization, giving the government a more direct role in pressuring the United Auto Workers (UAW) to make concessions.

House Speaker Nancy Pelosi called the bailout plan “a barbershop—everyone is getting haircuts in terms of the conditions. Labor has to take a haircut because of the concessions… . Shareholders have to take a haircut. There has to be consideration of the relationship with dealerships, with suppliers, and the management itself has to take a big haircut on all of this.”

A week earlier UAW president Ron Gettelfinger announced that union officials had decided to reopen contracts with Ford, General Motors, and Chrysler; end the union’s jobs bank; and allow the auto bosses to delay their payments into the UAW retirees’ health plan.

“Concessions, I used to cringe at that word,” Gettelfinger said at a news conference in Detroit. “But now, why hide it? That’s what we did.”

“It’s going to be hard on the membership,” Frank Fabrizio, president of UAW Local 600 in Dearborn, told the Detroit Free Press. “They are not happy with it, but it’s what has to be done.”

In testimony to the Senate Banking Committee December 4, Gettelfinger said, “We recognize that all stakeholders—equity and bondholders, suppliers, dealers, workers and retirees, and management—must come to the table and share in the sacrifices that will be needed.”

This marks the second time in three years that the UAW officialdom has reopened contracts to give back to the employers. In 2005 the UAW gave up a 3 percent raise, diverting the money to help pay health-care costs. In 2007 the union agreed that most new hires would start at about $14 an hour, half what UAW members had been making, and would receive inferior health and pension plans. The union accepted outsourcing of cleaning jobs at an even lower rate.

Retirees’ health care, which had been the responsibility of the companies, was shifted to a trust fund managed by the union, saving the companies 50 percent on health insurance. The trust fund takes effect in 2010. Now the UAW is offering to let the bosses delay payment of $14 billion into the fund.

The jobs bank the UAW will now dismantle originated in 1984 contract negotiations. The UAW made concessions on work rules in return for a jobs bank for workers laid off due to technological changes, plant closings, or restructuring. These workers continued to receive close to full pay and benefits until recalled to work. There are currently some 3,500 workers in the jobs bank.

Meanwhile, layoffs continue. GM has slashed its workforce in half in the last three years and plans another 30,000 layoffs. The company will close plants in Orion Township, Michigan; Lordstown, Ohio; and Oshawa, Ontario; for all of January, laying off 2,000. When the plants reopen in February, they will be down to two shifts. According to union figures, in the last five years the UAW at Big Three plants has lost half its membership, down to 150,000 members from 300,000.
 
 
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