Carmakers and UAW to begin vital talks
DETROIT — United Auto Workers union bargaining officials are arriving in Detroit this week to begin discussing wage and benefit concessions they must make so General Motors Corp. and Chrysler LLC can keep their federal loans.
Under the terms of the $17.4 billion granted to GM and Chrysler last month, the companies have until Feb. 17 to hammer out amendments to their current contracts that would bring labor costs in line with those of employees at foreign auto companies’ plants in the U. S.
Those concessions need to be approved by union members and submitted as part of GM and Chrysler’s restructuring plans by March 31. That’s when the government can call in the loans if the requirements haven’t been met.
Rick Wagoner, GM’s CEO, said Thursday that he expected the company will come to an agreement with the UAW.
“I’m confident that we’ll come together and get the kind of changes that we need,” Wagoner said on NBC’s “Today” show, where he was joined by UAW President Ron Gettelfinger. Gettelfinger said the union will ensure that “what we do is done in the best interest of our members as well as our retirees.”
If talks between the union and GM fall apart, the union may not be able to go on strike, its most potent weapon against the company. A provision of GM’s loan agreement with the government would automatically place the loans in default if a union strikes, according to a GM filing with the Securities and Exchange Commission.
UAW officials would not say if or when formal talks with GM and Chrysler would begin. However, both sides have met in recent weeks.
Wagoner said the much-cited $10-an-hour wage difference between GM autoworkers and workers at U. S. plants owned by foreign automakers “may be a little on the high side.”
Hourly wages for UAW workers at GM factories already are about equal to those paid by Toyota Motor Corp. at its older U. S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota — generally viewed as the main competitor of the Detroit Three — says it pays about $30 per hour.
But including benefits and the cost of providing health care to more than 432,000 GM retirees, the Detroit automaker says its total labor cost is around $69 per hour, compared with an all-inclusive cost of $53 per hour at Toyota. GM’s total cost will drop to $62 per hour in 2010 when a UAW administered trust fund starts paying retiree health care costs instead of the company, but that still leaves a $9 difference, mainly due to the “legacy” costs of century-old GM paying its retiree pensions.
Wagoner said Thursday that the GM can survive long-term without cutting benefits to retired workers.
Other items that will be on the table include payments and benefits to laid-off workers.
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