UAW to suspend maligned jobs bank

Ahead of hearings, union offers contract changes

Louis Aguilar, Alisa Priddle and Robert Snell / The Detroit News

DETROIT -- Local leaders of the United Auto Workers agreed to suspend the program where laid-off workers can get up to 95 percent of their wages and benefits, a concept that came to symbolize the stereotype of overpaid, underworked factory workers.

Hundreds of local UAW leaders from all three Detroit automakers agreed at an emergency meeting Wednesday to clear out the controversial jobs bank, defer payments to a new health care trust fund and consider modifying other parts of its landmark 2007 labor agreement. Several UAW officials and analysts said any other changes likely mean wage cuts, which would take a general vote by UAW members.

"Concessions, I used to cringe at that word. But now, why hide from it?" said UAW President Ron Gettelfinger at a press conference immediately after the meeting at the Marriott Hotel in the Renaissance Center.

The changes are being made to prevent the Detroit Big Three from collapsing. On Tuesday, the automakers submitted plans to Congress, outlining how they'd use $34 billion in requested emergency government loans. GM has offered to eliminate up to 31,000 jobs, shut nine plants and either shrink, sell or possibly kill three brands in addition to Hummer, which already is up for sale. Ford's plan said the automaker needs to bargain with the UAW on wages, benefits and work rules. Chrysler's plan called for "meaningful concessions from each of its major constituents."

The changes UAW leaders agreed to Wednesday are "substantive and painful," made on top of deep concessions granted by the UAW in recent years, said Harley Shaiken, a University of California Berkeley labor professor. "There are 60 percent fewer hourly workers. Future wages and benefits are two-thirds lower than previous packages."

Yet Shaiken says he's not sure it's enough to convince Congress to bail out Detroit. "The perception of Detroit is driven in part by stereotypes and myths," he said.

The union has lost more than 119,000 autoworkers since 2006 and now represents 139,000. It agreed last year to a contract that reduced total hourly pay and benefits for new hires to about $26 from about $78, and makes new hires ineligible for pensions. The contract also created union-managed trusts that will take over retiree health care obligations starting in 2010.

Local leaders agreed on Wednesday to immediately suspend the jobs bank, which has 3,542 workers. Suspending the program just as the automakers prepare to eliminate more workers also prevents the newly laid off from joining it in the months ahead, company officials said.

Gettelfinger said the jobs bank -- something the union has defended steadfastly in the past -- has become a lightning rod since congressional hearings two weeks ago.

Several local UAW officials were glad to see the program go. "That's the UAW's jet," said Terry Everman, chairman of Local 599, referring to the corporate jet debacle that marred the first Capitol Hill plea by the carmakers.

Everman represents GM Flint Powertrain employees, which has 90 workers in the jobs bank, including some who've been there for years. "It wasn't the UAW or the workers who wanted to sit in that program for so long; they wanted to work," he said. "It's almost irrelevant in the bigger picture."

Everman said it's his understanding the jobs bank workers will remain in the program until at least the end of the year before they are either assigned to other jobs or possibly offered a buyout.

Top UAW officials and staff must now meet with automakers to work out the removal of workers in the jobs bank.

Besides suspending the jobs bank, the union will help the automakers' cash flow by deferring required payments into the health care trust fund, called voluntary employee beneficiary associations, or VEBAs. Gettelfinger declined to put a new date on the payments.

Because the creation of the fund, which will be managed by the union starting in 2010, had to be approved by the federal court, changes to the payments and schedule must go back before a judge, Gettelfinger said.

Ford already has paid $2.7 billion into the fund as required by the terms of the 2007 agreement. GM and Chrysler did not make their initial payments. But the Dearborn automaker still welcomed the offer of deferred payments, which will delay Ford's next payment of more than $6 billion due next year.

The next step is for the bargaining committees to review the various national agreements, which were intended to last four years. The union won't open the entire contracts, but there are provisions to make modifications to such things as the jobs bank. Any changes to issues such as wages or benefits would have to be ratified by the union's 139,000 workers.

"Everything is on the table," said David Cole, chairman of the Center for Automotive Research in Ann Arbor.

Cole said the UAW concessions, while substantive for UAW members, are "almost symbolic" in the uphill battle to convince Congress the Detroit automakers deserve taxpayer billions.

"The real problem is the absolute collapse of the credit market. But manufacturing is a high fixed-cost business and you cannot cut your way to success in manufacturing," he said. "The UAW is making significant steps, but the larger issue is that a lot of smart people don't know what's going on in manufacturing."

UAW local officials said they generally supported making more concessions, and that many of their rank-and-file members would approve.

"Overall, the meeting was supportive and most of our members understand that we are in unprecedented times," said Ben Strickland, a delegate from Local 1112 which represents GM workers in Lordstown, Ohio.

Even the UAW Chrysler national committee chairman who spoke out against the national contract last year said the dire situation of the automakers could override the concerns of members.

"There will be some concern, but, there is also a great deal of concern about the overall economy," said UAW Local 1700 President Bill Parker.

Gettelfinger is to be on a 6:10 a.m. flight today to Washington for the start of the congressional hearings about the fate of Detroit's Big Three.

Staff Writer Bryce Hoffman contributed. You can reach Louis Aguilar at (313) 222-2760.