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DEC-Holiday-2008:Holiday Issue 12/16/08 10:05 AM Page 3 GOP slams labor, derails auto rescue package Some senators demand more wage and benefit cuts from workers By DON McINTOSH Associate Editor When U.S. auto industry CEOs asked Congress for aid this month, critics of organized labor seized the crisis as a chance to slam unions. Out- rageously high union wages and bene- fits, it was argued, had brought the do- mestic auto industry to death’s door. So, when Senate Republican leaders killed a proposed rescue package Dec. 12, they said it was because backers had refused their proposal for immedi- ate reductions in union worker pay to the level of nonunion workers. But leaders of the United Auto Workers (UAW) counter that blaming the union for the troubles of the Big Three is unfair and inaccurate. It’s true that General Motors, Ford, and Chrys- ler are running out of gas, spending down reserves at a time when car sales have plummeted. And the Big Three American automakers have lost mar- ket share to foreign-headquartered competitors — from 90 percent in De- troit’s heyday to 48 percent today. But that has little to do with the union, which has shrunk dramatically in re- cent years and had already agreed to steep concessions. The UAW has been unable to or- ganize new foreign-owned plants, or to stop the Big Three from outsourc- ing. The layoffs Michael Moore docu- mented in his 1989 film “Roger and Me” have continued. U.S.-based auto companies have outsourced produc- tion of parts like seats, dashboards, and frames that used to be made in- house, often to lower-wage and non- union employers. Five years ago, there were approximately 300,000 UAW members at GM, Chrysler, and Ford; today, there are fewer than 150,000. And the entire global auto industry is hurting right now, as car and truck sales have sunk to the lowest level in 25 years. Other governments are look- ing to aid their automakers, too. The U.S. auto industry’s relatively deeper woes have some long-term structural causes. For starters, Japan, Germany and South Korea have free government- provided health care, and generous public pension systems. The United States lacks those things, so union workers try to make up for them in union contracts. That can be costly for employers, especially older, long-es- tablished companies like the Big Three. The Big Three have automated, downsized and outsourced in recent decades, so they have a very senior workforce and more retirees than ac- tive workers. And older workers and retirees are much more expensive to insure. The Big Three, combined, are responsible for pensions and health care for more than a million retirees, spouses and dependents. Two out of five of their retirees are under 65 and thus aren’t yet eligible for Medicare. When foreign-headquartered auto companies make cars in the United States, they also need to pay for health care. But they started making cars in the United States only about 25 years ago, so they have very few U.S. re- tirees. As of a year ago, Toyota’s en- tire U.S. operation reportedly had fewer than 1,000 retirees. As for the sky-high wages union auto-workers are said to earn, the evi- dence suggests union and nonunion wages are converging. Just three for- eign-owned U.S. plants are unionized — a Toyota plant in California, a Mit- subishi plant in Illinois, and a Mazda plant in Michigan. Foreign automak- ers mostly built in states where unions don’t have as much of a presence — like Toyota in Kentucky, Volkswagen in Tennessee, and Mercedes in Missis- sippi. And they pay higher-than-aver- age manufacturing wages, likely in part to make unionizing less attractive. Counting bonuses, the Toyota workers can make $30 an hour. What about the oft-repeated statis- tic that UAW members make $73 an hour? It’s not true, UAW President Ron Gettelfinger told the Senate Banking Committee Dec. 4. “The $73 an hour figure … includes not only the costs of health care, pensions and other compensation for current work- ers, but also includes the costs of pen- sions and health care for all of the re- tired workers, spread out over the active workforce. Obviously, active workers do not receive any of this compensation, so it is simply not ac- curate to describe it as part of their ‘earnings.’” In fact, the UAW assembler wage is $28.12 an hour — about $57,000 a year for full-time work. And by 2010, the union says, total compensation for the average UAW worker will be less than for the average nonunionized worker at a foreign-owned factory. That’s because in 2007, after a two- day strike at GM, the union that once set the standard for American workers agreed to a two-tier compensation sys- tem. Under that system, new hires make $14.50 an hour and are excluded from the retiree health care and de- fined benefit pension plans. Those provisions were copied in contracts with the other automakers. Plus, under that contract, the com- panies get to unload their past com- mitment to retiree health care onto a Voluntary Employee Benefit Associa- tion (VEBA) as of 2010. The compa- nies are to contribute a lump sum to the fund, and then have no further re- sponsibility. Benefits will likely be re- duced. Gettelfinger told Congress the union is prepared to make a further concession, delaying automakers’ payments to the VEBA. But the myth that high union wages were the root of the problem persisted. And in the Senate, myth won out over fact. The House had done its part, pass- ing a compromise bill that had support from the Bush White House. The bill, the Auto Industry Financing and Re- structuring Act, allowed $14 billion — from a fund to promote development of fuel-efficient vehicles — to be used for short term loans aimed at keeping the companies in business for several months as they attempt to restructure. Lots of conditions were placed on those loans, including limits on execu- tive compensation, restrictions on owning or leasing corporate jets, pro- hibitions on dividend payments to stockholders, and a commitment to look at retooling factories to make ve- hicles for sale to public transit agen- cies. Each automaker that accepted the loans would have to give the govern- ment an equity stake, and submit a re- structuring plan for approval by a gov- ernment “car czar” no later than March 31, 2009. The restructuring plans would be designed to return the companies to long-term viability and would include sacrifices from all stakeholders, in- cluding management, directors, bond- holders, shareholders, suppliers, deal- ers, UAW members and other company employees. If the plans meet the czar’s approval, further govern- ment financing could be made avail- able. If not, the government could call in the loans and force the company into bankruptcy. The House passed the bill Dec. 10, 237 to 170, with 205 Democrats and 32 Republicans in favor and 150 Re- publicans and 20 Democrats voting against it. [Southwest Washington De- mocrat Brian Baird voted for it, as did (Turn to Page 17) (International Standard Serial Number 0894-444X) Established in 1900 at Portland, Oregon as a voice of the labor movement. 4275 NE Halsey St., P.O. Box 13150 Portland, Ore. 97213 Telephone: (503) 288-3311 Fax Number: (503) 288-3320 Editor: Michael Gutwig Staff: Don McIntosh, Cheri Rice Published on a semi-monthly basis on the first and third Fridays of each month by the Oregon Labor Press Publishing Co. Inc., a non- profit corporation owned by 20 AFL-CIO unions and councils includ- ing the Oregon AFL-CIO. Serving more than 120 union organizations in Oregon and SW Washington. Subscriptions $13.75 per year to AFL-CIO union members. Group rates available to trade union organizations. PERIODICALS POSTAGE PAID AT PORTLAND, OREGON. CHANGE OF ADDRESS NOTICE: Three weeks are required for a change of address. When ordering a change, please give your old and new addresses and the name and number of your local union. POSTMASTER: Send address changes to NORTHWEST LABOR PRESS, P.O. BOX 13150-0150, PORTLAND, OR 97213 DECEMBER 19, 2008 NORTHWEST LABOR PRESS PAGE 3
