Automakers Forced to Pay 85- to 95-Percent of Wages to Union Members Who Are Not Working Friday, November 21, 2008 By Tiffany Gabbay
United Auto Workers President Ron Gettelfinger(CNSNews.com) – The Big Three automakers are forced to pay 85- to 95-percent of union wages and benefits to members of the United Auto Workers union who aren’t working – even if their plants have been closed. Industry analysts say union labor agreements that obligate the Big Three to pay millions of dollars to workers who are no longer working are a major reason why the automakers are in trouble – a problem that no short-term bailout can fix. During hearings last week where the chief executives of Ford, Chrysler and General Motors appeared before the Senate Banking Committee, Sen. Bob Corker (R-Tenn.) raised the issue. Corker asked Rick Wagoner, CEO of General Motors, why with all of the measures he has taken to prevent a collapse, his company was still not making money. “Is it because of the (United Auto Workers) union?” Corker asked pointedly. Wagoner, who demurred from answering directly, said that even at plants that are closing, “85 percent” of union employment benefits still “have to be paid.” He said that GM has had to restructure and reduce the cost of operating in the U.S., but the company still pays for employees that are not currently working at “idle facilities.” Chrysler Chairman Robert Nardelli, facing a similar question from Corker, confirmed that “agreements are in place” between Chrysler and UAW that, regardless of demand, Chrysler must still operate at a pay rate of 95 percent of wages for employees not currently working at idle facilities. Peter Morici, a professor at the University of Maryland’s school of business, told CNSNews.com that one of the biggest problems the companies face is the UAW’s Jobs Bank – a program established more than two decades ago that guarantees nearly full salary and benefits to out-of-work employees. “Right now if a plant closes in St. Louis and a new one opens in Kansas City, the workers don’t have to move from St. Louis to Kansas City; they can opt to get a $105,000 payout or go on Jobs Bank where they can collect 95 percent of pay for the rest of their lives,” Morici said. The Detroit automakers have not released official numbers indicating how much they currently spend on their respective Jobs Banks, but previously released four-year labor contracts signed with the UAW in 2003 revealed “contribution caps” to be implemented by each of the Big Three. These contracts say that GM agreed to allocate $2.1 billion in Jobs Bank payments over four years, Chrysler $451 million for its program along with another $50 million for salaried union employees, and Ford agreed to set aside $944 million. Morici, who also testified at last Tuesday’s committee hearing, said that economists estimate that $2,000 per vehicle of every car manufactured by the Big Three goes directly to pay employee benefits, something foreign automakers do not have as part of their overhead. The economist said he believes U.S. automakers are “capable of making high quality vehicles” but that the extremely high labor and product development costs will keep the Big Three from becoming profitable and surviving. “My view is they can’t do that because their labor costs are too high and their product development costs are too high” Morici said. “They need to lower their labor costs to those enjoyed by say, Honda at the new Indiana plant and eliminate all of the burdens and work rules that get in between the management and workers in terms of defining how the work place is run,” he added. UAW President Ron Gettelfinger, meanwhile, told the congressional panel that his union will not be making any concessions in order to receive the proposed $25 billion in government aid – and attributed the automakers’ difficulties to the economy and the tight credit market’s impact on car buyers. Viewer Comments The following comments are posted by our readers and are not necessarily the opinions of either CNSNews.com or the story’s author. To be considered for publication, comments must adhere to the Terms of Use for posting to this Web site. Thank you. Showing 1-5 of 15 Comments Newer to Older Older to Newer 1 2 3 Next Loading... freeseeker at 02:57 AM - December 02, 2008 Most of our employees, both production and skilled, have higher eduction. Most have at least some college, many have advanced degrees. What I'm telling you is, we get paid more, yes, because we've earned it. I'm sick and tired of class warfare among blue collar workers. Pitting one worker against another. A liberal ploy if I ever heard one. Finally, the auto industry has earned a bailout. The only reason Ford and the others are loosing money is because Congress has destroyed the economy over the last 2 years. The industry loses right now are loses not of our own making. Remember in 1994 when the Democrats were warning that if they ever got back control of Congress they were going to make the American people pay for throwing them out in the first place. January 3, 2007 the economy was humming along. It's taken the Democrat controlled Congress less than 2 years to screw up everything and everyone. The economy being in the condition it's in was a successful vendeta. freeseeker at 02:43 AM - December 02, 2008 I'm a skilled trades worker. Electrician by trade. My base rate of pay is just shy of $33.00 per hour. That's about $1.00 per hour more than a typical Toyota skilled worker. Do I have good beneifts? Yes, of course. If not I'd have to take all my skills and find a job that included good benefits. But then again I'm a highly trained commodity. My skills have value. As the work force changes, as all the companies automate, the production workers are becoming fewer and fewer. They're skills are also becoming greater and greater. We all earn the money we make. Frankly most of you can't do what we do, and wouldn't last a day if the opportunity presented itself. I speak from experience, I've been an assembler, a production machine operator, an electrical apprentice, a journeyman electrician, and both a production and skilled supervisor. I have a college degree, a state journeyman's license, and soon to have a master's license. freeseeker at 02:30 AM - December 02, 2008 I'm a Ford worker. "Frank as I wanna be" is correct about the 85% pay. With the 2007 contracts the jobs bank is coming to an end. As it is now the jobs bank does not last forever. As I read the contract you run out of that benefit after 2 years. That is two years after unemployment runs out. The jobs bank was originally created to discourage the companies from laying people off in the first place. Frakly I don't see what else Ford could do to satisfy Congress. Ford alone has gotten rid of 51,000 employees and closed 17 plants. Our quality and gas milage meets or exceeds anything the Japanese or Koreans are putting out. And I'd put the new Lincoln MKS against a Lexus any day. Our new F-150 is the finest new truck on the market. The Toyota Tundra is, by comparison, JUNK! I've also read comments about the wages paid to UAW represented workers. Production does not make $30 an hour. They make about $1.00 an hour more the a typical Toyota worker. matts2 at 11:07 PM - November 30, 2008 What an astounding misunderstanding. Here is the the original comment: "Wagoner, who demurred from answering directly, said that even at plants that are closing, “85 percent” of union employment benefits still “have to be paid.” Got that? Not 85% of all wages, 85% (and that for a limited time) at a *closed* plant. From that you somehow concluded that 85% of all wages are to non-workers. For your conclusion to make sense it would mean two things. First, that the automakers have laid off all of their non-union workers, so 85% of union wages was 85% of all wages. Second, that they have closed all of their plants so pay to laid off workers was the only pay. Next time, if some fact seems too outrageous, check to see if it is a fact before you show your outrage. Santee at 02:14 AM - November 25, 2008 What other company has such a package for its employees? The Big Three auto makers are in trouble for good reason! We wonder why such benefits would have even been considered, until we realize the stranglehold that the UAW has on the Big Three. The UAW "will not be making any concessions in order to receive the proposed $25 billion in government aid." Sounds like the Big Three still will not "make it" with all the money that the government can throw at them because they still have not gotten it together. The best of plans and all the retooling in the world, will not make them competitive with other auto makers. Let them go Chapter Eleven, get rid of most of the garbage that has built up over the years, retool for energy efficient vehicles then perhaps they can be competitive again. The government should not throw money down this rathole. On Dec 22, 6:35 am, Florida Cracker 532 <[email protected]> wrote: > Blacks and Immigrants Bring in the Union [ anti-union campaign went > down to defeat ]http://www.truthout.org:80/122108B > When workers at Smithfield Foods' North Carolina packing house voted > in the union on December 11, the longest, most bitter anti-union > campaign in modern labor history went down to defeat. Sixteen years > ago, workers there began organizing with the United Food and > Commercial Workers. In 1994 and 1997, the union was defeated in > elections later thrown out by Federal authorities because the company > created an atmosphere of violence and terror in the plant. In 1997, > one worker was beaten after the vote count. Company guards were given > the ability to arrest workers, who were held in a detention center in > the plant they called the company jail. Many workers were fired for > union activity. And in recent years, immigration raids swept the > plant > in the middle of the union drive, adding to the climate of > intimidation. > > It was no surprise then, that the pro-union vote (2,041 to 1,879) > set off celebrations in house trailers and ramshackle homes in Tar > Heel, Red Springs, Santa Paula, and all the tiny working class towns > spread from Fayetteville down to the South Carolina border. Relief > and > happiness are understandable in this state, where union membership is > the lowest in the country. But Smithfield workers were not just > celebrating a vote count. Their victory was the culmination of an > organizing strategy that accomplished what many have said U.S. unions > can no longer do - organize huge, privately-owned factories. > > Five thousand people work in the world's largest pork > slaughterhouse, where they kill and cut apart 32,000 hogs every day. > Efforts by the modern U.S. labor movement to organize factories the > size of the Tar Heel plant have not been very successful for the last > two decades. In fact, private-sector unionization has fallen below 8 > percent of the workforce. The giant electronics plants of Silicon > Valley have an anti-union strategy so intimidating that unions > haven't > even tried to organize them for years. Japanese car manufacturers > have > built assembly plants and successfully kept workers from organizing, > in spite of efforts by the auto union. > > The price for labor's failure to organize Japanese plants became > clear in December's Congressional debate over the auto bailout > proposal. Southern Republican senators demanded that the United Auto > Workers agree to gut its union contracts to match the non-union wages > and conditions at Nissan, Honda and BMW. The presence of the non- > union > plants threatens to destroy the union, and the same dilemma exists in > industry after industry. > > Unions pin their hopes on the Employee Free Choice Act. This > proposal would require a company like Smithfield to negotiate a union > contract if a majority of workers sign union cards. It would avoid > the > kind of union election that took place at Smithfield in 1997, where > workers voted in an atmosphere of violence and terror. EFCA would > also > put penalties on employers who fire workers for union activity. At > Smithfield, the company rehired in 2006 workers it fired for union > activity in 1994. But it was only obliged to pay the fired workers > for > their lost wages, and even then was allowed to deduct any money > they'd > earned during the decade their cases wound through the legal system. > EFCA would substantially restrict the kind of anti-union campaign > Smithfield mounted for 15 years. > > But EFCA by itself will not build strong unions, which workers > can > use not just to win elections but to make substantial changes in the > workplace. The union at Smithfield wasn't created on election day. > Workers had already organized it in the battles that preceded the > vote. They did much more than sign union cards. They had to lose > their > fear, and show open support for the demands they'd chosen themselves, > like lower line speed to reduce injuries, rehiring workers fired > because of their immigration status, or giving workers a paid holiday > for Dr. King's birthday. Packinghouse laborers then had to learn to > make management listen to those demands by circulating petitions and > forming delegations to demand changes. > > The union strategy relied on organizing resistance to > immigration- > related firings, and uniting a diverse workforce of African > Americans, > Puerto Ricans and immigrant Mexicans. In 2007, Immigration and > Customs > Enforcement agents and company managers cooperated in two immigration > raids that produced a climate of terror organizer Eduardo Pena > likened > to "a nuclear bomb." Immigrant workers left the plant in droves. The > Smithfield raids were two of many in recent years, used to punish > workers when they've tried to improve conditions. > > The plant's citizen workers felt the effects along with the > immigrants. For months afterwards, the organizing campaign was > effectively dead, with many leaders deported and union activity > halted > by fear. It was only when African American workers who'd fought to > win > the King holiday became the core of a new generation of leaders that > the struggle to build the union could continue. > > If Black and Latino immigrant workers hadn't found a way to work > together, the union drive would have ended with the raids. And if the > company and ICE had succeeded in convincing half the plant that the > other half really had no right to work because they lacked legal > immigration status, workers would have been unwilling and unable to > defend each other. In the end, both groups found a common interest in > better wages and working conditions. But they also had to agree to > defend the right of each worker to her or his job, and treat any > unfair firing as an attack on the union, whether the victim was > Black, > Mexican, or Puerto Rican. > > The Smithfield firings were made possible by employer sanctions, > the Federal law that prohibits employers from hiring undocumented > workers. The law makes working a crime for people without papers, and > became the pretext for firing immigrant union leaders. That's why the > AFL-CIO voted in 1999 to call for the law's repeal. The Smithfield > raids show that changing immigration law is as necessary for > organizing unions as passing reforms like EFCA. > > Outside the Tar Heel plant, the union grew roots in working-class > communities, and became part of workers' lives. They took English > classes in its office and marched in demonstrations for civil rights. > That coalition turned the company's anti-labor actions against it, > exposing its record in the place where Smithfield was most vulnerable > - in the eyes of consumers. > > The election result was the product of a long-term organizing > effort and commitment. With a similar commitment, other unions can do > the same, no matter how big the plant or anti-union the employer. But > it takes a strategy based on building a real union in the workplace > and community. That's what workers did at Smithfield. > > And with changes in labor and immigration law, workers won't have > to conduct a 15-year war to accomplish the same goal. --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
