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"There are a lot of mixed emotions," says Local 699 president Al Coven.; A bus full of GM and Delphi leaders arrives at the UAW-GM Center for Human Resources in Detroit.Struggles at GM
UAW approves negotiations to help ailing GM
But any union givebacks will come without reopening the contract that expires in 2007.
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DETROIT -- Local United Auto Workers officials voted Thursday to support negotiations with General Motors Corp. to help the automaker reduce spiraling employee health care costs.
But UAW Vice President Richard Shoemaker said that while concessions may be necessary, he would block any move to reopen the union's labor agreement with GM that runs through 2007, according to several union officials.
The vote came during a meeting of about 100 local and regional union leaders from GM and Delphi Corp. at the UAW-GM Center for Human Resources in Detroit.
"They're saying negotiations are not going to be reopened, but the union side will definitely consider a lot of things," said Linda Blaine-Motter, chairwoman at Local 909, which represents workers at GM's Warren powertrain plant.
Shoemaker told union officials that GM is pushing for concessions from the UAW in the short term, although it was unclear whether a strict deadline has been set.
The union's latest statements come two days after GM Chairman and CEO Rick Wagoner told shareholders that the company plans to cut at least 25,000 hourly jobs and close a number of assembly and parts plants between now and 2008.
Wagoner said GM's health care costs, which will total $5.6 billion this year, threaten the company's and union's future.
But "intense" talks between the automaker and the union have yet to produce an agreement to reduce health costs, Wagoner said. GM has said its union employees pay just 7 percent of their health care expenses while salaried workers pay 27 percent, and that gap must close.
"Let me just emphasize that our very strongly preferred approach is to do this in cooperation with the UAW because we're convinced that is the best way for our employees, our stockholders, all our constituents," Wagoner said in his speech in Wilmington, Del.
While Shoemaker was clear that the UAW doesn't plan to reopen the labor agreement, he now appears to have the blessing of his members to work within the contract to assist the automaker.
In March, DaimlerChrysler AG's Chrysler Group exercised a little-known provision in its contract with the UAW to increase out-of-pocket medical expenses for about 35,000 workers and retirees. The automaker was able to raise costs without opening the contract, but the deal took months to negotiate.
UAW workers recently ratified an agreement that allows Ford Motor Co. to take control of 15 of plants from ailing supplier Visteon Corp. and offer buyouts to 5,000 workers.
GM is looking for relief after losing $1.1 billion during the first three months of this year, its largest quarterly loss in more than decade.
The automaker is not providing full-year financial guidance and its credit rating has been lowered to junk-bond status.
At the same time, GM's market share in the United States has fallen to 25.4 percent through May, down from 27 percent last year, and sales are down 6.7 percent this year, according to Autodata Corp.
GM's biggest problem, though, may be the health care expenses that equal $1,500 for every car and truck it produces.
Increasingly strident comments from GM and the union over employee health coverage have given rise to fears of a major confrontation on the issue.
But some local union officials leaving the meeting Thursday said they support Shoemaker's efforts to work with GM, even though concessions will be tough to swallow.
"There are a lot of mixed emotions," said UAW Local 699 president Al Coven, who represents workers at Delphi's Saginaw Steering Systems plant. "Everyone wants GM to survive. They've got some tough issues we need to face and we can either decide to help them or not to help them. We're not stupid. We're going to help them."
Sean McAlinden, a labor expert with the Center for Automotive Research in Ann Arbor, said it would be difficult if not impossible to persuade rank-and-file workers to vote to approve opening the contract for health care benefit reductions.
"It would never get ratified," McAlinden said. "How are they going to write up something for GM guys in particular, 60 percent of whom can retire in five years, to cut their own retirement benefits. How do you get that ratified?"
UAW Vice President Nate Gooden, who heads the union's DaimlerChrysler department, told The Detroit News on Thursday that the union's contract with Chrysler will not be reopened.
Even if other Detroit automakers and suppliers win concessions from the UAW before their contracts expire, Gooden said the Chrysler contract is sacrosanct.
"No way are we reopening the contract. No way will DaimlerChrysler reopen its contract," said Gooden after the JVS Strictly Business Awards Luncheon in Dearborn.
For GM, cutting health care is one part of a larger strategy to regain its footing in North America. The company plans to retool its brand lineup, introduce a slew of new vehicles and reduce purchasing costs.
And a plan that will end up lowering vehicle prices closer to the amount consumers actually pay is aimed at attracting new customers while giving GM a way to back off from big cash rebates.
GM is further banking on a new line of high-profit sport utility vehicles and pickup trucks that begin making their way to showrooms next year to boost its bottom line.
After Wagoner's announcement on job cuts , Shoemaker said the automaker can't cut its way back to health, but Local 699's Coven says he's willing to do his share.
"It isn't going to bother me one bit if I have to pay a little more for my health care," he said. "I'll do it."
You can reach Ed Garsten at (313) 223-3217 or egarsten@detnews.com.
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