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UAW nominates Bob King to be its next president

BRENT SNAVELY
FREE PRESS BUSINESS WRITER

UAW vice president Bob King has secured the official nomination to become the union’s next president, replacing two-term president Ron Gettelfinger.

King, 63, who leads the union’s Ford department, has been a UAW vice president since 1998. King emerged as a leader of the UAW’s powerful UAW Local 600 in the early 1980s.

Despite many accomplishments, King was unable to convince Ford’s UAW workers to pass modifications to a labor contract this fall that were designed to bring Ford more in line with contracts the union has with General Motors Co. and Chrysler Group LLC. The UAW announced Nov. 2 that more than 70% of its members had voted against the proposed deal.

Gettelfinger said he takes full responsibility for that defeat and said it doesn’t reflect on King at all.

With its membership declining and the union poised to assume control over the management of health care benefits for more than 800,000 retirees in January, King will face the daunting task of rejuvenating a union that has been forced to retrench over the past several years.

According to its annual financial report filed with federal regulators on Monday, the UAW lost 33,873 members in the past year, ending with 430,000 members. The union reported 1.5 million members at its peak in the early 1970s.

“Any way you look at it, the next leader of the UAW has to be a reactive leader,” said Gary Chaison, a professor of labor relations at Clark University in Worcester, Mass.

Gettelfinger, 65, said earlier this year he would retire after his second four-year term expires next year because the union’s rules bar officers from re-election after age 65 and he will be too old.

Contact BRENT SNAVELY : 313-222-6512 or bsnavely@freepress.com

UAW chief has faith in King

Gettelfinger upbeat, confident in successor's readiness to lead union
BY BRENT SNAVELY
FREE PRESS BUSINESS WRITER
CORRECTION: An earlier version of this story had an incorrect title for Cindy Estrada. Her correct title is director of the UAW National Organizing Department. This report is correct.

An upbeat and nostalgic Ron Gettelfinger, who is stepping down as UAW president in the coming year, said Wednesday he is confident that longtime friend and colleague Bob King will do a masterful job as his replacement.
"We forced him" to accept the nomination, Gettelfinger joked as he addressed journalists at a news conference at the Dearborn Hyatt. "He's the best guy on the board. The board got behind him and said 'Bob! Bob! Bob!' "
King, 63, received the unanimous support of the UAW's board and administrative caucus to be elected as the next president at the union's constitutional convention in Detroit next June. Then, he is to focus on trying to rebuild the union after years of retrenchment from the industry's decline.
"We will collectively ... put together a plan and a strategy ... based on the great work that Ron has done," King said.
Gettelfinger, 65, said he hasn't made retirement plans, but has been reading about the late UAW president Douglas Fraser's work lobbying Congress for Chrysler aid in 1979.

King set to take UAW presidency
It's King's UAW now.
He received the unanimous support of the union's board of directors and administrative caucus on Wednesday to be the union's nominee for UAW president at a constitutional convention next June in Detroit.
"There is no question in my mind Bob King will be the right person to lead the union forward," Gettelfinger said during a news conference on Wednesday. "He is relentless and tenacious."
While other candidates can be nominated for the presidency at the convention, the practice is viewed as a mere formality.
Gettelfinger has served as president for two terms and is too old to seek re-election according to UAW rules.
The UAW on Tuesday also announced that secretary-treasurer Elizabeth Bunn, along with vice president Cal Rapson, will retire. Meanwhile, vice presidents Jimmy Settles and General Holiefield have been nominated for re-election.
New nominees to become top leaders for the UAW include Dennis Williams, a UAW director in Chicago, Joe Ashton, also a regional director, and Cindy Estrada, the director of the UAW National Organizing Department.
While Williams is nominated to become the next secretary-treasurer, Gettelfinger said King will decide how to divide up the duties after the June convention.

King offered few clues about his agenda.
"It's very humbling to be chosen by my peers and the international executive board and to have the endorsement to run for president," King said.
King, who leads the union's Ford department, has been a UAW vice president since 1998.
After years of declining union membership and concessionary agreements, the UAW and the automotive industry have hit bottom and could grow now, Gettelfinger and King said.
The UAW has 430,000 members. At its peak in the 1970s, the union had 1.5 million members.

Contact BRENT SNAVELY: 313-222-6512 or bsnavely@freepress.com

Fiat manufacturing boss inspects Chrysler plants

David Barkholz
and Robert Sherefkin
Automotive News
September 17, 2009 - 4:31 pm ET

DETROIT -- Fiat Group manufacturing guru Stefan Ketter inspected Chrysler's Sterling Heights Assembly Plant in suburban Detroit this morning as part of a series of North American plant visits to improve Chrysler quality and efficiency, UAW officials said today.

Ketter, 50, wanted an update on how implementation of Fiat's manufacturing system is progressing, said Bill Parker, president of UAW Local 1700, which represents hourly workers at Sterling Heights.

The plant makes the Chrysler Sebring and Avenger mid-sized sedans and the Sebring convertible.

Parker said that this afternoon, Ketter was scheduled to visit Chrysler's Warren Truck assembly plant, where the Dodge Ram pickup is produced.

A union source at Chrysler's Belvidere, Ill., plant said Ketter inspected the plant Tuesday. Yesterday, he was at the Brampton, Ontario, plant, the source said.

Belvidere builds the Dodge Caliber small car and Jeep Compass and Patriot crossovers. Brampton makes the Chrysler 300 and 300C sedans and the Dodge Charger and Challenger muscle cars.

A Chrysler spokesman declined to comment.

Lobbying for plant

Parker said he was optimistic after Ketter's four-hour visit today that the Sterling Heights plant would stay open beyond the current Sebring production run through December 2010.

Ketter asked questions about the plant's paint shop, which needs to be replaced or expanded at a cost of at least $300 million, Parker said. The UAW president said he took that as an indication that Fiat is open to putting new product into the plant or extending the current Sebring run beyond 2010.

Parker has organized a Sept. 25 rally with city and county officials to urge Fiat to keep the plant open.

This week at the Frankfurt auto show, Fiat CEO Sergio Marchionne said Chrysler had slipped competitively before Fiat took control of the company as part of Chrysler's emergence from bankruptcy protection this spring.

"We were surprised by how little had been done in the past 24 months," Marchionne said. "It will be a slow progress in the beginning, but we will see significant improvement in 2010."

Well traveled executive

Ketter, who was born in Brazil, rose through the ranks at BMW, Audi and Volkswagen before joining Fiat in 2004. At Volkswagen he was responsible for quality and service at Volkswagen of America.

The UAW's Parker said he has seen firsthand evidence of the Fiat manufacturing system at work. He said it is designed to get at the root causes of inefficiency.

For example, a rack used at Sterling Heights to bring parts to the assembly line was damaged about three weeks ago and replaced before the next shift came to work, Parker said. Before Fiat, that would have been the end of the story, Parker said.

But the Fiat system demanded that a reason be presented why the rack was damaged in the first place so future problems could be avoided, he said.

SHOWING SOLIDARITY: Former Chrysler workers marched on the Mraz Lane overpass over I-44 in Fenton Mo. Friday, in support of keeping American jobs in America. One of the shuttered Chrysler plants in Fenton is in the background. Associated Press

UAW members rally against plant closure

By K.O. Jackson
Tribune business writer

July 25, 2009 10:24 pm

— FENTON, Mo. — What happens at one Chrysler Group LLC plant affects all Chrysler plants.
The same is true with Chrysler’s United Auto Workers’ members.
When a plant is shuttered and a UAW worker is hurting, members respond to the call — even if the call is a six-hour drive away from Chrysler’s Kokomo facilities.
Early Friday morning, a bus half-filled with Kokomo Chrysler UAW retirees and current employees left UAW 685 union hall’s parking lot en route to Fenton, Mo., a suburb of St. Louis.
There they were greeted by yellow signs reading “Gate Closed” on fences surrounding the sprawling Fenton Chrysler North and South Assembly plants.
So were the two plants once producing the Dodge Ram pickup and the Chrysler minivan.
The plants once employed more than 6,000 workers. The last Ram left the north plant July 2. The south plant’s last minivan exited the facility in November 2008.
All that remains are weeds sprouting through concrete cracks in empty parking lots.
Since emerging from bankruptcy, with assistance from Fiat SpA and a $12-billion U.S. government bailout package, Chrysler has announced it will sell the shuttered Missouri plants and build the minivan in Windsor, Canada, and the Ram in Saltillo, Mexico.
However, before the closure is completely consummated, the Show-Me-State wanted to show Chrysler the company can’t leave Missouri without a fight.
Wearing blue UAW shirts emblazoned with the message “Stop Plant Closings In the USA,” more than 3,500 people protested the Fenton closures on the plants’ front yards Friday in a “Rally for Americans” protest.
It is the first Chrysler plant protest — but not the last — since America’s smallest automaker exited its brief bankruptcy stay June 10.
With Fiat, Chrysler Group LLC is now the world’s sixth-largest automaker.
“We have heard the government plans to retain the 30,000 unemployed workers affected by the Chrysler plants closing here. We have heard from Chrysler that they will handle the plant closures and job losses in a socially responsible manner,” said Don Ackermann, president of UAW Local 136, whose north assembly plant was affected by the closing.
Ackermann was one of many union members, Teamsters officials and politicians who addressed the audience about America’s manufacturing-labor issues with other countries.
They spoke of Chrysler plans to close eight U.S. plants, but none in Mexico or Canada. They addressed the fact from 2004 through July 2008, more than 1,6 million Chrysler vehicles were sold in the U.S. versus around a quarter-million in Canada.
“Build them where you sell them,” continued Ackermann. “[Politicians] must get it through their head they are destroying the American way of life. We need to send a strong message to them that enough is enough.
“The plant closures affect everyone from the workers and their families to the school districts to charitable organizations. This is no longer a business issue, but a social issue. The corporations failed and they had to borrow from the U.S. taxpayers. Now they want to carry U.S. taxpayers’ money across the borders. Enough is enough.”
When Rich Boruff, president of UAW 685, addressed the audience, he said, “I couldn’t be prouder to stand here in front of you. This is a fighting town. It breaks my heart to see what is happening here.”
Boruff expects the next protest rally will be held in September at the Michigan Sterling Heights Assembly plant where the Chrysler Sebring and Dodge Avenger are built.
That facility is scheduled to close in 2010.
Boruff and Jeff Everett, president of UAW Local 1166, said they both expect future protests to grow bigger.
“We will fight this every step of the way,” Everett said. “We don’t need a handout or rebate or a stimulus check. What we need is a job and the place to start is right here.”
The idea of Chrysler jobs crossing the U.S. border may be around for a while. With the merger, Fiat plans to build its highly fuel efficient Fiat 500 mini car in Toluca, Mexico.
The company plans to introduce the car in North America in two years and estimates it will sell 50,000.
Shawn Fain, a member of the UAW/Chrysler National Negotiation Committee, said they cannot fight what the company plans to sell, but they can “mobilize” to voice their concern.
And that concern, that fight starts in Kokomo, he adds.
“It is exciting to see the turnout, but we have to step this up to a national level and it starts at a local level,” said Fain, who meets monthly with the national committee discussing what is occurring in Chrysler’s plants.
“It’s good to see the concern, but we have 5,000 members and [Kokomo] couldn’t fill a 55-passenger bus for a free ride to protest a closing. If we are not going to fight now, who is going to fight for us in Kokomo? It’s too late when [the local plants] are closing. We have to mobilize now.”
Fighting, protesting and having a place to work are reasons Leslie W. Ellison and his wife, Kerry, rode the bus from Kokomo to Fenton.
Leslie, a Howard County councilman, retired from Kokomo Transmission Plant with 22 1/2 years of service. Kerry is employed at Indiana Transmission Plant 2.
There is a connection between Kokomo and Fenton, Leslie said. Some of Fenton’s workers have worked in Kokomo and Kokomo workers have worked in Fenton.
“I couldn’t help but to think by the grace of God goes Kokomo,” said Leslie. “This could have been Kokomo, luckily Fiat liked our product enough to keep us. This [protest] was a tremendous experience.”
Along with Kerry Ellison, Charlene Alexander was one of a few current Chrysler employees making the charter-bus trip.
Three years away from retirement from KTP, Alexander called her retired friend Dana Wilson and reminded her about the protest rally trip.
The two shared laughs and thoughts throughout the trip.
“It’s a shame they didn’t do something before the plant closed. When the plant’s doors close, it’s no way to open them back up,” said Alexander. “We need to know what is going on in our plants so we can keep our doors open so the same thing doesn’t happen to us in Kokomo.”
“We need to get the buses full next time,” said Wilson. “Let everybody know and open it up to everybody so we can make it bigger in Michigan.”

• K.O. Jackson is the Tribune’s business writer. He can be reached at (765) 854-6739 or via e-mail kirven.jackson@kokomotribune.com

April 24, 2009

Dodd warns against Chrysler liquidation

ASSOCIATED PRESS

NEW YORK -- With Chrysler LLC appearing increasingly likely to seek bankruptcy protection, members of Congress are calling for an orderly process that saves the company from liquidation.

“My hope is that it’s not a liquidation,” Sen. Chris Dodd, chairman of the Banking Committee, said this morning on the “Early Show” on CBS, “but what they call a debtor-in-possession, sort of Chapter 11 filing, which would allow for the reorganization of these companies.”

Published reports Thursday said Auburn Hills-based Chrysler was preparing a bankruptcy filing, which could come as early as next week. Such a bankruptcy would protect the pensions and retiree health care benefits of United Auto Workers union members, the New York Times reported.

One possibility is that a bankruptcy would allow the company to rid itself of unwanted liabilities. That would allow the Italian automaker Fiat SpA — which has been in talks to acquire a stake in Chrysler — to select which operations it wants, according to the Wall Street Journal.

“As we move forward in this process, we believe it’s important to keep all options open,” Chrysler said in a statement. “Chrysler will continue to work through the end of the month, based on the direction given by the Presidential Auto Task Force, to secure the support of the necessary stakeholders and reach a successful conclusion that the Administration and U.S. Treasury deems appropriate.”

Messages seeking comment were left with the UAW and the Treasury Department.

Chrysler has been surviving on $4 billion in government aid since the beginning of the year and is six days away from a government-imposed restructuring deadline. The Obama administration has promised another $6 billion to the carmaker if it can arrange a tie-up with Fiat and extract deeper concessions from stakeholders, but that outcome appears increasingly remote.

A major sticking point involves a group of banks and hedge funds that hold about $6.9 billion in secured Chrysler debt. They are negotiating with the Treasury Department over a possible debt-for-equity exchange involving a stake in a Chrysler-Fiat alliance. Most recently, the Treasury has asked the debtholders to forgive $5.4 billion and take a 5% stake in the alliance, which is far from the lenders’ latest offer.

Chrysler would file for bankruptcy even if it reaches an agreement with its lenders and Fiat, but if the deals fall through, the company would begin the process of liquidation, the Journal reported, citing several people familiar with the matter.

“I wish we had different results, but the realities are what they are,” said Dodd, D-Conn. “This may be the best option, even though we would have preferred a different one.”

“I hope this is not a liquidation — I think that would be the wrong step — but rather one that allows for reorganization,” he said.

Sen. Debbie Stabenow, D-Mich., said late Thursday she continued to oppose bankruptcy for Chrysler.

“With Chrysler, we want to see Chrysler/Fiat come together. We want to see GM be able to make it on their own,” Stabenow said on “The Ed Show” on MSNBC.
She added that banks that have received government aid should “be willing to stand up.”

“I wrote another letter today to them, saying they need to step up and do their part to make sure these companies can be strong,” she said.

Obama on autos: Aid ahead but at a price

GM, Chrysler updating plans for revival

GM Still negotiating with bondholders

WASHINGTON -- Heading toward Monday's announcement of his plans to help Detroit's auto industry, President Barack Obama said Thursday that the carmakers would need to make painful changes to get more federal help.

"I think it is appropriate for us to say, 'are there ways for us to provide help to the U.S. auto industry to get through this very difficult time?' " he said during an online question-and-answer session. "But the price is you've got to finally restructure to deal with these long-standing problems.
"That means that everybody's going to have to give a little bit -- shareholders, workers, creditors, suppliers, dealers -- everybody is going to have to recognize that the current model, economic model of the U.S. auto industry is unsustainable."

His task force is expected to unveil a framework Monday that sets new terms for General Motors Corp. and Chrysler LLC to get more federal help beyond the $17.4 billion in loans they already have.

While noting the credit crisis and a sales slump that may reach new lows in March, Obama also revived criticisms of the industry he made in a 2007 speech to the Detroit Economic Club. He chastised the car companies for mismanagement, and said they could not rely on gas-guzzling SUVs as their sole source of profits.

"If they're not willing to make the changes," he said, "then I'm not willing to have taxpayer money chase after bad money."

Meanwhile, GM and Chrysler are preparing updates to their turnaround plans in the face of ever-worsening U.S. sales.

On Thursday, two forecasters pegged March's auto sales at annual rates below 10 million vehicles, the worst-case scenarios envisioned by the automakers.

Lowering their sales and production forecasts would raise the chances of even-deeper cuts, following GM's announcement Thursday that about 7,500 UAW workers agreed to buyouts and early retirements.

Here's a look at where their turnaround plans stand:

Workers

Chrysler, GM

The UAW tentatively has agreed to end the so-called jobs bank, which pays laid-off workers most of their regular pay. The union also has made other unannounced concessions. Talks continue on replacing some cash payments the companies were to make for what the union's retiree health care trust is owed with company stock.
Dealers
GM
GM plans to shrink its U.S. dealer network of more than 6,200 by about 25% by 2012.
Chrysler
74 dealers, or more than 2% of its 3,372 dealers, went out of business in the last three months of 2008. Chrysler says financially weak dealers accounted for 27% of its year-end 2008 sales, up from 20% in September.
Debt holders
in an effort to restructure its unsecured debt.
Chrysler
No agreement yet with the banks that hold the company's debt.
Suppliers
Chrysler
More than $1 of every $5 Chrysler spent in February on parts and materials went to suppliers Chrysler deems troubled, up from $1 of every $10 in October.
GM
Predicts a 30% reduction in suppliers to its North American operations.
Free Press staff contributed to this report.
Cycle of job loss must end, Obama says

Automakers, others need help, he says
February 9, 2009
BY JUSTIN HYDE and TODD SPANGLER
FREE PRESS WASHINGTON STAFF

WASHINGTON -- President Barack Obama, stung by partisan infighting and trying to negotiate a rocky path to pass a bill he hopes can revive the economy, went to the people Monday, calling in a prime-time news conference for urgent action as job losses mount and businesses falter.

"We find ourselves," Obama said, "in a rare moment where the citizens of our country and all countries are watching and waiting for us to lead."

It came on a day when Obama also visited a hard-hit Indiana town, drawing attention to the struggling domestic auto industry and how its downturn is hurting the Midwest. He said his administration will push for money to help carmakers retool plants to make more fuel-efficient vehicles, enabling them to compete with foreign automakers.

"If we don't use this crisis as an opportunity to start retooling, then we will never catch up and be able to compete effectively against Japanese automakers, Korean automakers," Obama told the crowd in Elkhart, Ind., just south of the Michigan border. "We will find ourselves continuing to slide."

The effort comes at an auspicious moment for the 3-week-old Obama administration: Tuesday, as the president travels to Ft. Myers, Fla., in another attempt to rouse support for his economic package, the Senate is set to approve an $838-billion stimulus package. That that will set off a fractious round of negotiations with House leaders who have their own ideas about how best to kick-start the economy.

Against that backdrop, Obama continued to call for quick action -- even if the stimulus plan didn't address all of the Democrats' demands -- as his Treasury Department secretary outlined proposals to boost financial markets by mitigating rising foreclosures and helping banks and other lenders get bad debt off their books and begin lending again.

"With the private sector so weakened by this recession," Obama said, "the federal government is the only entity left with the resources to jolt our economy back to life. It is only government that can break the vicious cycle where lost jobs lead to people spending less money which leads to even more layoffs.

"And breaking that cycle is exactly what the plan that's moving through Congress is designed to do."

Earlier Monday, the Senate voted 61-36 to end debate, setting up today's proforma passage of its version of the economic stimulus package. But in order to attract enough Republican votes -- three -- Democrats were forced to cut spending, particularly on school construction and state stabilization funds, that House leaders had said they would find hard to swallow.

That could create a new bar for Obama, whose leadership skills could be called upon on Capitol Hill to broker a compromise that could pass in the House and Senate.

Most Republicans in the Senate were still arguing Monday that the stimulus plan spent too much, didn't cut taxes enough and would be -- in the words of Sen. John McCain, R-Ariz. -- an example of "generational theft" that would burden the nation's children.

GOP senators pointed to $1 billion for the census and $14 billion in Pell higher education grants as examples of money they said would not create jobs.

Obama and the Democrats have argued that, though imperfect, the bill will help people without jobs by providing them with greater benefits and jump-start the economy by paying for new investment, research and infrastructure work on bridges, roads, buildings and sewer systems.

"The plan is not perfect. No plan is," Obama said at the news conference Monday. "I can't tell you for sure that everything in this plan will work exactly as we hope, but I can tell you with complete confidence that a failure to act will only deepen this crisis."

Sen. Debbie Stabenow, a Michigan Democrat, said the state could do well even under the Senate version of the bill, including not only the money to help unemployed people (the state's 10.6% jobless rate in December led the nation) but funding for new projects.

The stimulus compromise in the Senate bill includes $2 billion in direct grants for battery development and manufacturing, and expanded tax credits for buyers and manufacturers of plug-in hybrid cars and light trucks. It also has a tax break for new-car buyers and money for the federal government to buy plug-in hybrids and flex-fuel vehicles for its fleet.

"The core of the pieces for Michigan are in here," Stabenow told the Free Press editorial board Monday.

Although Obama mentioned retooling money while in Indiana on Monday, the stimulus does not now include a proposal by Michigan lawmakers to double the $25 billion in loans available for retooling plants to build more efficient models. It could, however, signal that the administration is open to the idea.

Obama has long maintained that Detroit automakers could not compete in the global economy unless they built cleaner vehicles that get better gas mileage. As part of their cost-cutting plans due Feb. 17 under the $17.4-billion in loan agreements from treasury, General Motors Corp. and Chrysler LLC must explain how they will meet future fuel-economy standards.

Accompanying Obama to Indiana -- and the only Republican member of Congress to make the trip -- was Rep. Fred Upton of St. Joseph, whose southwestern Michigan district abuts northwestern Indiana. Upton, who said he talked about the auto industry's needs, also said he believes that Obama is flexible in his approach to helping businesses.

Upton voted against the stimulus in the House but said he'd wait to see the negotiated version between the House and Senate before deciding how he might vote next. The Senate version, he said, "is a pretty big improvement."

Debunking the myth of the $70-per-hour autoworker

by Johnathan Cohn

If you've been following the auto industry's crisis, then you've probably read or heard a lot about overpaid American autoworkers -- in particular, the fact that the average hourly employee of the Big Three makes $70 per hour.

That's an awful lot of money. Seventy dollars an hour in wages works out to almost $150,000 a year in gross income, if you assume a 40-hour work week. Is it any wonder the Big Three are in trouble? And with auto workers making so much, why should taxpayers--many of whom make far less -- finance a plan to bail them out?

Well, here's one reason: The figure is wildly misleading.

Let's start with the fact that it's not $70 per hour in wages. According to Kristin Dziczek of the Center for Automative Research -- who was my primary source for the figures you are about to read -- average wages for workers at Chrysler, Ford, and General Motors were just $28 per hour as of 2007. That works out to a little less than $60,000 a year in gross income -- hardly outrageous, particularly when you consider the physical demands of automobile assembly work and the skills most workers must acquire over the course of their careers.

More important, and contrary to what you may have heard, the wages aren't that much bigger than what Honda, Toyota, and other foreign manufacturers pay employees in their U.S. factories. While we can't be sure precisely how much those workers make, because the companies don't make the information public, the best estimates suggests the corresponding 2007 figure for these "transplants" -- as the foreign-owned factories are known -- was somewhere between $20 and $26 per hour, and most likely around $24 or $25. That would put average worker's annual salary at $52,000 a year.

So the "wage gap," per se, has been a lot smaller than you've heard. And this is no accident. If the transplants paid their employees far less than what the Big Three pay their unionized workers, the United Auto Workers would have a much better shot of organizing the transplants' factories. Those factories remain non-unionized and management very much wants to keep it that way.

But then what's the source of that $70 hourly figure? It didn't come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits -- namely, health insurance and pensions -- and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages -- again, $28 per hour -- and you get the $70 figure. Voila.

Except ... notice something weird about this calculation? It's not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that -- probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees -- in other words, the cost of benefits for other people. One of the few people to grasp this was Portfolio.com's Felix Salmon. As he noted recently, the claim that workers are getting $70 an hour in compensation is just "not true."

Of course, the cost of benefits for those retirees -- you may have heard people refer to them as "legacy costs" -- do represent an extra cost burden that only the Big Three shoulder. And, yes, it makes it difficult for the Big Three to compete with foreign-owned automakers that don't have to pay the same costs. But don't forget why those costs are so high. While the transplants don't offer the same kind of benefits that the Big Three do, the main reason for their present cost advantage is that they just don't have many retirees.

The first foreign-owned plants didn't start up here until the 1980s; many of the existing ones came well after that. As of a year ago, Toyota's entire U.S. operation had less than 1,000 retirees. Compare that to a company like General Motors, which has been around for more than a century and which supports literally hundreds of thousands of former workers and spouses. As you might expect, many of these have the sorts of advanced medical problems you expect from people to develop in old age. And, it should go without saying, those conditions cost a ton of money to treat.

To be sure, we've known about these demographics for a while. Management and labor in Detroit should have figured out a solution it long ago. But while the Big Three were late in addressing this problem, they did address it eventually.

Notice how, in this article, I've constantly referred to 2007 figures? There's a good reason. In 2007, the Big Three signed a breakthrough contract with the UAW designed, once and for all, to eliminate the compensation gap between domestic and foreign automakers in the U.S.

The agreement sought to do so, first, by creating a private trust for financing future retiree benefits -- effectively removing that burden from the companies' books. The auto companies agreed to deposit start-up money in the fund; after that, however, it would be up to the unions to manage the money. And it was widely understood that, given the realities of investment returns and health care economics, over time retiree health benefits would likely become less generous.

In addition, management and labor agreed to change health benefits for all workers, active or retired, so that the coverage looked more like the policies most people have today, complete with co-payments and deductibles. The new UAW agreement also changed the salary structure, by creating a two-tiered wage system. Under this new arrangement, the salary scale for newly hired workers would be lower than the salary scale for existing workers.

One can debate the propriety and wisdom of these steps; two-tiered wage structures, in particular, raise various ethical concerns. But one thing is certain: It was a radical change that promised to make Detroit far more competitive. If carried out as planned, by 2010 -- the final year of this existing contract -- total compensation for the average UAW worker would actually be less than total compensation for the average non-unionized worker at a transplant factory. The only problem is that it will be several years before these gains show up on the bottom line -- years the industry probably won't have if it doesn't get financial assistance from the government.

Make no mistake: The argument over a proposed rescue package is complicated, in no small part because over the years both management and labor made some truly awful decisions while postponing the inevitable reckoning with economic reality. And even if the government does provide money, it's a tough call whether restructuring should proceed with or without a formal bankruptcy filing. Either way, yet more downsizing is inevitable.

But the next time you hear somebody say the unions have to make serious salary and benefit concessions, keep in mind that they already have -- enough to keep the companies competitive, if only they can survive this crisis.

Gettelfinger: 'The UAW is at the table'

Amy Wilson
Automotive News
November 20, 2008 - 4:17 pm ET

DETROIT -- UAW President Ron Gettelfinger says he's willing to talk more about automotive industry concessions to further the passage of emergency funding for the Detroit 3.

In a press conference today, Gettelfinger defended the UAW's record and stressed that the union already has given numerous concessions on jobs, wages and benefits during the past several years. He stopped short of saying the union is ready to offer further concessions.

"The UAW is at the table," Gettelfinger said. "We're at the table every day, and we would welcome all of the other stakeholders to the table to make some concessions."

News of a bipartisan deal to speed financial assistance to the Detroit 3 broke during Gettelfinger's press conference, but the deal was put on ice until Dec. 8 by congressional leaders a few hours later.

The UAW called today's gathering to reiterate points made by auto industry representatives during 8 ½ hours of testimony in Washington this week.

Detroit 3 CEOs are asking Congress to approve the distribution of $25 billion to fund their operations through the economic crisis. General Motors and Chrysler LLC chiefs both warned their companies might not survive without the help.

Gettelfinger said he couldn't comment specifically on today's so-called compromise agreement until he knew more about it. But he said he hopes rescue funding will be passed in time.

"The importance of this industry cannot be overstated," he said. "We cannot allow one of these companies to fall off a cliff."

Agreement critical

Gettelfinger warned that one of the Detroit 3 could collapse by year end. He said it's critical for Congress and the Bush administration to reach agreement to provide immediate assistance -- at the very least enough to ensure that the Detroit 3 can continue operations until the Barack Obama administration can assemble a long-term plan for the survival of the industry.

Gettelfinger agreed that the automakers should have to submit business plans to get the money and to show a strategy for repaying taxpayers.

Many critics of the proposal have called for the ouster of management of the Detroit 3. Gettelfinger said he doesn't know whether that will solve the problem.

But "if it does, let Congress put that as a stipulation," he said.

Help to the South

Gettelfinger also criticized the lack of support for the rescue funding in light of financial incentives that have been given to foreign automakers, primarily to locate manufacturing operations in Southern states.

Those automakers have collected more than $3 billion since 1992, he said, specifically citing Alabama for its incentives to lure Mercedes, Honda, Toyota and Hyundai plants.

Said Gettelfinger: "It just seems odd to us that we can help the financial institutions in this country, that we can offer incentives to our competitors to come here and compete against us; but at the same time, we're willing to walk away from an industry that is the backbone of our economy."

November 14, 2008

Senate will take up $25-billion auto bill Monday

By Justin Hyde
Free Press Washington Staff

WASHINGTON – Senate Majority Leader Harry Reid plans to bring the $25 billion in loans to automakers onto the Senate floor Monday, as backers hope to overcome what may be stiff opposition from Republicans.

With Republicans expected to use a procedural delay, the earliest the bill could be voted on would be Wednesday. The House is not expected to come into session unless the Senate approves some kind of aid plan.

The chief executives of General Motors Corp., Ford Motor Co. and Chrysler LLC, along with the UAW, are expected to testify at two hearings next week to explain why the loans are needed. GM has said it could run short of cash next year without “immediate” government aid, and all have urged employees and suppliers to lobby Congress on their behalf.

Sen. Christopher Dodd, D-Conn., said Thursday that there were not enough Republican votes to get the measure through the Senate. Supporters will need several Republican senators to back the measure to win the 60 needed to close debate, and only Ohio Sen. George Voinovich has come out publicly in favor so far.

The auto industry bill could be attached by Democrats to a measure extending unemployment benefits to make voting against the package carry a higher political cost.

Reid asked Senate Minority Leader Mitch McConnell, R-Ky., to support unemployment benefit extension and "legislation to protect the millions of workers at risk from the possible collapse of our domestic auto industry."

"These two provisions both address especially urgent needs and seem most likely to win your support and the support of your caucus," Reid said in a letter today.

Sen. Richard Shelby, R-Ala., said today that without deep changes by Detroit, aid to the industry would be “sending money down the rat hole.”

“We’ve got to look at the model of Detroit and what’s the real fundamental crisis there,” Shelby told MSNBC. “I hate to send billions and billions of dollars of taxpayer money, and it won’t help them in the long run.”

The White House indicated again today that it would prefer Congress sped $25 billion in retooling loans for more efficient models rather than use money from the $700-billion financial industry bailout. The auto industry and its backers want the financial industry funding – and the oversight from the Treasury – because the retooling loans will not meet their short-term needs.

“We think the $25 billion that they've already authorized and appropriated, and that we've designed through the regulations would be something that they might consider accelerating to those companies,” White House spokeswoman Dana Perino said today.

Michigan Sen. Carl Levin said in a statement he was pleased “that Senator Reid is proceeding with a bill to provide support for the auto industry because of its unique role in the American economy."

“If the administration is serious about wanting to help the industry bridge the economic chasm we are facing, then I am confident that a way can be found to provide this support

Chrysler sues Getrag over plant financing

Rift jeopardizes U.S. dual-clutch gearboxes

David Barkholz and Robert Sherefkin

Automotive News | October 9, 2008 - 11:26 am EST

Chrysler LLC’s source of dual-clutch transmissions in the United States is jeopardized by a factory-building dispute with supplier Getrag Transmission Manufacturing LLC.

Chrysler yesterday sued Getrag in Michigan, alleging that the German supplier failed to raise up to $300 million in debt financing necessary to build and equip a plant in Tipton, Ind., to produce the transmissions.

The plant was expected to open in the fall of 2009.

Getrag was expected to be Chrysler’s sole source of dual-clutch transmissions in the United States. The dispute now casts the project in question, said Chrysler spokesman David Elshoff.

A Getrag spokeswoman declined comment on the matter.

Work continues on plant

A dual-clutch transmission saves fuel because it has two clutch sets inside the transmission that allow faster shifts. It also offers an automatic shifting option.

Chrysler uses Germany-built Getrag dual-clutch transmissions on the European version of its Dodge Journey crossover. The automaker also is planning to use the fuel-saving transmission in Europe on the Chrysler Sebring and Dodge Avenger sedans.

Chrysler has not yet disclosed which vehicles would get the dual-clutch transmission in the United States.

Elshoff said work at the construction site continues today. But he would not say whether work is planned beyond that point.

Under the partnership, Chrysler had agreed to be the main customer for the 700,000 transmissions built annually at the plant.

The total cost of the plant was originally estimated at about $530 million. About 1,200 Chrysler employees were to staff the plant.

In the lawsuit, Chrysler seeks damages for any delays the dispute might cause and additional costs that the automaker may incur for changing transmission vendors.

The automaker also wants the court to relieve Chrysler of any reimbursement of costs already absorbed by Getrag.

The complaint says that Chrysler had agreed to a price increase on the transmissions to get Getrag to sign a definitive agreement for the project. Getrag had balked at the agreement and briefly stopped work at the construction site in December 2007, the lawsuit says.

Chrysler alleges that Getrag had assured Chrysler that it could raise the debt financing. The lawsuit says Getrag did not make a good faith effort to get the money.

The lawsuit indicates that Getrag had sought to line up the money from German banks as long as it was guaranteed by the German government.

Chrysler argues that it should have been informed of that condition before signing the definitive agreement. As it turned out, the German government would only guarantee the debt if Chrysler set up a $300 million escrow account to assure repayment, the lawsuit says.

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