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KRISHER, Associated Press
Tuesday, September 25, 2007

DETROIT -- If the United Auto Workers strike against General Motors Corp. lasts longer than a week or two, it could cost GM billions of dollars and stop the momentum the company was building with some of its new models, according to several industry analysts.
  
A strike of two weeks or less would not hurt GM's cash position and would actually improve its inventory situation, Lehman Brothers analyst Brian Johnson said Monday in a note to investors. But a longer strike would be harmful, causing GM to burn up $8.1 billion in the first month and $7.2 billion in the second month, assuming the company can't produce vehicles in Mexico or Canada, Johnson wrote.

Initially, the strike wouldn't have much impact on consumers because GM has so much inventory, the analysts say. The company had just under 950,000 vehicles in stock at the end of August, about 35,000 less than at the same time last year.

But Tom Libby, senior director of industry analysis for J.D. Power and Associates, said even a short strike could hurt GM because its new crossover vehicles -- the Buick Enclave, GMC Acadia and Saturn Outlook -- are selling well and in short supply.

"The momentum they've established for those products would be interrupted if there's a supply interruption," Libby said.

GM had about a 65-day supply of cars and trucks as September began, versus a 71-day supply at the same time last year, said Paul Taylor, chief economist for the National Automobile Dealers Association. The Enclave, he said, is at a tight 24-day supply.

It was unclear what would happen to vehicles that were en route to dealers. The Teamsters transportation union said its 10,000 automotive transport members would not cross UAW picket lines.

The strike will cost GM about 12,200 vehicles per day, according to the auto forecasting firm CSM Worldwide of Northville. If the walkout goes beyond 36 hours, CSM expects vehicle production in Canada to be affected because of a lack of U.S.-built engines and transmissions.

The strike began at 11 a.m. EDT Monday when 73,000 UAW members at about 80 GM facilities in the U.S. walked off their jobs. Talks resumed a short time later as sign-carrying picketers marched outside plant gates, but weary bargainers stopped to rest around 8 p.m. Negotiators were to return Tuesday morning for their 22nd straight day of bargaining.

Union President Ron Gettelfinger said the company wouldn't budge on guarantees of new vehicles for U.S. plants that would preserve union jobs. But he said the UAW is willing to bargain on the issue of the union taking over retiree health care obligations.

"Job security is one of our primary concerns," Gettelfinger told reporters Monday after talks broke off and the strike began. "We're talking about investment and we're talking about job creation" and preserving benefits, he said.

Striking workers will receive $200 a week plus medical benefits from the UAW's strike fund, which had more than $800 million as of last November, according to the UAW's Web site.

The UAW, Gettelfinger said, is willing to talk about taking money from the company to form a retiree health care trust, something he said the union proposed and the company rejected in 2005.

GM wants the trust, called a Voluntary Employees Beneficiary Association, or VEBA, so it can move much of its $51 billion in unfunded retiree health care liabilities off the books, potentially raising the company's stock price and credit ratings. It's all part of GM's quest to cut or eliminate about a $25-per-hour labor cost disparity with its Japanese competitors.
"This strike is not about the VEBA in any way, shape or form," Gettelfinger said. "We were more than eager to discuss it," although he said no agreement had been reached.

David Cole, chairman of the Center for Automotive Research in Ann Arbor, said before the strike began that the UAW leadership may need a walkout to show members that it did all it could to get the best deal.

"They're in a bit of a box, in that they need some drama to get an affirmative vote on this," he said.

GM spokesman Dan Flores said the automaker was disappointed in the union's strike decision.

"The bargaining involves complex, difficult issues that affect the job security of our U.S. work force and the long-term viability of the company," he said. "We remain fully committed to working with the UAW to develop solutions together to address the competitive challenges facing GM."

GM shares fell 20 cents to $34.74 Monday.

The UAW picked GM as the lead company and potential strike target in labor negotiations with the Detroit Three automakers that began in July. An agreement between GM and the UAW would become the pattern for pacts with Ford Motor Co. and Chrysler LLC, which have indefinitely extended their contracts with the union.

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If the United Auto Workers strike against General Motors Corp. lasts longer than a week or two, it could cost GM billions of dollars and stop the momentum the company was building with some of its new models, according to several industry analysts.

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GM unloads retiree health costs
UAW gets promises on jobs in tentative contract deal
BY TOM KRISHER AND DEE-ANN DURBIN
The Associated Press

   DETROIT — As the ink dries on the new four-year contract between General Motors Corp. and the United Auto Workers, retirees, workers, Ford and Chrysler are all anxious to see the details of what could be a watershed pact for the industry.
   For retirees, there’s uncertainty about how the union will manage their health care. To the rank-andfile, there’s the hope that a two-day strike was enough to bring promises from GM to build new vehicles at their factories, keeping them employed for years.
   Even GM executives must be wondering whether there’s enough cost savings to make them competitive with the Japanese.
   “There is a lot of relief, but that’s coupled with anxiety to see details of the agreement,” auto worker Tom Brune said Wednesday as he stood next to a pile of strike placards at the union hall near a GM plant in Wentzville, Mo.
   Union and company bargainers struck the tentative deal just after 3 a.m. Wednesday after bargaining for about 18 hours, but they gave few details. It still must undergo the scrutiny of local union presidents and a vote of GM’s UAW members, which is likely to take place this weekend.
   The big detail that the company and union confirmed, though, was that the union will take money from the nation’s largest automaker to form a trust that would handle payments for retiree health care.
   Several industry analysts said the agreement would shape contracts with GM’s Detroit-area competitors, Ford Motor Co. and Chrysler LLC. It’s also likely that the deal will frame other U.S. labor contracts, the analysts said.
   “We view the tentative agreement and its apparent terms as a historic milestone toward the longterm improvement in fundamentals and survival at the North American automakers,” KeyBanc analyst Brett Hoselton wrote in a note to investors.
   GM and the union praised the agreement, with the company saying it goes a long way toward cutting about a $25-per-hour labor cost gap between GM and Japanese automakers with U.S. factories. GM has said it pays workers $73.26 an hour in wages and benefits. The company lost $2 billion last year and is in the midst of a restructuring.
   “This agreement helps us close the fundamental competitive gaps that exist in our business,” GM Chairman and Chief Executive Rick Wagoner said.
   The deal allows GM to move its roughly $51 billion in unfunded retiree health care costs into an independent trust administered by the UAW. The union also agreed to lower wages for some workers. In exchange, the UAW won commitments from GM to invest in U.S. plants, bonuses and an agreement to hire thousands of temporary workers, which will boost UAW membership, according to a person who was briefed on the contract. The person requested anonymity because the details haven’t been publicly released.
   All through the negotiations, which formally began in July, retiree health care was the key issue. Neither the UAW nor GM gave details of the trust, called a Voluntary Employees Beneficiary Association, but another person briefed on the talks said GM agreed to pay the union about 70 percent of the total obligation, or around $36 billion. That person also requested anonymity because the details haven’t been publicly released.
   Deutsche Bank auto analyst Rod Lache said the agreement to move retiree health care costs off GM’s books eventually could reduce the labor cost gap by $18 an hour.
   UAW President Ron Gettelfi nger said the union’s projections show the VEBA will secure retirees for 80 years.
   GM currently has 340,000 hourly retirees and spouses. Gettelfinger said he recognizes some in the union are opposed to the VEBA, but the union has supported the idea for several years.
   After ratification, the VEBA memorandum would have to be approved by the courts and would be reviewed by the U.S. Securities and Exchange Commission, GM said.
   One of the people briefed on the contract said that because GM’s pension fund has more money than its expected obligations, both sides agreed to tap into it to fund the trust. Retirees also would get a pension increase, but it would be offset by an equal increase in health care contributions, the person said.
   In exchange for their ratification, union members would get a one-time bonus of $3,000 and then bonuses of 3 percent, 4 percent and 3 percent of their annual pay each year for the last three years of the contract, said one of the people briefed on the contract.

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For retirees, there’s uncertainty about how the union will manage their health care.

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hire thousands of temporary workers, which will boost UAW membership

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Autos and health care  
First published: Thursday, September 27, 2007

The two-day strike against General Motors by the United Auto Workers was another reminder -- if one was needed -- that the nation's health care crisis isn't just about the uninsured. It affects retirees, workers with coverage and corporate profits as well. And a solution is urgently needed.
True, the UAW walked off the job over several issues, including wages and outsourcing of jobs. But a major issue was how to provide retired auto workers with the health benefits they thought they would receive when their days on the assembly line were over. Now, thanks to a creative solution worked out between management and labor, the retirees' health cov@@hyphen@@erage will be paid for out of a trust managed by the union and overseen by the Securities and Exchange Commission. GM will contribute $35 billion to the fund to get it going. In exchange, the company will be relieved of an estimated $50 billion in retiree health plan obligations it faced before the strike began.

Thus, the old saying that what is good for GM is good for the country has been modified. Today, it comes down to what ails GM ails the country as well. The giant automaker isn't the only company facing mounting health coverage expenses. All companies are. But GM's burden is also competing on an uneven playing field where auto workers and retirees in other nations are covered by government-sponsored health care plans. But in the United States, the old model of employer-provided health coverage persists, making it harder for American companies to compete in the global marketplace.

In a sense, American businesses only have themselves to blame for their dilemma. When health care costs were low, executives readily agreed to raise health care and pension benefits in lieu of raises. Now, with health care costs escalating, those concessions are proving burdensome.

Moreover, the business community has long resisted a national health care system. In 1993, then-first lady Hillary Clinton encountered that resistance when she attempted to overhaul the way health care is paid for in the United States. Even now, as a presidential candidate, she talks of bearing the scars from that battle and has put forth a new, hybrid plan that incorporates private coverage and national pool coverage for the uninsured.

In 1993, when Mrs. Clinton was being pilloried over health care, GM was the No. 1 automaker in the world. In April, it fell to No. 2, behind Toyota. Talk about the handwriting on the wall.

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GM has said it pays workers $73.26 an hour in wages and benefits. The company lost $2 billion last year and is in the midst of a restructuring.

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In exchange for their ratification, union members would get a one-time bonus of $3,000 and then bonuses of 3 percent, 4 percent and 3 percent of their annual pay each year for the last three years of the contract, said one of the people briefed on the contract.

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Healthy deal by GM, UAW

   If last week’s landmark labor deal between General Motors and the United Auto Workers union doesn’t make the case for a national health care program, nothing does.
   GM was so desperate to unload the burden of providing health insurance for workers and retirees that it was willing to risk a crippling strike by the company’s 73,000 workers. And who could blame company management? The burden has been projected at $55 billion over 80 years.
   In the end, GM will pay 70 percent of that — hardly chump change — allowing the union to set up a trust known as a voluntary employee benefit association. The so-called VEBA will assume responsibility for the workers’ health insurance beginning in about two years, saving the company an estimated $10 per hour in labor costs, or more than $1,900 per vehicle. That should enable the nation’s largest automaker to better compete with its Japanese counterparts, one of which (Toyota) leapt ahead of GM this year in worldwide sales. So it’s a good deal for GM, and, depending on the course of health care costs, a good deal for GM workers.
   But if something isn’t done to rein in the high cost of health insurance, the UAW will likely be in the same fix as GM before long. That something is probably going to have to be some kind of national health care plan, because under the current system, costs just keep going up, up, up, while the quality of care is being compromised by insurers and health-maintenance organizations determined to contain those costs.
   GM, meanwhile, is hardly the only U.S. company that has been hurt by high insurance costs.
   It will be interesting to see what, if any, changes the union will impose to improve workers’ health so they’re less likely to use the system. There may be greater cooperation in this regard now that the adversarial relationship between the union and company is no longer part of the equation.  

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If last week’s landmark labor deal between General Motors and the United Auto Workers union doesn’t make the case for a national health care program, nothing does.

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The union had more than $800 million in that fund as of last November, according to the UAW's Web site

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And honestly, this really has nothing what so ever to do with universal health care.

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Taxi drivers to strike over rules for GPS, credit card equipment
BY ULA ILNYTZKY The Associated Press

   NEW YORK — A New York City cabbies’ group will stage an Oct. 22 strike — its second in two months — over new requirements for GPS and credit card equipment.
   The 24-hour walkout by the Taxi Workers Alliance will begin at 5 a.m. on that Monday, and include a lunchtime demonstration outside the Taxi & Limousine Commission in Lower Manhattan, said its executive director, Bhairavi Desai.
   Desai predicted thousands of drivers would participate. The group says it represents about onefifth of the city’s 44,000 licensed taxi drivers.
   “We’re asking all the drivers to leave all taxis parked but to come to the demonstration,” she said. “There will be picket lines, starting in the early morning, at different garages and at transportation hubs,” including Penn Station and Grand Central Terminal.
Mayor Michael Bloomberg has said that the city would be ready, but told the cabbies it was in their best financial interest to keep working. Susan Leone of Brooklyn was one of several workers in Manhattan on Wednesday who said they would not be deterred by a strike.
“If I have a meeting I take a taxi, otherwise I take a subway,” she said. “I would just figure out another route.”
The alliance pronounced last month’s two-day strike a resounding success, but city officials said its impact was minimal. The two sides disputed the extent of cabbies’ participation, but probably thousands of drivers idled their taxis, with the alliance putting the figure at tens of thousands.
   Temporary fare rules encouraged cab-sharing to lessen the squeeze, but there were some cab crunches at airports and in midtown Manhattan.
   The dispute centers on a requirement that all taxis have the GPS and credit-card systems installed by Jan. 31, 2008.
   City officials say the devices are plums for passengers, making payments more convenient and lost items easier to locate. But the advocacy group sees the technology as a pricey invasion of cabbies’ privacy.
   In a telephone interview Wednesday, Desai said that the 5 percent surcharge on each credit card transaction “is simply a wage cut,” while the GPS “we find really objectionable [because] it’s a tool of labor control.”
   “The TLC and the garages are the only ones who will have this [tracking] information, and they will have it in real time, which is a fundamental change in how the industry has functioned over the past 100 years,” Desai added.
   The city has said the technology won’t be used to track drivers, but Desai said it gives garages an upper hand during negotiations over drivers’ income.
   The alliance also called Wednesday for health care and a pension fund to be set up for drivers, who Desai said average 60 to 70 hours a week and retire without any pension.
   The group also called for union recognition.
   “We want collective bargaining,” Desai said. “It would mean that all of the workers would have the strength of one negotiating body representing their interests. It would require all parties to come to the table and negotiate in good faith. We don’t have that in our industry.”
   The alliance asked a court to block the technology requirement. A federal judge declined last week to do so, saying the benefits to riders appeared to outweigh drivers’ privacy rights. But the full merits of the case have yet to be argued, and the judge told the drivers and city to try to negotiate a settlement before an Oct. 10 court date.  

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Auto workers at
GM plant nix deal
   MASSENA — United Auto Workers at General Motors’ Powertrain plant, scheduled to be closed by the end of next year, have rejected the tentative labor agreement between their union and the company, a union official said.
   UAW Local 465 workers voted against the contract 172-137, said union president Anthony Arquiett.

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Auto workers reach deals with Chrysler, GM
Union wins guarantees that vehicles will be produced in U.S. plants
BY TOM KRISHER AND DEE-ANN DURBIN
The Associated Press

   DETROIT — The United Auto Workers union reached a tentative four-year contract with Chrysler Wednesday, hours after going on strike and the same day General Motors workers ratified a separate four-year pact.
   Next up: Ford.
   A person with knowledge of the Chrysler LLC agreement said it includes some guarantees that vehicles will be produced at U.S. factories, a company-funded union-run trust that will pay much of Chrysler’s $18 billion in long-term retiree health care costs, and a lower wage scale for some newly hired workers.
   The person, who requested anonymity because the contract has not been ratified by union members, said the new vehicle guarantees are not as extensive as those given by General Motors Corp.
   The guarantees, which translate into job security for union workers, are in many cases only for the life of current products, the person said. GM made guarantees at many factories that include the next generation of cars, trucks and parts.
   The new lower wage scale, the person said, covers new hires who would replace Chrysler Mopar parts transportation workers. Buyout and early retirement offers would be made to current workers in an effort to get them to leave, the person said.
   The lower wage scale is similar to the one negotiated by GM, the person said.
   UAW President Ron Gettelfi nger said the strike against Chrysler, which is 80.1 percent owned by private equity firm Cerberus Capital Management LP, would end immediately and workers should report for their next available shift.
   “This agreement was made possible because UAW workers made it clear to Chrysler that we needed an agreement that rewards the contributions they have made to the success of this company,” Gettelfi nger said in a statement.
   Gettelfinger wouldn’t release any details of the contract, but Chrysler said the tentative agreement includes the retiree health care trust The newly private company didn’t say how much money it will contribute to the trust.
   “The national agreement is consistent with the economic pattern and balances the needs of our employees and company by providing a framework to improve our longterm manufacturing competitiveness,” Chrysler Vice Chairman and President Tom LaSorda said in a statement.
   Chrysler’s national UAW contract covers about 45,000 workers and 78,000 retirees and spouses.
   Brett Ward, a material handler at Chrysler’s Sterling Heights assembly plant, said Wednesday night he had not been given details of the agreement.
   But he feared that it would have a lower-tier wage structure for new hires that was similar to what the union negotiated with GM. In the next contract, he’s afraid Chrysler will negotiate wages downward for all workers, similar to a deal between the UAW and troubled auto parts supplier Delphi Corp.
   “They made it one tier again, but a much lower, undesirable one,” said Ward, a member of Soldiers of Solidarity, a group often critical of the union.
   Kevin Bork, a senior designer at a Chrysler technical center, said his primary concerns are health care and stopping the outsourcing of jobs.
   “I’m very happy that the strike didn’t last very long and we’ll all be returning to work,” he said. “Now, it’s just a matter of seeing what the offer is.”
   The UAW said its historic contract with GM, which also includes a retiree health care trust, was approved by 66 percent of production workers and 64 percent of skilled trades workers.
   The deal, reached Sept. 26 after a two-day nationwide strike, establishes lower pay for some workers and makes promises for future work at U.S. plants.
   UAW members at 19 of 24 U.S. Chrysler factories and several other facilities left their jobs for the picket lines at 11 a.m. Wednesday and stayed out for about six hours.
   Talks between the UAW and Chrysler began in July but accelerated last weekend. Among the major issues were the retiree health care trust, the company’s desire to outsource parts-trucking jobs, promises that future products will be built at U.S. factories and parity with health care concessions that were given to Ford Motor Co. and GM two years ago.
   A majority of Chrysler workers will have to ratify the tentative agreement before it can take effect. Ford will be the final automaker to bargain with the UAW.
   Chrysler became a private company shortly after the contract talks began in July. Cerberus bought its share of Chrysler from the former DaimlerChrysler AG in a $7.4 billion transaction in August. Chrysler is now a private company without publicly traded shares.  

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Union wins guarantees that vehicles will be produced in U.S. plants

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The guarantees, which translate into job security for union workers, are in many cases only for the life of current products, the person said. GM made guarantees at many factories that include the next generation of cars, trucks and parts.