WASHINGTON — First it was the heads of Detroit's Big Three automakers who offered public pledges to cut costs, shrink their vehicle lines, go green and slash their own salaries in the quest for a desperately needed government bailout.
Wednesday, it was the workers' turn to sacrifice before crucial congressional hearings begin this morning on the automakers' request for $34 billion in emergency loans.
United Auto Workers President Ron Gettelfinger said the union would allow General Motors Co., Ford Motor Co. and Chrysler to delay billions of dollars in payments to a retiree health-care trust and suspend a controversial jobs bank that pays laid-off workers. The union also would consider other cost-cutting changes, he said.
"This should be interpreted as a meaningful and a painful sacrifice," said Harley Shaiken, a labor relations professor at the University of California at Berkeley. The jobs bank was "something the union worked over decades to achieve."
Gettelfinger complained that, after workers agreed to major concessions in 2005 and 2007, the union and the companies were being asked to make significant new sacrifices in order to secure federal aid, while big financial institutions such as Citigroup gave up relatively little to secure much larger amounts of taxpayer money.
"Are we going to blame the autoworkers, who are by the way 10 percent of the cost of an automobile … or are we going to take a look at what's happened to our economy, to the housing crunch, to the Wall Street bailout and the failures on Wall Street?" Gettelfinger said during a televised Detroit news conference as union members cheered.
"I'm having a little problem myself here understanding why there's a double standard here, but we accept it, and we'll play by those rules," he said.
Billions requestedThe union's announcement came one day after General Motors said it faced insolvency by the end of the year without $4 billion in immediate federal aid, with billions more needed in 2009. Chrysler said it needed $7 billion or could run out of cash early next year. And Ford, which requested a "standby line of credit" of up to $9 billion, warned that a failure by one of its U.S. competitors could take the others with it.
Rep. Fred Upton, R-Mich., said the union moves should help sway skeptical lawmakers. "Everyone's got to tighten their belt, that includes the UAW as well as management," he said.
GM Chief Executive Rick Wagoner traveled Tuesday to Washington — this time in a fuel-efficient Chevrolet Malibu hybrid after he and others were roundly criticized for jetting in last month on separate private planes. On Wednesday, Ford Chief Executive Alan Mulally and Robert Nardelli, Chrysler's top executive, also drove to Washington in hybrids from their companies.
Opponents of bailing out the automakers have pointed to the union contracts, arguing that generous pay and benefits have kept GM, Ford and Chrysler from being more competitive with foreign automakers. The companies and the UAW said major concessions in 2007 will eliminate most of the cost differences by 2010.
The UAW sent fact sheets this week to every member of Congress disputing some claims about its wages and benefits, such as an oft-cited figure that union autoworkers earn $73 an hour. That figure includes the cost of health care and pension for current workers plus retired workers. UAW members now earn $14 to $33 an hour, the union said.
But Gettelfinger, who will testify alongside the chief executives before the Senate Banking Committee today, said offering more givebacks was the responsible thing to do.
Last year's contract talks led to the creation of the Voluntary Employee Beneficiary Association trust, a concession aimed at lowering costs for retiree health care. Payments to the trust are supposed to start in 2010, and automakers targeted the fund in their plans to Congress as a source of additional savings. Ford, for example, is scheduled to pay $13.2 billion into the trust by the end of 2009.
The jobs bank, which pays laid-off workers, has been controversial, and many analysts predicted the union would have to give it up. The move is largely symbolic as it has shrunk significantly in recent years, to less than 4,500 workers.
But Gettelfinger noted that with a smaller work force that is earning less as a result of earlier concessions, the union alone couldn't save the Big Three.
"To be honest with you right now, if the UAW membership went in these facilities and worked for nothing … it would not help the companies that much," he said.
The union work force at GM, Ford and Chrysler has declined to less than 150,000 from 300,000 five years ago, and the companies are promising more cuts in the restructuring plans they delivered to Congress on Tuesday.
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