Wednesday, September 26, 2007

UAW Strike Spurred GM Into Quick Action

Apparently General Motors didn't think Ron Gettelfinger would actually pull the trigger and send tens of thousands of auto workers off the production line and into picket lines. Well they guessed wrong, and the decision sent ripples through the North American auto world. Less than two days later, GM came back and started talking about issues they refused to acknowledge before the deadline. Although the UAW made concessions, GM ultimately caved to their demands concerning job security.

From The Detroit Free Press:


UAW President Ron Gettelfinger announced the agreement at a 4 a.m. news conference at the union's national headquarters in Detroit.

He said the agreement included a historic plan to shift oversight of retiree health-care benefits to the UAW, removing more than $50 billion in long-term obligations from GM's books.

The company had sought such a plan, called a voluntary employee beneficiary association, or VEBA, to help lower its fixed costs and make it more competitive with rivals such as Toyota Motor Corp., which does not have such so-called legacy costs. The costs are said to add more than $1,000 to the cost of each vehicle made by domestic companies.

It wasn't known how much money GM would put into the VEBA up front, but Gettelfinger said projections showed that it would be solvent for at least 80 years.


Other details included $3,000 dollar signing bonuses for employees, a two-tier wage system for new employees based on whether they work directly with vehicles and no wage increases at the moment. The big item in the news is the voluntary employee beneficiary association that will defer costs from GM to the UAW, something both sides finally agreed on. GM has a right to be cost-efficient, but first the security of its employees had to be ensured.

Employees and employers are happy this is over, but most importantly, it showed that a strike still wields the power it had commanded years ago.