“What makes you think this group of Executives have any ability to make cars that will sell? Fire Rick – Fire John – Fire them all. Not only have they ripped off the unions, they have ripped off the shareholders and the customers in many cases”
By Lou Ann Hammond
General Motors and the United Auto Workers (UAW) have been meeting for weeks now and, according to a General Motors employee, will continue to meet with the UAW as long as they are making progress. The meetings are meant to open up the 2003 contract and renegotiate the health care benefit’s and pension costs that are pushing the company further into the red.
There is a little talked about contractual agreement that the UAW has with the Big 3 – General Motors, Ford Motor Corporation and Daimler Chrysler – and some auto suppliers, mainly Visteon and Delphi. The agreement is known as Job opportunity Bank Security System (JOBS) or “job banks”, or Guaranteed Employment Numbers (GEN). Its a job security program that was first negotiated in 1987, and was designed to give employees who might otherwise be laid off job security. General Motors wont talk about it at all. According to Stefan Weinmann, spokesperson for General Motors, “Were not discussing details of jobs banks for competitive reasons”. When asked why they would discuss health benefit’s and pension costs openly, Weinmann said, “That is public information that can be found in our financial statements, job banks isnt.” According to another source, “this is not the hill General Motors is going to die on in the upcoming negotiations. They are looking for concessions on health care and pensions. In each negotiating period, certain concessions are focused on.” In 2003 there was just pattern bargaining, no one company was focused on and a blanket agreement was made by all.
According to a document sent to www.carlist.com, the basic guarantee from the 1987 agreement is that no eligible employee will be laid off over the term of the agreement, except for the following reasons:
Currently, UAW membership is 710,000, down from about 1.5 million in it’s heyday. As of March 2005 General Motors had decreased it’s union worker membership to 109,000.
My sister is a union member in a telecommunications business. She will retire in four years with full health care benefit’s, with no premium, and a pension that is commensurate with her full salary. If she doesnt get fired. With 24 years under her belt, she still worries that she could be fired if there is an economic downturn. She would lose the benefit’s she had worked most her adult life to achieve and would go on unemployment for 48 weeks and then she would need to find another job at the age of 51 that would let her live her life as she knows it now. The company would be able to reduce the variable cost of her salary and benefit’s down to reflect her no longer working at their company.
Not so, for automotive workers in the UAW and other auto manufacturer unions. There are upwards of 10,000 people who are not working but collecting a salary and benefit’s and some are still accruing seniority. It was best said by John Novak, Morningstar analyst, in a Chicago Tribune article on June 19, 2005, “Essentially, what they are doing is making labor, which in most industries is a variable cost, into a fixed cost. In most businesses, when demand declines, you can downsize your workforce and your costs also shrink.”
According to McAlinden, there are three types of layoffs;
Employees assigned to the JOBS bank report to work, howe’ver, may not work on productive jobs and in some instances are idle. We (Delphi) currently have approximately 3,000 employees assigned to the bank with an associated cost penalty of approximately $300 million. This is a cost that many of our competitors do not face.”
Williams goes on to say,”Its important to note that while we are clearly challenged in the current environment, our problems are not with our people, nor our unions, rather the structure upon which we currently operate. The current structure — conceived at a different time and under different circumstances — does not allow us to react to a convergence of numerous factors (i.e. – pension contributions, commodity price increases, health care costs, etc.) in a timely manner.”
McAlinden says that General Motors job banks costs more per person than Delphi, more on the lines of $120,000 per person per year. The number in job banks is being reported as 3,500 people, but industry insiders believe that number is way low, especially with the closure of the Linden, Baltimore and Lansing assembly lines. At the Lansing Car Assembly line there were 2,900 hourly (or union) members “laid off”, in Linden and Baltimore there were 950 and 1,000 union members, respectively, laid off. That would total 8,350 employees without jobs, but that doesnt count the people who retired, took a package or were deployed to other factories.
If the whispers are correct, then General Motors has closer to 7,000 people that are in job banks or will be soon. That would mean that General Motors is looking at closer to a $840,000,000 hit to their bottom line, versus the $420,000,000 speculators were saying. General Motors will not confirm any of these numbers.
Things are looking brighter, at least for Delphi. The UAW-Delphi supplemental agreement was negotiated in May, 2004 and runs through September, 2011. Generally speaking, the wage and benefit package for employees hired under this agreement is roughly 60% of that earned by the current “traditional” employee. New hires average an all-in wage and benefit level of $24-25 an hour, compared to the all-in $60-70 an hour currently being earned. Additionally, there are no JOBS security provisions for employees hired under this agreement.
General Motors does not have a “two-tier” agreement with the UAW. Only Visteon and Delphi have signed this agreement, meaning that the Big 3 still pay their new hires the same rate and the new hires still have JOBS security.
Expect the job banks issue to be on the agenda in 2007 when the UAW opens their negotiations with the auto manufacturers. The discussion will probably center around whether it is the responsibility of one company to finance volunteers, or workers that just sit idle in a hall for eight hours, and keep the local economy going, or whether their efforts, and their money, might be better spent keeping their business as a going concern.
The UAW was contacted several times and never responded.