UAW's Gettelfinger More Pragmatic Than He Appears

Posted by: David Kiley on July 23, 2007

General Motors and Ford began talks with the United Auto Workers today in what will probably be the most important round of contract talks the Detroit automakers have had in decades.
At issue is the amount of money GM and Ford, as well as Chrysler, will continue to pay toward the healthcare of hourly employees and retired hourly employees.
UAW president Ron Gettelfinger, like most UAW bosses, plays hardball. His refrain of the last few months concerning Ford is almost comical in its defiance of reality about the ailing automaker.: “I’d just say (Ford’s financial condition) depends on who you talk to,” Gettelfinger said. “And they’ve got a lot of cash, by the way, the company does. So that’s not an issue for us right now.”
Make no mistake. Gettelfinger is not obtuse or deranged. He knows Ford lost $12.6 billion last year and had to mortgage itself up the hilt to raise $23.4 billion in the debt markets. But Gettelfinger has to look like a pitbull to his membership. In negotiation meetings, people tell me, he is probably more realistic about the state of the business than any of his predecessors.
GM last year spent $4.8 billion on insurance and medical care for its workers and retirees. But its Ford, say some onlookers and analysts, that has to get a new deal from the UAW or else risk falling short of its target of profitability by 2009.
What GM and Ford are hoping for is to off-load the healthcare liability to the UAW to manage by paying some percentage of the long-term liability now. “This is critical for Ford…I’m not sure they will make it otherwise,” said one Ford outsider who counsels the company’s management.
GM and Ford hourly labor costs — $73.26 and $70.51, respectively — are about $30 higher than those of their Japanese rivals operating U.S. plants, according to data compiled by the automakers.
Much of that gap represents the cost of higher pensions and health-care costs for retirees, according to the automakers. The UAW’s current four-year contract with the three Detroit-based automakers expires Sept. 14.
Gettelfinger has been very cooperative with Ford in getting work-rules changed and letting individual plants negotiate with Ford to improve their chances of staying open.
The UAW’s membership has been decimated in recent years. And the economy in Michigan, where a lot of Big Three jobs are located, is in the tank for loss of the jobs that have been cut already.
Look for a pretty progressive agreement and for the UAW and retirees to pay more of their own healthcare costs. The Golden Goose that used to pay 100% of their medical costs is long dead. And Gettelfinger knows it.

Reader Comments

Stan Hoyle

July 23, 2007 5:19 PM

This article reminds me of a book I just read -Ford and the American Dream - Founded On Right Decisions - written by Clifton Lambreth. This book does a great job of outlining the problems that the American automotive industry is facing and ponders the question - What would Henry Ford do if he were alive today? The book is available at www.thefordbook.com , www.executivebooks.com and all other national and local bookstores.

Darin

July 24, 2007 10:17 PM

Ford and GM hourly costs are $70.00+, get real. They use that figure in an attempt to generate some sympathy for the company and animosity from other workers. That includes the cost of their retirees but is in no way a reflection of the compensation earned by current workers. If we added the white collar pensions and benefits with the executives bloated pay packages the number would be even larger and would surely widen the labor gap between them and the competition. Unfortunately the management does not publicize that figure because it does not accomplish the previously mentioned goals and would encourage an examination of their performance. Let's not forget that the retirees that are due these "legacy" costs gave up things to get those benefits. Please try and use the actual compensation numbers or risk losing your credibility.

Retired GM worker

August 12, 2007 5:10 PM

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