Auto Bailout: UAW Chief Draws a Line

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Natural Bargainer

Gettelfinger argues that if not for the recession and credit crunch, the Big Three already would be hiring workers at that much lower wage. Including weaker benefits, those new hires cost $28 an hour. That's half what Toyota's workers cost.

How did he sell the concessions to his members? None of the current workers lost much of anything. They kept their pay, and their health-care benefits are still first-rate. Anyone losing a job got buyouts averaging more than $100,000, and they typically head into the pension rolls. Says one high-level GM executive: "Ron is a natural-born bargainer."

Of course, that plan worked to save the car companies money only so long as they kept growing and had enough cash to buy out older, higher-paid workers. But as the economy slid into recession and auto sales fell into a hole, pressure grew for Gettelfinger to give up even more.

In September, GM executives told the UAW boss that they wanted to merge with Chrysler. The Center for Automotive Research estimated that a merger could cost upward of 30,000 jobs. So Gettelfinger called Steve Girsky, a former Wall Street analyst who once worked as an adviser to GM, to look at the deal. He asked Girsky to tell him the straight truth about what a deal meant, preferring an independent view from the sales pitch coming from GM executives. Girsky discovered that GM was running out of cash, and called Gettelfinger on Nov. 4 to tell him the news.

"He was calm," recalls Girsky. "He just said, "O.K., what can we do?""

Most industry observers believe Gettelfinger will fight to the death to keep wages where they are. But under threat of extinction and government prodding, he may well ditch the JOBS bank. Gettelfinger may even have to persuade his members to pay more for health care. When asked about it, he didn't rule it out: "I'll just have to wait and see what the government wants," he said. How about a GM-Chrysler merger? "No," he said firmly.

The problem is, Gettelfinger has a tough hand. If he goes on strike, "he loses the country," says Ned Hill, dean of the College of Urban Affairs at Cleveland State University. So he will have to hope the Obama Administration is lenient. "At this point, his cards are all political," Hill says.

Welch is BusinessWeek's Detroit bureau chief.