To meet on problems

GM, UAW

Dip in stock price, rise in health costs are issues

April 14, 2005|By KNIGHT RIDDER/TRIBUNE

DETROIT - Hundreds of top plant-floor officials at General Motors Corp. and the United Auto Workers plan to get together this morning in Dearborn, Mich., to discuss the state of the auto industry and GM.

They don't expect to hear much that's positive.

GM and the UAW hold such meetings annually, but because GM is in the midst of trying times - the company expects to report one of its worst quarters in years next week, and its stock is at a 10-year low - this session is taking on extra importance.

GM Chairman and Chief Executive Officer Rick Wagoner is to address the group, as are UAW Vice President Richard Shoemaker and other top officials at GM. Wagoner took control of GM's North American operations last week.

There has been speculation that this meeting will result in GM's pressing the union to reopen its national UAW agreement and address rising health care costs at GM, but union and company insiders say that would not happen at this forum, if ever. The UAW is loath to reopen contracts in the middle of them, and this four-year pact doesn't expire until September 2007.

The GM-UAW talks are called a Key 4 meeting because the top two UAW officials and top company officials from each auto plant attend. It will certainly focus on the issue of GM's health care spending, but the push will be to reduce workers' spending within the framework of the agreement, GM and UAW officials and auto experts say.

"Rick will say, `Here's the inside scoop.' He wants to talk to these people and say here is how bad off things are in the big picture," said Sean McAlinden, economist and labor expert at the Center for Automotive Research in Ann Arbor, Mich.

"GM and the UAW are looking inside the current agreement to see what can be done to alleviate GM's health care spending without reopening the contract," he said.

McAlinden added that many in the UAW know health care is a problem for GM, but the automaker's recent decision to spend $2 billion to end its relationship with struggling Italian automaker Fiat - five years after it spent $2.4 billion to create that relationship - is a source of contention within the union.

GM expects to spend $5.6 billion in cash on health care this year, more than any other U.S. company. GM estimates that U.S. hourly workers and retirees pay about 7 percent of their health care costs; salaried workers and retirees pay 27 percent of their health-care costs.

McAlinden and others said the biggest thing GM can hope for is slight changes in UAW health plans that would lighten the automaker's burden, similar to changes Chrysler made this year.

He said GM is holding its meeting in Dearborn this year, instead of in Palm Springs, Calif., or Las Vegas, to send a message of austerity to union officials and company employees.

GM said the meeting is more about plant-level officials getting a chance to hear from senior executives.

"It's really an opportunity to, once a year, pull folks together to share some views and some concerns and give them some perspective on the company," said GM spokesman Stefan Weinmann.

UAW officials who plan to attend say they expect GM to press the union on health care, but they wonder whether executives are holding themselves accountable for the Fiat debacle.

"We in the union are doing everything we can in terms of efficiency, building good products and eliminating waste. I don't understand them coming to us with their hands out after that Fiat deal," said Dave Peterson, president of UAW Local 31 at the Fairfax assembly plant in Kansas City, Kan., which builds the Chevrolet Malibu.

"That's $4 billion. And they want us to help now? That's ludicrous. That $4 billion could have been spent on marketing that would have put more people in the seats of our cars," he said.

About 1,200 union officials met with executives from the Auburn Hills, Mich.-based Chrysler Group in early March. Chrysler said the tone of the meeting was positive. Popular new cars and trucks have buoyed the company.

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