Time for sacrifice

United Auto Workers agrees to concessions as Big 3 seek aid

December 04, 2008|By Jim Puzzanghera | Jim Puzzanghera,Tribune Washington Bureau

WASHINGTON - First it was the heads of Detroit's Big Three automakers who offered public pledges to cut costs, shrink their vehicle lines, go green and slash their salaries in the quest for a desperately needed government bailout.

Yesterday, it was the workers' turn to sacrifice before crucial congressional hearings begin this morning on the automakers' request for $34 billion in emergency loans.

United Auto Workers President Ron Gettelfinger said the union would allow General Motors, Ford and Chrysler to delay billions of dollars in payments to a retiree health-care trust and suspend a jobs bank that pays laid-off workers. The union also would consider other cost-cutting changes, he said.

But Gettelfinger complained that after workers agreed to major concessions in 2005 and 2007, the union and the companies were being asked to make significant new sacrifices in order to secure federal aid, while big financial institutions such as Citigroup gave up relatively little to secure much larger amounts of taxpayer money.

"Are we going to blame the autoworkers, who are, by the way, 10 percent of the cost of an automobile ... or are we going to take a look at what's happened to our economy, to the housing crunch, to the Wall Street bailout and the failures on Wall Street?" Gettelfinger said during a televised Detroit news conference as union members cheered.

"I'm having a little problem myself here understanding why there's a double standard here, but we accept it, and we'll play by those rules," he said.

The union's announcement came one day after General Motors said it faced insolvency by the end of the year without $4 billion in immediate federal aid, with billions more needed in 2009. Chrysler said it needed $7 billion or could run out of cash early next year. And Ford, which requested a "standby line of credit" of up to $9 billion, warned that a failure by one of its U.S. competitors could take the others with it.

Michigan Republican Rep. Fred Upton, co-chairman of the House Auto Caucus, said the union moves should help sway skeptical lawmakers. "Everyone's got to tighten their belt; that includes the UAW as well as management," he said.

The Detroit CEOs performed so poorly in requesting federal help last month that Democratic congressional leaders told them to deliver detailed turnaround plans this week and gave them a second chance to plead their case.

The executives traveled to Washington this time in fuel-efficient hybrid vehicles after being roundly criticized for jetting in last month on separate private planes. The public relations offensive continues this morning, when GM, Ford and Chrysler, along with Sen. Carl Levin, a Michigan Democrat, plan to show off their advanced technology vehicles on Capitol Hill before the hearing.

The automakers face a tough sales job. A CNN/Opinion Research Poll released yesterday found that 61 percent of Americans oppose a bailout.

But the UAW is a major supporter of Democrats and helped President-elect Barack Obama win key Midwestern states such as Michigan and Ohio, so party leaders don't want to let one or more of the automakers fail, said Ross Baker, a political science professor at Rutgers University.

"The fact that they have given the heads of the automobile companies a makeup exam is an indication that they regard the support of unions as crucial and they don't want to desert a friend," he said.

Opponents of bailing out the automakers have pointed to the union contracts, arguing that generous pay and benefits have kept GM, Ford and Chrysler from being more competitive with foreign automakers. The companies and the UAW said major concessions in 2007 will eliminate most of the cost differences by 2010.

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