Details of the deal

Details of the hard fought deal are starting to leak out. First, the NYT's story this morning:

The contract’s main feature — a health care trust called a voluntary employee benefit association, or VEBA — means that G.M. will no longer have to carry the debt it will owe for employee and retiree health care benefits on its books. Earlier this year, G.M.’s chief executive, Rick Wagoner, referred to those obligations as “very large and frankly formidable.”

That debt is estimated at $55 billion for the next 80 years. So G.M. will establish the trust with about 70 percent of that amount, making an upfront payment of cash, stock and other assets. The difference is expected to come from gains on investments by the trust.

In return, the union won guarantees that medical benefits for hourly workers and retirees and their families will remain in place for the next two years. G.M. will also invest money in its American plants, and will maintain its current union work force of 73,000, according to Ron Gettelfinger, the U.A.W. president.

And the Free Press has these details:

• Workers will receive no wage increases, but will each receive a $3,000 signing bonus, plus annual lump-sum bonuses of 3% or 4% for the final three years of the contract. The UAW also agreed to divert a portion of future wage increases to pay for health care for both active and retired workers, those sources said.

• GM will make more than 4,000 temporary workers permanent employees, a move that stands to increase UAW membership.

• The automaker will implement a two-tier wage and benefits scale for jobs that GM and the UAW have agreed are "non-core" production jobs. Those jobs are expected to include many positions in which workers do not have their hands on a vehicle in the assembly process. In addition, GM is expected to offer a targeted special attrition program to move workers in those non-core jobs off the active worker member rolls. Wages and benefits for second-tier workers will average $27 per hour, compared with the average $73 per hour of current workers, the sources said.

• Gettelfinger said the agreement includes modifications to the controversial jobs bank, which provides unemployed workers with full pay as they wait for job openings. The modification includes an expansion of the area in which workers would be required to move for a different assignment or lose their income. Currently, workers are not required to move for jobs farther than 50 miles from their previous plants.

There is mixed emotions about the deal, especially that two-tier structure. It's something a lot of people weren't talking about as negotiations got more and more intense, but now that it's become a reality, it's kind of splash of cold water.

"I hate it," Jason Craig, a 34-year-old Chrysler worker, bluntly said Wednesday after hearing about the UAW deal with GM.

Craig works at a Chrysler parts warehouse in Center Line. For two nights he had stopped and walked the picket line with GM strikers at a powertrain plant in Warren.

"These guys that walked off that line at 11 o'clock" Monday morning, Craig said, "I tip my hat to them."

At least one part of the deal has him upset. He fears the two-tier wage system in the tentative deal with GM could be carried over to Chrysler and affect his job. Hourly employees not directly related to making cars and trucks could receive lower pay and benefits under the contract.

Even if his job is not directly affected, Craig, a New Baltimore resident, said he would not approve a contract that creates two tiers of wages and benefits.

He backs his union and Gettelfinger, but this part of the deal undermines the union, he said.

"There's no solidarity in that," Craig said about the two-tier system. "If we have another strike and we have one guy making $15 an hour and another guy making $30 an hour, I guarantee you he's not going to walk out as fast as me."

But I think this quote encompasses what the union was fighting for:

Faust's father moved from Tennessee to Michigan in the late 1940s to work in a Chrysler Corp. foundry. The new contract gives the next generation a chance to keep things going, he said.

"We fight not just for ourselves, but we fight for the young people coming behind us," Faust said. "This is middle-class employment, and we want to keep it that way."

"They may have underestimated the union's resolve"

Despite all the outsourcing and early buyouts that thinned active ranks, GM should have known what it was dealing with:

General Motors Corp. and the United Auto Workers are close to an agreement on a new contract that would end a two-day strike by 73,000 workers at the biggest U.S. automaker, five people briefed on the talks said... An accord to halt GM's first national strike in 37 years may be announced as early as today...

The framework for an agreement for the UAW to assume an estimated $50 billion in future union retiree medical costs in exchange for a one-time payment from GM had already been mostly complete, according to the people. Bargainers spent the last two days on issues such as health care for active workers and reduced pension and retiree benefits for new hires, the people said.

"GM may have realized that the strike could go on for a while, that they underestimated the union's resolve,'' said Harley Shaiken, a labor professor at the University of California at Berkeley. "The key is that GM must have a commitment on future products and jobs,'' he said. "That's the linchpin that converts whatever sacrifices are made into future benefits for UAW workers.''

Gettelfinger and Co. didn't let management play chicken with them. They were practically dared to strike, and they did. And GM, either fearing the repercussions of a strike already being supported by the Canadian UAW and the Teamsters, among others, going a long time, or perhaps knowing they were asking for the sun and the moon, is looking ready to concede what they were seemingly unwilling to just a few days ago.

Or maybe they were afraid of this:

EDWARDS TO JOIN STRIKING AUTO WORKERS ON PICKET LINE IN BUFFALO

Buffalo, New York – Tomorrow, Senator John Edwards will join striking auto workers from U.A.W. Local 774 on a picket line outside of the General Motors Powertrain Plant in Buffalo, New York. On Monday, 73,000 U.A.W. members walked off the job after contract negotiations with General Motors reached a stalemate.

It's amazing what standing up to these people can do.

Solidarity

While it may affect their workload, and consequently, their wages, its good to see that there will be no ancillary picket crossing from the Teamsters:

The International Brotherhood of Teamsters will not deliver General Motors Corp. (GM) cars while the United Auto Workers stages a nationwide strike against the U.S. auto maker.

In a press release issued following the UAW's decision to kick off a strike Monday, the Teamsters said it will "stand with" the UAW by not crossing "a UAW picket line...Our 10,000 automotive transport members will not deliver GM cars" from plants to dealerships in the U.S.

Teamsters spokeswoman Leslie Miller said the Teamsters handles delivery of GM cars from plants to dealers. She said the auto maker may try to get help from non-Teamsters-represented delivery services but it may find trouble finding nonunion people with needed capabilities.

"Workers should not solely bear the brunt of decades of bad business decisions by GM management," Teamsters President James P. Hoffa said. "By outsourcing good jobs and creating a growing environment of economic and job insecurity, GM has failed its workers and its customers."

This is especially significant, given that the Teamsters are part of the Change to Win federation that broke off from the AFL-CIO two years ago. Not that I expected anything else, but it's good to know there will be no meaningful inaction.

Strike

It's come down to this:

United Auto Workers members walked out of General Motors Corp. plants shortly after 10 a.m. Monday as negotiations for a four-year contract reached an impasse 10 days after the previous contact expired.

The strike, the first against GM since 1998, came after the two sides appeared close Sunday night to historic changes in the contract concerning health care and other benefits. Few observers had expected a strike because it comes as Asian automakers are grabbing bigger shares of the U.S. market and could be damaging to both sides.

UAW President Ron Gettelfinger said the union walked out because GM "has failed to recognize and appreciate what our membership has contributed during the past four years."

The union and GM reportedly had agreed on a plan to transfer responsibility for GM's $51 billion health care liability for retirees to a union-run trust fund but were unable to settle on wages and job security issues.

Workers at GM's plant in Janesville, Wis., started picketing outside the massive facility shortly after 10 a.m., halting work on assembly lines that build large sport-utility vehicles such as the Chevrolet Tahoe and Suburban.

"If they think I'm going to take a wage cut and pay more for health care, they're dreaming," said Dave Van fossen, a 48-year-old worker at the plant. "My utilities just went up 14 percent and everything else is going up. Why would I accept a pay cut?"

The part of the article I didn't excerpt:

An extended strike could slow or derail a turnaround effort at GM that had produced three straight quarters of profit after two years of massive losses. GM has eliminated more than 150,000 UAW jobs the last two years and could cut more if it decides to close more U.S. plants.

No mention of the damage a strike would do to the union's members, and how they're soldiering on despite it, looking for fairness. Poor GM, not getting a solution to their mess on a silver platter.

T-Minus 10

D-Day, eleven hundred hours:

The UAW announced today that due to the failure of General Motors to address job security and other mandatory issues of bargaining, the union has set a firm strike deadline for 11 a.m. on Monday, Sept. 24.

“We’re shocked and disappointed that General Motors has failed to recognize and appreciate what our membership has contributed during the past four years,” said UAW President Ron Gettelfinger. “Since 2003 our members have made extraordinary efforts every time the company came to us with a problem: the corporate restructuring, the attrition plan, the Delphi bankruptcy, the 2005 health care agreement. In every case, our members went the extra mile to find reasonable solutions.

“Throughout this time period," said Gettelfinger, "it has been the dedication of UAW members that has helped GM set new standards for safety, quality and productivity in their manufacturing facilities. And in this current round of bargaining, we did everything possible to negotiate a new contract, including an unprecedented agreement to stay at the bargaining table nine days past the expiration of the previous agreement.”

“This is our reward: a complete failure by GM to address the reasonable needs and concerns of our members,” said UAW Vice President Cal Rapson, director of the union's GM Department. “Instead, in 2007 company executives continued to award themselves bonuses while demanding that our members accept a reduced standard of living.

“The company’s disregard for our members has forced our bargaining committee to take this course of action,” said Rapson. “Unless UAW members hear otherwise between now and the deadline, we will be on a national strike against GM at 11 a.m. EDT on Monday, Sept. 24th.”

The UAW negotiating team will remain at the bargaining table, Rapson said, throughout the night and up until the 11 a.m. deadline.

Despite every single media report stressing just how important it is that the big bad UAW needs to help poor GM out from underneath its crushing healthcare costs, its hard to argue with all the effort and help the union has given to the big dumb giant in recent years. Oh, not to mention that GM OWES the union members that healthcare. Let's not forget that as things begin to get really contentious.

End game?

Final lap?:

Negotiators for General Motors Corp. and the United Auto Workers were close to finalizing the details of a new contract Sunday after 20 straight days of talks, according to a local union official who is being briefed on the discussions.

The two sides have wrapped up work on most issues and were down to determining how much money GM must put into a trust fund for retiree health care that will be managed by the UAW, said the official, who spoke on the condition of anonymity because the talks are private. The official expected a final deal could be reached as early as Sunday evening, although others said it could take longer.

"My sense is they are close. I think this is the end game," said Harley Shaiken, a professor at the University of California at Berkeley who specializes in labor issues and has been closely following the talks. "They may be approaching a resolution, but if that's in the next two hours or the next two days, it's hard to say. There are a lot of complex issues yet to be resolved."

Of course, wasn't the amount of money going into the VEBA pretty much THE main issue in the first place? Maybe they're closer on a consensus number, or maybe the question is this:

Other key issues that remain to be clarified include how GM funds its VEBA contribution and whether the UAW deal allows the automaker to issue stock or tap its over-funded pension for some of the amount.

Earlier this year, the UAW agreed to a VEBA for bankrupt auto supplier Dana Corp funded at 71 percent of its liabilities, a level considered to be a benchmark in the GM talks.

Part of the funding for the VEBA could also come from cost-of-living increases that would otherwise have been paid to active workers. The UAW has allowed such transfers to pay for health care in contracts going back over 25 years.

The article also points out how much leverage it would give the UAW in the fight for the future of health insurance nation-wide. With over a million people in its risk pool, that's a significant chit to play in negotiations with big HMO's and the Republicans (and unfortunately, Democrats) they fund politically. Imagine those 1.2 million people in the VEBA buying into John Edwards' public run, Medicare-like plan.

That being said, the union has to make sure it gets enough money to fund the VEBA in the first place, as healthcare costs keep rising. From earlier reports, it didn't sound like GM was too excited about funding even that 71% that Goodyear, in much worse shape, put down.

And, they have to measure future production plant promises, as well. Those are the two most important things, clearly, and GM is playing them off each other. How the next President handles healthcare is a wild card, and one the UAW cannot play incorrectly. Do they take less VEBA funding anticipating some kind of universal healthcare? Remember, Edwards and Hillary (stealing from Edwards) will be requiring employers to pay for healthcare as a large part of the plan, so the VEBA exonerates GM, Chrysler and Ford from that requirement. Do they hope price controls send the price down enough, or that workers will qualify for a good chunk of assistance when it comes to the sliding premiums they will offer? I'd imagine that the public plan will be the one chosen by the UAW if the Edwards (and I guess Hillary) plan goes through.

So, how do you measure that against actually keeping jobs here? It'll be interesting to see what balance they strike.

Viva la VEBA no longer?

GM's inflexible greediness is shooting them in the foot:

General Motors Corp. and the United Auto Workers are discussing alternatives to a proposed union-run retiree health-care fund after the two sides couldn't agree on how much money GM would provide, three people with knowledge of the talks said.

"It's a terrific setback,'' said Sean McAlinden, an analyst with the Center for Automotive Research in Ann Arbor, Michigan. "Without the trust fund on retiree health, the first thing GM is going to offer is a massive, rapid offshoring of GM production and jobs.''

GM has asked the UAW to consider requiring new union members to replace the current pension with a 401(k) retirement savings plan and accept a fixed amount of health-care funds each year once they retire, people familiar with the proposal said earlier this week. GM also is asking all workers to accept a freeze in cost-of-living allowances and other concessions, people familiar with the talks said.

In return, the automaker has offered incentives such as a cap on out-of-pocket health-care expenses for retired and active workers and give lump-sum bonuses to employees for ratifying the contract, the people said.

And Forbes says:

Now under discussion is a second offer from GM that doesn't include the trust but has larger cost cuts, including a drop in hourly wages, increased health care contributions, fewer guarantees of new work at U.S. factories, reduced vacation time and other items.

But, not so fast, from the same Forbes article:

GM spokesman Tom Wickham would not comment on the VEBA developments. UAW spokesman Roger Kerson declined to comment.

On Thursday morning, a local union leader who also had been briefed on the talks said the VEBA was discussed by UAW bargainers on Wednesday.

"The VEBA's on the table. They're looking at the numbers right now," said the official, who also requested anonymity because the talks are private.

So, what it comes down to is a fight over how big the lump sum will be, as well as how GM will help out if healthcare costs keep rising like crazy. I guess saving 25% on healthcare costs and totally shifting responsibility to the union, which will have significant operating costs to run the VEBA, isn't enough. And now they're showing their true colors, looking to offshore jobs and cut other benefits.

What happened to negotiating in good faith? And now, if the UAW does go on strike, don't think the media won't portray it as them being hot headed and bringing potential ruin to the country. Bank on it.