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Correction to This Article
An earlier version of this article contained quotes from a previous draft of loan terms issued by the Treasury. This version has been corrected.

Some Say UAW's Sacrifices Look More Like Surrender

General Motors electrician Brian Thorne talks about the new bailout plan for U.S. automakers outside a plant in Parma, Ohio. The deal urges reduced pay rates.
General Motors electrician Brian Thorne talks about the new bailout plan for U.S. automakers outside a plant in Parma, Ohio. The deal urges reduced pay rates. (By Jason Miller -- Associated Press)

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By Peter Whoriskey
Washington Post Staff Writer
Saturday, December 20, 2008

For decades after its founding in 1935, the United Auto Workers stood as a powerful model for the American labor movement, an influential organization that historians credit with uplifting living standards for all working Americans.

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But with the announcement of the federal loan deal yesterday, the union found itself being forced into concessions that some described as tantamount to surrender.

The $17.4 billion federal loan agreement does keep the domestic auto industry alive. But the terms of that loan also insist that the wages and benefits for union workers be lowered to "competitive" the average of nonunion workers, specifically, those at the U.S. plants of Nissan, Toyota and Honda.

Those and other concessions would essentially erase the significant distinctions between union and nonunion auto workers, and the lack of such union worker advantages would render moot the union's fundamental purpose, some industry analysts and labor experts said.

It was the financial crisis, as well as the domestic industry's slippage against foreign automakers in the United States, that forced the union to acquiesce, albeit reluctantly, union leaders said yesterday.

In a statement, UAW president Ron Gettelfinger said the loan "will keep the doors of America's factories open, keep Americans working and prevent the devastating economic consequences for millions of Americans."

But, he noted, the union was disappointed that Bush "added unfair conditions singling out workers."

Exactly how tough the agreement ultimately will be on union workers is far from certain.

The language of the loan agreement sets specific "restructuring targets" that General Motors and Chrysler must use their "best efforts" to meet. Compensation must be made "competitive" to that of nonunion workers, and work rules must be "competitive" with those at nonunion plants. The companies also must reduce compensation to workers who have been laid off -- the jobs bank -- and at least half of the company's payments into retiree health care must be made in stock, not cash. If the companies fall short of those targets, they are required to explain why.

The payment in stock makes the health fund more risky. The wage concessions could force average wages down to $24 an hour from $28 an hour, analysts said.

But it is far from clear whether the Obama administration will hold the companies and the unions to those requirements. Democrats immediately signaled some opposition to the toughest provisions.

At a news conference in Chicago yesterday, President-elect Barack Obama said that workers should not be the ones "taking all the hits" and that all stakeholders "are going to have to play a part in this process."


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