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Once-Mighty UAW Yields to Market
Wage Reductions, Job Cuts and Loss of Benefits Among Likely Recovery Concessions

By V. Dion Haynes
Washington Post Staff Writer
Wednesday, February 18, 2009

The United Auto Workers, which once set the standard for organized labor for wages and job protection, said yesterday that it is making concessions as part of the recovery plans submitted by General Motors and Chrysler.

The plans are expected to accelerate wage reductions, job cuts and loss of benefits, changes already spurred by foreign competition, declining sales and the worst economic conditions since the Great Depression.

"The UAW has reached tentative understandings with Chrysler, Ford and General Motors on modifications to the 2007 national agreements," UAW President Ron Gettelfinger said in a statement. "The changes will help these companies face the extraordinarily difficult economic climate in which they operate."

While declining to detail the concessions, Gettelfinger said the union is in discussions with the automakers over their Voluntary Employee Beneficiary Associations, the funds to which the companies have contributed hundreds of billions of dollars to pay retirees' health-care costs. Some auto analysts suggested that the companies would need to eliminate or substantially reduce retiree benefits to stay afloat.

Analysts also said the developments are being closely watched by other unions and that the automakers' plans could play a role in undoing gains won over time in the labor movement.

The UAW "was the most successful industrial union in the country," said Charles Craver, a labor employment law professor at George Washington University.

But "right now employers are vehemently anti-union," Craver said. "They will use this as an opportunity to tell workers, 'This is what happens when you get a union.' "

Harley Shaiken, a professor of labor issues at the University of California at Berkeley, said he thought the UAW's situation could spark a growth in unions. He said the labor movement grew dramatically in the years after the Great Depression. And union members are pushing the Employee Free Choice Act, which would allow workers to unionize with a petition rather than a secret-ballot vote.

"As this recession becomes more long-lasting, we could see a resurgence in the labor movement in response to that," he said. "People want a sense of fairness and dignity in economic hard times."

GM and Chrysler submitted their plans as a condition of receiving federal loans: $13.4 billion for GM and $4 billion for Chrysler. GM updated its outlook for industry sales this year, lowering it from 12 million to 10 million units. Chrysler, which used part of its loan to pay employees and retirement costs, said it is seeking $5 billion more from the government -- up from $3 billion -- because of deteriorating marketplace conditions.

Union members declined to comment on the tentative agreement because details have not been disclosed but said they have made numerous givebacks.

"Unfortunately, we've made many concessions in the last agreement of 2007," said Jim Graham, union chief at a GM plant in Lordstown, Ohio, that manufactures Chevrolet Cobalts. "That's been overlooked, and now we're being demonized -- like UAW and workers at the plant are at fault -- and that is not so."

The government has pressured automakers to bring wages in line with their foreign counterparts, who pay an average of $10 an hour less.

Gary N. Chaison, professor of industrial relations at Clark University in Worcester, Mass., said the U.S. labor movement is closely watching the UAW.

"Already the financial world is blaming the American labor movement for dragging down recovery," he said, and he doesn't expect a happy ending.

"We know pay will be lower, jobs will be lost, employee benefits will be cut," he said. "These were once the aristocrats of labor in America. They were best paid. These were the good jobs. Everyone knows this. So this is basically an orderly retreat to get out of this with little damage."

Craver, the GWU professor, said the only way for automakers to cut retirees' health costs might be to file for bankruptcy.

Negotiating with the retirees might be difficult because they are not union members. "The UAW doesn't represent them," Craver said. If GM and Chrysler can't get "the retirees to agree to it, they will have to go to bankruptcy . . . to substantially alter the pension and health care."

The UAW led the movement for fair wages, generous benefits and pension plans. In 1949, the union won its effort to get Ford to establish $100-a-month pensions for employees. The other two major U.S. automakers soon followed suit.

Staff writer Kendra Marr contributed to this report.

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