Well-Kept Media Secret: UAW Conceded No Base Pay, Health, or Pension Benefits in GM, Chrysler Bankruptcy Run-ups

NoToGMandChrysler0109A New York Times article by Nick Bunkley on Friday targeted for print on Saturday about the status of contract talks between Ford Motor Company and the United Auto Workers piqued my interest in a previously neglected but important matter.

Ford and the UAW are apparently close to an agreement. In describing what Ford workers are being asked to give up, Bunkley wrote the following (bolds are mine throughout this post):

Ford executives have said the company needs more concessions to keep G.M. and Chrysler from having an advantage.

.... The deal that U.A.W. workers at Ford approved in March got rid of cost-of-living pay increases and performance bonuses through 2010 and eliminated the jobs bank program, which allows laid-off workers to continue receiving most of their pay. In addition to those concessions, G.M. and Chrysler workers agreed to work-rule changes and a provision that bars them from striking.

What? From press coverage at the time, you would have thought that unionized GM and Chrysler workers made ginormous, humungous, unprecedented sacrifices to enable their companies to get through bankruptcy and to emerge as lean, mean vehicle-making machines.

Uh, no.

What follows is a picture of the top portion of the first page of a "contract outline" presented by the union to its members shortly before the changes therein were ratified (full outline in PDF format is here; HT WSJ's Deal Journal blog):

UAWcontractOutlineIntro0509

Let me repeat the key sentences found inside the red box:

For our active members, these tentative changes mean no loss in your base hourly pay, no reduction in your health care, and no reduction in pensions.

.... Unfortunately, in this process our retirees are required to make difficult sacrifices as is explained later in the summary.

In other words, the UAW protected its currently working members, the ones who get to vote on contracts, from any meaningful sacrifice, while hosing its retirees, who don't get to vote.

How hard were retirees hit? This hard, according to a May local news report out of Detroit:

(UAW President Ron) Gettelfinger said the contract is a difficult one for the active members and retirees, who will give up some 25% of their health care benefits. "This was a matter of salvation as much as we possibly could for our retirees. I am regretful that we had to do anything and I think it's a disgrace we had to do anything," Gettelfinger said.

Spare us the pseudo-tough talk, Ron.

Even given the opportunity to cleanse all sins in bankruptcy, GM and Chrysler ended up doing very little to change their U.S. manufacturing day-to-day cost structure. Thanks to press coverage that has been almost completely derelict, almost no one knows this. Nick Bunkley's piece above continues in that truth-obscuring tradition.

What really happened between the two companies and the UAW confirms and extends what I noted last week (first item at link) when items about post-bankruptcy restructurings began to appear:

In each case, it looks like the bankruptcy plan really consisted of the following:
  • “Let’s steal as much as we can from disfavored stakeholders.” In Chrysler’s case, with the help of government intimidation, first-lien non-TARP lenders were fleeced.” At GM, it happened to the unsecured bondholders.
  • “Let’s cut things back just enough to make us look like we’re serious, but not enough to be able to emerge profitably.
  • “Let’s hope for a miracle in the marketplace.”

It looks like retirees were treated by their UAW "brothers and sisters" as yet another set of "disfavored stakeholders."

Meanwhile, the marketplace miracle necessary for all of this to even have a chance of working is nowhere to be found, and tens of billions of our tax dollars appear to be headed for a big, fat write-off.

Cross-posted at BizzyBlog.com.

Tom Blumer
Tom Blumer
Tom Blumer is a contributing editor for NewsBusters.