September 14, 2007 (LPAC)--"Big Three" U.S. automakers fighting off bankruptcy threats are offering far less than expected to the United Auto Workers (UAW) to take over its members' healthcare plans, raising the possibility of a national auto strike. The deadline for a contract settlement between the UAW and General Motors--the "lead company" designated by the union to bargain with--is midnight tonight, Sept. 14, although the talks could be extended. The automakers are now reportedly trying to use the contract talks to shed more than 30% of their total wage/retirement/healthcare costs per worker.
Local strike preparations were only ordered by the national union on Sept. 13, according to union local sources cited by the Detroit News today, after "the talks took a turn for the worse" on Wednesday night. The head of a Lansing, Michigan local representing GM workers said, "Apparently, from last night until this morning [Thursday], everything's changed." GM, after being designated the lead company for negotiations, has also been designated the "strike target" by the UAW--a phrase traditionally used by the union at the negotiations deadline, but one which President Ron Gettelfinger had said, in recent years, he would not use.
The critical problems relate directly to the debt desperation of the Big Three, especially Ford, and the unexpected difficulties of Chrysler's buyout by private equity fund Cerberus, because of the collapse of the leveraged-takeover junk bond market. When the UAW agreed in principle to take its members' and retirees' health plans off the companies' hands for a lump sum--a huge potential benefit cut--the companies responded by making that cut more huge. Against $114 billion in long-term healthcare liabilities for their employees, GM, Ford, and Cerberus/Chrysler had been thought to be offering a one-time "dowry" payment of only about $71 billion, with the UAW asking $80 billion. Now, the companies are offering only $63 billion, not much more than half of the healthcare liabilities which the UAW would be assuming for them. And in addition, they are refusing to "trade off" this big UAW concession, by dropping other demands for average union wage cuts and jobs cuts.
The union is getting "friendly advice" not only from the "analysts" and financial press, but also from the Lazard Freres bank which it has hired as consultants, that it must take the health plan deal because one or more of the "Big Three"--particularly, Ford--are likely to go bankrupt in the current financial crisis and leave healthcare unfunded entirely.
