UAW Members Await GM Health Deal After Ford Contract Ratified

As Originally Posted at Bloomberg

United Auto Workers members at General Motors Corp. will have to wait for an agreement on a union retiree health-care fund before voting on labor concessions GM needs to keep U.S. aid.

A UAW-GM agreement approved Feb. 17 by negotiators is similar to the economic matters ratified by UAW members at Ford Motor Co., UAW Vice President Cal Rapson wrote in a letter yesterday to local presidents and chairmen. GM and the UAW are still negotiating changes to the so-called Voluntary Employee Beneficiary Association, the letter said.

GM must persuade the UAW to swap $20.4 billion in future obligations to the VEBA for half that in cash and the rest in equity as part of U.S. Treasury requirements to keep $13.4 billion in loans and win approval for as much as $16.6 billion more. GM has said it needs at least $2 billion in fresh aid by the end of this month or it will be bankrupt.

Changes to the GM contract “in the area of economics, pattern the UAW Ford agreement,” Rapson said in the letter. Other parts, he said, are “drastically different.”

For example, there are no mandatory physical examinations and “other parts of the agreement are different to better fit GM culture.”

The UAW walked out on GM talks on Feb. 13 in a dispute over the VEBA demands and later returned to approve only other concessions. GM UAW members must still ratify the agreement for it to be implemented.

GM spokeswoman Renee Rashid-Merem said the automaker isn’t commenting on the VEBA negotiations, which are ongoing. UAW spokesman Roger Kerson didn’t return a phone call or an e-mail seeking comment.

Ford Changes

The Ford contract changes won the support of 59 percent of production workers and 58 percent of skilled-trades employees, the union said yesterday in a statement. The terms include elimination of annual bonuses and cost-of-living pay increases, as well as reductions in layoff benefits and in the company’s cash contribution to the VEBA for Michigan health insurance.

A key provision of the Ford accord lets the Dearborn, Michigan, automaker cut by half its cash contribution to the VEBA. Stock will make up the balance of the payments to the fund, beginning in 2010 when $3.2 billion is due, according to a March 5 report by Chicago-based analyst Brian Johnson of Barclays Capital.

Union Givebacks

Ford’s labor agreement also eliminates the so-called jobs bank, a 25-year-old program that paid UAW employees their full salary indefinitely to report to work when there were no duties to perform. GM and Chrysler LLC have eliminated their programs.

Instead, Ford union workers with more than 20 years will get 52 weeks at about 70 percent of their gross wages, so-called supplemental unemployment benefit, or SUB, pay -- or about double what they would receive in unemployment -- and 52 weeks more at half that rate.

Workers with more than 10 years and fewer than 20 get 39 weeks of full SUB pay and 39 weeks at half the rate. A worker with less than 10 years’ service gets 26 weeks at full supplemental pay and 26 weeks at half.

In the past, workers would get the supplemental pay for 48 weeks and then go into the jobs bank.