Rank and file workers organize against UAW-GM deal

A landmark deal which could help the Big Three US automakers narrow their labor cost gap with Asian competitors faced opposition Thursday among the union's rank-and-file workers ahead of a crucial ratification vote expected next week.

Leaders of the United Auto Workers union expressed confidence that they would receive the votes necessary to approve a contract negotiated with General Motors Wednesday after a two-day strike. That agreement will then be used as a framework for its negotiations with Ford Motors Co. and Chrysler LLC.

But three former UAW executive board members have spoken out against the contract and group of union dissidents is waging an Internet campaign urging members to vote against the plan to transfer the administration of retiree health care benefits to the union.

At issue is whether General Motors will provide sufficient funds to ensure that the union-run retiree voluntary employee beneficiary association (VEBA) is able to pay benefits.

While details of the deal are being withheld pending union ratification, UAW president Ron Gettelfinger said Wednesday that GM would provide a large enough cash infusion to ensure the trust can pay out benefits for the next 80 years.

But the UAW has been burnt by VEBAs in the past: a 33 million dollar fund negotiated in 1998 with Caterpillar Corp collapsed in 2004, leaving retirees to pick up the cost of health insurance if they weren't covered by federal Medicare plans.

Greg Shotwell, founder of the dissident union group Soldiers of Solidarity, which has battled UAW leaders and Delphi Corp.'s management since 2005, said the fact that GM shares jumped more than nine percent on news of the contract should make workers wary of the agreement.

"The rush to ratify is a sure sign that the 'Concession Caucus' doesn't want members to examine the contract too closely or debate it among themselves before they cast a vote," Shotwell said, referring to the UAW leadership's Union Caucus.

"Hence the slogan, 'Vote no until you know the whole truth,'" said Shotwell, who works at a GM warehouse in Lansing, Michigan.

"Don't imagine that GM will pull up to Solidarity House (the UAW headquarters) with a Brinks truck and pile cash into wheel barrows for the mystic VEBA," he told AFP.

"As VEBA fund managers the UAW joins the sharks and parasites in the insurance industry and will assume GM's role as the gatekeeper -- the collector of tolls which will be automatically deducted from your pension, or extracted in co-pays," he added.

UAW spokesman Roger Kerson did not return calls asking for comment on the Caterpillar VEBA.

Gettelfinger, however, said Wednesday he is looking forward to the debate.

"We have a VEBA in place. I think our retirees will be exceptionally pleased with this contract," he said during the news conference at which he called an end to the union's first nationwide walkout against GM since 1970.

Wall Street hailed the deal which will transfer a ballooning future liability currently estimated at more than 50 billion dollars off GM's books.

"While the devil will be in the detail, our first reaction is that GM captured a much broader set of concessions than we previously anticipated," JP Morgan analyst Himanshu Patel said in a report.

The health care agreement is expected to relieve GM of 14 billion dollars of retiree health care obligations if GM pays the UAW the equivalent of 70 percent of its current long term obligations in the deal, as is widely expected, Deutsche Bank analyst Rod Lache wrote in a research report.

While GM would take a huge hit to fund the deal, it would then improve the company's free cash flow by 2.7 to 2.8 billion dollars a year and cut labor costs by 18 to 19 dollars an hour, he estimated.

GM's US labor costs are currently nearly 30 dollars an hour above the level at non-unionized US plants run by foreign rivals like Toyota Motor.


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