UAW boss continues to mislead about bailout

Washington Post:

For decades after its founding in 1935, the United Auto Workers stood as a powerful model for the American labor movement, an influential organization that historians credit with uplifting living standards for all working Americans.

But with the announcement of the federal loan deal yesterday, the union found itself being forced into concessions that some described as tantamount to surrender.

The $17.4 billion federal loan agreement does keep the domestic auto industry alive. But the terms of that loan also insist that the wages and benefits for union workers be lowered to "equal" the average of nonunion workers, specifically, those at the U.S. plants of Nissan, Toyota and Honda.

Those and other concessions would essentially erase the significant distinctions between union and nonunion auto workers, and the lack of such union worker advantages would render moot the union's fundamental purpose, some industry analysts and labor experts said.

It was the financial crisis, as well as the domestic industry's slippage against foreign automakers in the United States, that forced the union to acquiesce, albeit reluctantly, union leaders said yesterday.

In a statement, UAW president Ron Gettelfinger said the loan "will keep the doors of America's factories open, keep Americans working and prevent the devastating economic consequences for millions of Americans."

But, he noted, the union was disappointed that Bush "added unfair conditions singling out workers."

Exactly how tough the agreement ultimately will be on union workers is far from certain.

The language of the loan agreement sets specific "restructuring targets" that General Motors and Chrysler must use their "best efforts" to meet. Compensation must be made "equal" to the nonunion workers, and work rules must be "competitive" with those at nonunion plants. The companies also must reduce compensation to workers who have been laid off -- the jobs bank -- and at least half of the company's payments into retiree health care must be made in stock, not cash. If the companies fall short of those targets, they are required to explain why.

The payment in stock makes the health fund more risky. The wage concessions could force average wages down to $24 an hour from $28 an hour, analysts said.

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Gettlefinger continues to mislead about the concessions that others will have to make. What should be abundantly clear is that the workers are not being singled out, but are being asked to share the sacrifices that others are making.

The equity holders are shareholders, essentially the owners of the company are taking the biggest hit. They may even be wiped out ans the debt holders are crammed down and forced to take an equity position and essentially wipe out their debt holdings.

The unions will also get an equity position, which could be profitable to them down the line if the companies rebound. That equity position still gives them a leg up on the competition even though their wages and other benefits may now be equal. To say that the unions are being singled out when upper management is working for $1 a year and everyone else is making a sacrifice is just dishonest.