UAW President Ron Gettelfinger rallied support for VEBA in 2007, saying it would protect retiree health care benefits. (The Detroit News)
High-level talks continued Wednesday between leaders of the United Auto Workers and Detroit's Big Three automakers to try to hammer out an agreement to change funding terms for a trust the union will manage beginning next year to pay for retiree health care.
The UAW on Tuesday said it had reached tentative agreements with the automakers on other concessions to help the struggling companies rein in costs. The union agreed to let General Motors Corp. freeze lump-sum bonuses and cost-of-living increases for the next two years, reduce skilled-trades positions and eventually pay less to laid-off workers, according to sources familiar with the situation.
The sources said there are no significant differences between the GM pact and those with Ford Motor Co. and Chrysler LLC. GM and Chrysler are trying to carve out billions more in labor savings to meet the terms of federal loans that they need to survive the worst auto market and economic downturn in decades.
Neither the union nor the automakers would comment on the negotiations Wednesday. UAW legislative director Alan Reuther briefed Michigan Congressional Democrats about the tentative deal.
In revised restructuring plans submitted to the government on Tuesday as a condition of the $17.4 billion in loans they have already received, GM and Chrysler asked for as much as $21.6 billion more.
Their loan terms call for GM and Chrysler to bring their labor costs in line with those at foreign-owned U.S. auto plants. Ford wanted similar concessions, though it hasn't sought government aid.
Sources familiar with GM's discussions with the UAW said the union has agreed to give up two lump-sum bonuses and reduce the percentage of pay workers receive in supplemental unemployment benefits. However, the number of weeks workers will receive the pay has been extended from 48 weeks to two years.
The percentage of pay depends on the level of seniority, and is different for workers with 20 years or more of seniority, the sources said. The extended supplemental pay is in exchange for the UAW's agreement to end the jobs bank, a controversial program that allowed idled workers to receive nearly full pay while laid off.
Negotiators also have agreed to reduce highly paid skilled trade jobs, with the provision that if a skilled-trade worker takes a production position, the worker will be paid the lower production wage rate.
The federal government also wants the automakers to pay half of what they owe UAW health care trusts in company stock rather than cash, a move that could save them billions of dollars.
The UAW and the automakers agreed to the trusts, known as voluntary employee beneficiary associations, or VEBAs, during difficult contract talks in 2007 that spawned strikes at GM and Chrysler but forged historic new labor agreements. The VEBAs will help the automakers save money by transferring responsibility for retiree health care to the UAW.
For retirees, the VEBA was described as insurance against losing health benefits should the automakers file for bankruptcy. UAW President Ron Gettelfinger rallied support for the VEBAs in 2007 by saying it would secure retiree health care benefits for the next 80 years.
Negotiators haven't indicated when the VEBA discussions might be settled.
The UAW is "having second thoughts of taking on the responsibility of the VEBA," said Gary Chaison, a labor professor at Clark University in Worcester, Mass. "They are reluctant to let GM off of their obligation."