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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (70043)	10/10/2007 2:21:36 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

How Less Pay, More Risk 'Sells Itself' Job-Security Promises Have Auto-Workers Union Poised To Ratify GM Deal Today online.wsj.com By MIKE SPECTOR in Lordstown, Ohio, and JEFFREY MCCRACKEN and JOHN D. STOLL in Detroit October 10, 2007; Page B1 The contract agreement the United Auto Workers struck with General Motors Corp. after a two-day strike last month freezes union members' base pay for four years. It shifts $51 billion in health-care obligations for retirees from GM to a union-run trust fund. And it pays new UAW workers lower wages for the same work as veterans. For instance, many of the people voting on the deal in Warren are temporary workers, and the contract has favorable terms for them. In addition, several of the people voting on the deal will be lured to retire very shortly with generous attrition packages. He also noted UAW officials said that the next generation of transmissions would be built at the Warren plant, assuring work well into the next decade. But Mr. Benchich said the contract language states that getting the transmission work is "'business-case dependent.' That means we have to offer more cuts to make a 'business case.' It's just a continual downward spiral." In Lordstown, local president Mr. Green's approach to securing ratification at his plant had been to avoid a hard sell, or engaging in arguments. Tall with short spiked brown hair and matching soul patch, Mr. Green, 37 years old, is a relative newcomer to GM and UAW politics. He's worked for GM since 1989, when he began as a summer helper on the production line. Eventually he went full-time, driving a forklift for eight years. Mr. Green, who has a bachelor's degree in social science, took over as Local 1714 president in March, earning $29 an hour. Mr. Green's message to members: Just the facts. As he sees them, the facts are job security, steady wages and continued health coverage. "I'm not trying to sell anything," Mr. Green said. "The facts speak for themselves." But just in case, this past weekend, Mr. Green, along with a representative from the international union, held three closed-door meetings in the local's union hall, a converted gymnasium. In chats with members leading up to the vote, he tended not to mention the lower wages for new hires. Nor did he often talk about Wall Street's main obsession: The union's agreement to take responsibility for retiree health care through a union-managed fund called a voluntary employees' beneficiary association, or VEBA. To be free of the obligations, GM will contribute $29 billion to the trust fund. Wall Street views that as a major union concession that should help GM close cost gaps with Asian rivals such as Toyota Motor Corp. But when Mr. Green mentioned health care, he talked about continued coverage for active workers and not "VEBA." He said he didn't understand all the VEBA's particulars but trusted union leaders to tap top-notch advisers to manage it and invest more carefully than GM. Mostly, Mr. Green focused on "the awesome feeling knowing there's a commitment" for future work at his plant. By yesterday morning, Mr. Green's troops had spoken: His local passed the deal with about 57% of the vote. He said the new contract will return GM to profitability and alter perceptions of its workforce. "We did step up to the plate," he said. "It's just ... will people recognize that?" Write to Mike Spector at mike.spector@wsj.com, Jeffrey McCracken at jeff.mccracken@wsj.com and John D. Stoll at john.stoll@dowjones.com