Auto Workers Union Adjusts to Going Private
MICHELE NORRIS, host:
One of the big surprises in today's Chrysler deal is that Ron Gettelfinger, the head of the United Autoworkers, actually endorsed it. Earlier, Gettelfinger had opposed the deal with the private equity firm. In the past, the union has seen such companies as slash-and-burn capitalists who sacrifice jobs for profits.
NPR's Frank Langfitt joins us now in the studio. And, Frank, why is the UAW leadership supporting it this time?
FRANK LANGFITT: Well, we're not - it's not entirely clear just yet exactly why. You know, for one thing, it seems to be a matter of pragmatism. Gettelfinger today at a news conference said that they weren't party to this decision anyway, so to some degree, he felt like he needed to go on with it.
The other thing, though, is he said that Cerberus has given some assurances through Daimler Benz that they'll - that they're going to make some commitments to the union. Now, he wouldn't say what they were. One of the most important things for the union is to protect jobs, and here's what he said at the news conference today in Detroit:
Mr. RON GETTELFINGER (President, United Auto Workers): And in our discussions, there was a lot of things that we were concerned about. A lot of this is confidential information that we're not permitted to disclose and we will not disclose, but based on everything that we heard, we were comfortable enough to say that we will support this transaction.
LANGFITT: Now, Gettelfinger said that they're going to meet with Cerberus tomorrow, and what he hopes to hear is a reaffirmation of some of these commitments that he's heard. But so far, we really don't have any idea what those are.
NORRIS: Now, Cerberus is a private equity firm - we assume - interested in making profits. How can they do that without cutting jobs?
LANGFITT: Well, that's not entirely clear either. But one of the things that people are talking about in Detroit is some kind of deal on pensions and health care. You know, Chrysler owes $18 billion in liabilities to its retirees on health care and pensions, and so there may be some possibility that the union would take over the pension fund, and in agreement for that, they would agree to cut costs on their health care. And in terms of the pension fund, this would be, sort of, a bird-in-the-hand for the union. They could control it and protect it.
NORRIS: So one possible concession. What else might the union get?
LANGFITT: Well, the big thing for them is investment in U.S. factories. You know, in the age of globalization, their biggest concern has to be protecting jobs. And Cerberus, apparently, has made some intimations that they're willing to invest more. And of course, in order to sell this to the union rank and file who's going to be really nervous about a private equity group, it'd be great for them to hear that there's going to be some protection for their jobs.
NORRIS: Is there any kind of precedent for a union taking over or taking control of working - worker benefits?
LANGFITT: Absolutely. You know, earlier this year, Goodyear struck a really interesting deal with the U.S. steelworkers. It didn't get a lot of media attention, but everybody in Detroit was following it.
And here's what happened. The union - the steelworkers ended up taking about a billion dollars from the company, from Goodyear. And in exchange for that, they took control of the pensions, and they also took responsibility for all those rising health care costs.
Now everybody in Detroit, when this happened, the big three automakers all said this was something they were looking at really closely.
NORRIS: Frank, this is happening at a very interesting time. Contract negotiations between the UAW and the big three start this summer. How will the Cerberus deal affect that?
LANGFITT: Well, it's interesting. Gettelfinger was asked that today at the news conference, and he said he didn't think there'd be any influence at all. But I can't imagine many people in Detroit really buy that, because the way these always work - and this starts at the end of June, these contract negotiations, they'll go on into September, and they're going to be among the toughest that we've ever seen, because of all the pressure on these companies.
And what usually happens is it's what they call pattern bargaining. So if the UAW gets a deal with one company, the other companies want the same sort of thing. So if we see some sort of concession over pensions and health care, which are just a huge problem for these companies, you've got to figure that Ford and GM are going to be looking for the same kind of deal.
And so what we may be seeing - it's a little too early to say, because this is speculative - but some sort of new industrial model for dealing for these huge expenses that really are weighing down these big industrial U.S. companies.
NORRIS: Thank you, Frank.
LANGFITT: Happy to do it, Michele.
NORRIS: That was NPR's Frank Langfitt.
And there's a timeline on the history of Chrysler at our Web site. You can find that at npr.org.
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