Health-Care Talks Make UAW Retirees Wary It's an anxious time for retirees of General Motors. They, and more specifically their health-care benefits, are in the crosshairs as the United Auto Workers union hashes out a new contract with GM.
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Health-Care Talks Make UAW Retirees Wary

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Health-Care Talks Make UAW Retirees Wary

Health-Care Talks Make UAW Retirees Wary

Health-Care Talks Make UAW Retirees Wary

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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It's an anxious time for retirees of General Motors. They, and more specifically their health-care benefits, are in the crosshairs as the United Auto Workers union hashes out a new contract with GM.


Today in Detroit - General Motors and United Auto Workers return to the bargaining table, capping off a week for both sides to put a progress toward a new deal. One of the main issues has been the transfer of retiree health care costs to a union-managed fund. For decades, retirement for UAW member meant a solid pension and lifetime health care. Now that could change.

NPR's Frank Langfitt has more.

Unidentified Man: The flag of the United States of America and to the republic for which it stands…

FRANK LANGFITT: Today is the monthly retirees' meeting - UAW Local 22 in Detroit. This is home to many of the workers who built Cadillac into one of the world's great brands. Several hundred retirees amble in and take seats beneath the fluorescent lights for a ham and roast beef lunch. They've also come for an update on contract talks with General Motors.

Mr. JAMES SWEENEY(ph)(Retiree, General Motors): This is the worst, nothing like this before.

LANGFITT: That's James Sweeney. He's 78 and used to work as a dingman, repairing Cadillac bodies.

Mr. SWEENEY: This is the first actual worry I think that the retirees have had.

LANGFITT: That worry is a plan by GM to get rid of its health care obligations to Sweeney and nearly 270,000 other retirees. The company wants to put money in a trust fund and let the union takeover responsibility. Sweeney hates the idea. He's afraid the trust fund will dry up and he'll have to pick up the tab.

Mr. SWEENEY: When they run out of money, what would happen? GM will have no reason to refund it and say, hey, you took a buyout. It's yours. Let's face it. I hate to say that my medical depends on the stock market.

Mr. GEORGE McGREGOR (President, Local 22, United Auto Workers): Why should we (unintelligible) out the (unintelligible)?

LANGFITT: George McGregor is president of Local 22. He knows retirees like Sweeney are worried. McGregor takes the microphone and urges them to trust the union's bargaining committee.

Mr. McGREGOR: Well, let's say our (unintelligible) are less affordable because they're all going to give us a contract that's going to benefit and will be in the best interest of all our (unintelligible) every time we work (unintelligible).

(Soundbite of applause)

LANGFITT: These days, UAW retirees ride an emotional arc, from anxiety and fear to anger and frustration over a fast-changing world. Next up at the microphone is Frank Saraccio(ph), one of the retirees' officials.

Mr. FRANK SARACCIO (Official, United Auto Workers): We got a new horizon. We got something called a global economy. You know what that means? If you want to get a job, you will have to go to China or India or somewhere else out of the United States because they're not going to fill (unintelligible) here in the U.S. unless you and I come together and support candidates that are going to support those things that you and I and our families need.

LANGFITT: And at every meeting, there is a reminder of the passage of time.

Mr. SARACCIO: Anyone else in the audience who knows anyone has had to wait recently?

Unidentified Man #2: I do.

Unidentified Man #3: Me, Frank.

Unidentified Man #4: (Unintelligible).

LANGFITT: Some retirees at today's meeting began with GM in the 1940s. They were called the glory days when Detroit's big three owned the U.S. market. Jim Renfro(ph) is 86. He used to work assembly on the old Fleetwood.

Mr. JIM RENFRO (Retiree, General Motors): Man, I can remember when we was working in the plant that had people would wait six, eight months just for a Cadillac.

LANGFITT: But somebody who's devoted your life to the car business, how do you feel about watching it change the way it has.

Mr. RENFRO: Well, it hurts. I'll be honest with you. My grandfather came here in 1913. He worked for Ford Motor Company. I hate to see the changes and it hurts me when I see that the imports are selling more cars in this country than we are. And I mean, that's disgusts me.

LANGFITT: For many retirees, the current talks over health care come down to a promise. John Bates(ph) spent 35 years with GM. He sees it like this.

Mr. JOHN BATES (Retiree, General Motors): You have to take care of the people that took care of you and made you all that money, you know. But General Motors didn't make that money by themselves. That being a factor, we should be taken care of in our elderly years.

LANGFITT: But if General Motors has its way, it will rewrite its social contract with its retirees and then the responsibility to look after the sick will no longer fall on the company, but the union itself.

Frank Langfitt, NPR News.

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Q&A: The Stakes in the UAW, Automaker Talks

Eileen Duff of Lansing, Mich., the wife of a retired United Auto Workers union member, pickets the opening of the 2007 contract negotiations between GM and the UAW on July 23 in Detroit. Bill Pugliano/Getty Images hide caption

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Bill Pugliano/Getty Images

The United Auto Workers have called their first nationwide strike in more than three decades. The union blamed the walkout on what it described as General Motor's unwillingness to meet it halfway.

UAW head Ron Gettelfinger said the key issue holding up talks now does not involve the plans for a health-care trust fund that the union would manage. Instead, he said it is job security for his workers who face the threat of seeing their positions shipped overseas.

GM said it was disappointed by the strike and wants to reach an agreement as soon as possible.

Here's more on the health-care trust fund initially at the heart of the talks — and on what is at stake:

People call these among the most important talks in the history of the auto industry. Why?

They are about fundamental change. The question is who will take responsibility for about $100 billion in health care for retirees. That obligation is crippling companies as they try to compete against lower-cost, foreign firms. People who follow the car business say the future of the Detroit companies may be at stake.

What's the solution?

Both sides are interested in a health-care trust fund. The companies want to put money in a fund and let the union take over responsibility for retiree health care. The companies are talking about paying perhaps 65 cents on the dollar, but the union wants more, because it's worried the fund could run out and workers would be left hanging.

What does each side get out of a trust fund?

Control over their destinies. By getting health care obligations off the books, the companies insulate themselves from costs they can't predict. With a cleaner balance sheet, the firms can invest more in new products and — presumably — become more competitive. The downside for the union is obvious: it takes on the headache of rising health-care costs. But a trust fund also provides insurance. If a company goes bankrupt, creditors couldn't touch the trust fund — which would be separate from the firm — and retiree health care would be protected. Without a trust fund, a bankruptcy judge could void the union contract and retirees could lose all their health-care benefits.

What role does global competition play in all of this?

It's a huge factor. Back in the 1970s, the "Detroit Three" essentially were the U.S. car market. Today, it's a crowded field; foreign competitors, including the Korean firm, Hyundai, have factories throughout the American South. And when it comes to retiree heath care, there's no comparison. In the United States, Toyota has maybe 300 retirees compared to nearly 270,000 at General Motors. And at home, the company operates under Japan's state-run health care system.

Will a health-care deal solve the problems of the Detroit car companies?

No. Their troubles are deeper and some of the wounds are self-inflicted. The companies tilted production towards light trucks and SUVs, but that strategy collapsed when gas prices soared. And the firms need to improve their image with consumers. Even though quality has improved considerably in recent years, many people still view Detroit-made cars as second-tier products.