UAW Hopes New Year Brings Better Bailout Deal

The United Auto Workers object to key terms of the Bush administration's bailout of the automakers. Union President Ron Gettelfinger isn't shy about saying he will wait to work out a better deal with the Obama administration. Some analysts say terms of the deal are squishy enough that it will be difficult to know whether the deal is being undermined.

Copyright © 2008 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

RENEE MONTAGNE, host:

This is Morning Edition from NPR News. I'm Renee Montagne.

LINDA WERTHEIMER, host:

And I'm Linda Wertheimer. The Bush administration has set down terms to be met by General Motors and Chrysler, in order to receive government loans. For one thing, they're demanding that companies prove they can be viable. But the United Auto Workers plans to fight some of the government's requirements. And people who follow the car business say determining whether the firms can make it on their own won't be easy. NPR's Frank Langfitt reports.

FRANK LANGFITT: Under the terms of the loans, the United Auto Workers are going to have to give things up. Like the jobs bank, where workers can earn nearly full pay for no work. They'll also have to give up wages to help their companies compete with Toyota and Honda. Union President Ron Gettelfinger calls this quote "unfair." And he says he's going to try to get the president-elect, Barack Obama, to change it. Here's how Gettelfinger put it yesterday on Fox Business.

Mr. RON GETTELFINGER (President, United Auto Workers Union): We're willing to do more, but we want to see what other people are going to do before we have to continue to draw that last drop of blood.

Dr. PETER MORICI (Professor, University of Maryland, School of Business): Ron Gettelfinger doesn't want to change anything until Barack Obama becomes president because he's going to cash in that labor check.

LANGFITT: That's Peter Morici. He's a professor at the University of Maryland's School of Business. Organized labor helped Mr. Obama in his campaign. Morici says Gettelfinger now wants the President-elect to return the favor and preserve union benefits. But Morici says if that happens, many taxpayers will end up paying for a lifestyle that most Americans don't enjoy.

Dr. MORICI: Why should a waitress in Indiana making $12 an hour, maybe $25,000 a year, send her hard-earned tax dollars to Washington to subsidize automobile workers making more than $60,000 a year?

LANGFITT: The government is pressing the companies to make changes and become, quote, viable, but Marisi says there aren't any hard financial targets, and he worries that any determination of viability could be based on squishy assumptions that make the firms look stronger than they really are - like projected sales.

Dr. MORICI: Small changes in the assumptions can turn a lousy business model into a winner.

Mr. GEORGE MAGLIANO (Global Insight): Too much wiggle room with this, and not enough teeth.

LANGFITT: George Magliano oversees North American Auto Research for Global Insight, the financial analysis firm. He says the bailout is not a road map to profitability, just a way to keep the companies alive for a while.

Mr. MAGLIANO: It buys them time, and it's probably, as we were calling it, the bridge-to-the-bridge. OK?

LANGFITT: Even if Mr. Obama enforces some of the stricter terms, it's not clear how they'll work. Take retiree health care benefits, a giant cost. GM and Chrysler are trying to hand them off to the union. And they promised billions of dollars, so the union can cover future expenses. But the companies just don't have that kind of cash right now. And the government says the union must take half its payments in company stock. With GM trading below four bucks a share, Patrick Anderson says the union doesn't like that idea.

Mr. PATRICK ANDERSON (Director, Anderson Economic Group, Michigan): It's an enormous bind.

LANGFITT: Anderson runs Anderson Economic Group in East Lansing, Michigan. He says in some ways, the union is trapped by the downturn in the auto market.

Mr. ANDERSON: This is the situation that you find yourself in, when you are a major partner in a bankrupt company, or near-bankrupt company's operation.

LANGFITT: Unlike some analysts, Anderson thinks the Obama administration can use the threat of bankruptcy to make the union and the companies change. And he thinks some of the Bush administration's demands on work rules and union salaries will make a big difference. He just wishes he'd seen tougher requirements earlier - not for the Detroit companies, but for the nation's big banks.

Mr. ANDERSON: I certainly wish as a taxpayer that these kinds of terms were used in the Wall Street bailout, because it's striking to me how much more detailed, specific, and enforceable these provisions are.

LANGFITT: GM, Chrysler, and the United Auto Workers will begin wrangling over those provisions early next year.

Frank Langfitt. NPR News, Washington.

Copyright © 2008 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Related NPR Stories

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.