UAW Talks with Auto Industry Begin Negotiators from the United Auto Workers and Chrysler formally begin contract talks in Detroit Friday. The talks continue on Monday with GM and Ford. Much is at stake for both sides.
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UAW Talks with Auto Industry Begin

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UAW Talks with Auto Industry Begin

UAW Talks with Auto Industry Begin

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DEBORAH AMOS, host:

This is DAY TO DAY. I'm Deborah Amos.

NOAH ADAMS, host:

And I'm Noah Adams.

In a few minutes the District Attorney for New Orleans faces a lot of criticism. We'll explain that and give him a chance to defend his record.

AMOS: But first, we go to Detroit. Union negotiations began this morning with a ceremonial handshake between Chrysler CEO Tom LaSorda and the president of the United Auto Workers, Ron Gettelfinger. All week long on this program we've been exploring how crucial these talks will be for the future of the car business. Front and center is the question of health care, particularly for retirees.

NPR's Frank Langfitt is in Detroit for the first day of the negotiations, and he joins us now. Hi, Frank.

FRANK LANGFITT: Hi, Deb.

AMOS: So the main issue is health care. Please remind us what's wrong with the plan that's in place now.

LANGFITT: Well, the problem is the companies owe billions to their retirees. And this health care system was set up back when, you know, the Detroit Three completely dominated the market, so they could afford this. But now you have Toyota, Nissan and these other companies that have transplants down in the South, companies that are building cars here in the United States, they hardly have any retirees, and they also have government systems to keep the health care really affordable. So from the perspective of the companies here, you know, paying this health care costs of retirees is just unsustainable and really uncompetitive.

AMOS: And what are the automakers then proposing?

LANGFITT: Well, they're not saying right now. There's a blackout in terms of what they want to say to us, the reporters who are here in Detroit. But it looks like they're going to try to pitch some sort of trust fund. And the idea would be that the companies would pay a certain amount of money into a trust fund and then the union would take it over. And it would be their responsibility to look after the health care of their workers.

AMOS: And that takes union agreement. Will they go for that?

LANGFITT: Well, a lot of it may come down to money, you know. The companies don't want to pay everything they owe on heath care because that's going to end up costing them a lot. So it all depends on how many cents on the dollar that the UAW can get on this. They recently did a deal that went pretty well with Dana; it's a bankrupt auto-parts maker.

But you know, there are also some risks here. You know, if costs keep going up, the union could end up without enough money to really take care of their retirees and they may have to cut benefits. On the other hand, if any of these companies go into bankruptcy, creditors couldn't get that money, so the union would be able to keep it and protect it for the retirees.

AMOS: Is there any sense of how much money that we're talking about?

LANGFITT: Right now the Detroit companies pay about $11 billion a year for their retirees, and the total obligations are in the tens of billions.

AMOS: Let's talk about a hypothetical and see if we can personalize this. If, say, a young autoworker was sitting in a bar next to a retired autoworker, how would that conversation go?

LANGFITT: The conversation would probably get pretty honest. The younger worker - one of the issues here also is a two-tier wage system. And younger workers, some of them are temps, and they make about a third less pay than the older workers. The older workers, production, can make about 28 bucks an hour, which is very good for industrial wages right now in the United States.

So the younger worker might say, you know, why did you allow the auto companies to hire me at such a lower rate? And the older worker might say, would you cut my pension after I retire? The companies may try to expand this two-tier wage system. It's kind of a divide in conquer strategy, and of course it runs completely antithetical for the idea of a union, which is, you know, equal pay for equal work. There's a UAW activist I talked to - Greg Shotwell - and he describes what a two-tier system does to workers.

Mr. GREG SHOTWELL (United Auto Workers): This severs the solidarity between the two workers. It also severs the solidarity between generations. So these new hires, who are making less, would feel free to negotiate takeaways from retirees in order to benefit themselves. We couldn't blame them.

AMOS: And how long then would the negotiations go on?

LANGFITT: Well, the contract is up on September 14th. And really much of the summer is going to be pretty quiet. Each side will be staking out of position and talking about what their needs are. But usually like everybody else it takes a deadline to really motivate these folks. And so it's probably going to be in the final week or 10 days that you're going to see a lot of action and a lot of the tough decisions will come then.

And we'll see whether what we get is what the companies had been talking about, which is kind of a - what they call a transformational agreement that will change the complete structure of their cost and businesses, or maybe a more incremental one, which is what many people think the UAW wants to get.

AMOS: And does this agreement, if we get there, does it have ripple effects outside the car industry?

LANGFITT: Well, the car industry has helped set the industrial wage in this country, and it's going to be tough news for other manufacturing workers if they see the UAW having to lower wages, having to lower benefits, because, you know, they've been the standard setter for so many years.

AMOS: Thank you very much. NPR's Frank Langfitt reporting from Detroit.

LANGFITT: Thank you, Deb.

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