UAW Sacrifices Support For Laid Off Workers To Aid Ailing Auto Executives
Wednesday, December 03, 2008SUSIE GHARIB: The nation's struggling auto makers today won big concessions from the United Auto Workers. The development comes as the CEOs of General Motors, Ford and Chrysler prepare to testify before Congress tomorrow. They are seeking $34 billion in government loans. Those executives will be joined by UAW President Ron Gettelfinger, who said today his union is willing to renegotiate some terms of their labor contracts. As Stephanie Dhue reports, that commitment could help convince lawmakers to approve a bailout for Detroit's big three.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The UAW called it an unprecedented move, agreeing to delay payments into a health care trust for retirees and suspend the jobs bank, which pays workers after they've been laid off. UAW President Ron Gettelfinger says the jobs bank has become a distraction.
RON GETTELFINGER, PRESIDENT, UNITED AUTO WORKERS: It's a lightening rod. It's a sound bite, but it takes away the focus of what the real issue here. And the real issue is, the backbone of America.
DHUE: The union is also gearing up an ad campaign stressing its industry is as important to the economy as Wall Street. Whatever moves the union makes will be key for GM, Ford and Chrysler. The three firms submitted their restructuring plans to Congress yesterday and will answer questions from Senate lawmakers tomorrow. New Jersey Democrat Robert Menendez wants to know how the plans will work.
SEN. ROBERT MENENDEZ, (D) NEW JERSEY: You have to show me why this plan creates the viability for your company in the longer term and therefore the ability to repay the taxpayers. Secondly, you've got to give me benchmarks as to how we can ascertain that you are moving towards implementation of that plan in a way that creates viability.
DHUE: But critics say giving the auto industry government loans is the wrong approach. Cato's Dan Ikenson says the companies need to cut labor costs and a bankruptcy judge is better positioned than Congress to repair the auto industry.
DAN IKENSON, ASSOCIATE DIRECTOR, CATO INSTITUTE: The bankruptcy judge will tell them, we need to start over with these union contracts. Labor is supposed to be a variable cost. In this increasingly globalized economy in which U.S. manufacturers compete, you can't - when demand contracts, you need to be able to cut back your costs as well or else you can't survive.
DHUE: President-elect Barack Obama says it looks like the auto makers now have a serious set of plans and he thinks the focus should be on those plans, rather than where the money comes from.
PRESIDENT-ELECT BARACK OBAMA: At this point, I'm more interested in seeing whether or not there is a sound plan there and then I'll be in discussions and listening about where the best sources of money are.
DHUE: Senator Mendez says if the auto makers do get government loans, he wants to see protections against using that money for a merger with a foreign firm. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
KANGAS: Just moments ago, Senator Majority Leader Harry Reid told the Associated Press the Democrats plan to tap the $700 billion Wall Street rescue fund to save the U.S. auto makers does not have the votes to pass. Tomorrow we'll have complete coverage of the auto bailout hearings.
