UAW Needs to Give Chrysler Allowance – Gettelfinger
by: zekegervis
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UAW President Ron Gettelfinger
said on June 18 that the union must find a way to give Chrysler health care
allowances that are similar to those it gave to Ford Motor Co. as well as to
General Motors Corp. in 2005.
In an interview on “The Paul W. Smith Show” on
WJR-AM in
Two years ago, the UAW gave
health care allowances to Ford and GM that will save the companies’ billions of
dollars. And because Chrysler was in its stronger financial condition at the
time, the union refused to do the same for the group. The Chrysler Group, in
2005, made $1.8 billion. Unfortunately, due to the continuing steepness of
gasoline prices, which rose to nearly $3 per gallon, buyer began avoiding its
truck-based models. The company said that in 2006 it lost $618 million and
$1.98 billion before interest and taxes during the first three months of this
year.
In March, Gettelfinger said
that the UAW had finished a review of Chrysler’s finances in order to determine
if the allowances are warranted. On Monday, he acknowledged that the group has
a problem that needs to be resolved.
Roger Kerson, UAW’s spokesman
did not comment beyond the observations of Gettelfinger. Chrysler spokeswoman
Michele Tinson also did not comment.
In advance of national contract
talks with the Detroit Three that are set to formally start in July; both sides
have been negotiating on the health care allowances. But as of now, there is
still no health care agreement formulated.
Chrysler, Ford and GM have a
total of more than $100 billion in long-term retiree health care costs, which
analysts believe must be lessen.
Under the 2005 agreement with
GM, hourly workers would contribute $1 for each hour in future pay increases to
a new fund to be able to help pay for retirees’ health coverage. The amount of
$370 is the maximum amount that single retirees would pay every year in
deductibles and fees. Majority of the retirees and all active hourly workers
would have higher co-payments for prescription drugs.
Meanwhile, under the 2005
agreement with Ford, retired workers would pay monthly contributions, yearly
deductibles and co-payments for some medical services up to a maximum of $370
per year for individuals and $752 for a family. Neither deductibles nor monthly
contributions were asked from the hourly workers, but they must contribute a
portion of future wage increases to a trust for future health care
expenditures. Moreover, the agreement also raises workers’ costs for
prescription drugs as well as retirees’ emergency room visits.
Forecasters believed that any
allowance from the UAW on health costs was unlikely to be granted to Chrysler
when the group was turning a profit. But the situation has now changed.
DaimlerChrysler AG in
The company’s losses also
pushed Chrysler to announce a restructuring plan that includes acquisitions as
well as early retirement offers so it can accommodate 13,000 hourly and
salaried jobs in the
Although Cerberus already has
executives inside Chrysler’s headquarters working with its leaders, the equity
firm has said that it will leave the negotiations to Chrysler, which is being
led by Chrysler Group President Tom LaSorda.
On the radio show, Gettelfinger
said that he was pleased to say that the discussions he has had with Cerberus
have been very professional. He added that the firm has a lot of confidence in
Tom LaSorda’s capabilities and that they have confidence in the process that
has been founded.
About the Author
Zeke Gervis has a degree in Human Resource Management. He is an F1 fanatic and is a collector of racing memorabilias. At present, he enjoys working at a consulting firm in Iowa.
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