GM And The UAW Go After Each Other

September 14, 2007 by Douglas A. McIntyre

According to Bloomberg, "United Auto Workers President Ron Gettelfinger picked General Motors Corp. (GM) as the union’s strike target after arguing with the automaker’s North American head over funding for a proposed union-run retiree health fund." Normally the UAW picks one of the Big Three as the lead negotiator when the time comes to finish a contract. GM has been given that designation and an agreement with the company would lead to similar deals with Ford (F) and Chrysler.

But, the matter is a little more serious than the UAW finishing negotiations. The union appears to believe that GM is pushing too hard for a deal to move union benefits into a fund that would be controlled by the UAW. But, the pool of capital would have to be funded by GM, and the fight is over how much should go into that pot.

In return for the union’s acceptance of the fund, Gettelfinger asked the companies to contribute 70 percent of their retiree health-care liabilities to get the program started, while the automakers offered 55 percent. And, with such a big difference in the views of the two sides, it may be hard to find common ground anytime soon.

GM’s shares were up almost 10% yesterday on an upgrade from Citi and expectations that negotiations with the UAW will end successfully and soon. But, the members of the union are still pressing their management to keep as many jobs as possible. That is not to GM’s advantage.

Walter Reuther may have died 37 years ago, but the ghost of the former UAW leader is still sitting at the bargaining table.

Douglas A. McIntyre