Sources: UAW to Give Up Cost-of-Living Allowances, Bonuses

By Staff Report

Feb. 18, 2009

More details emerged Wednesday, February 18, on the concessions made by the United Auto Workers to the Detroit Three automakers in advance of Tuesday’s viability-plan filings by General Motors and Chrysler.

The new agreements call on workers to give up lump-sum bonuses over the next two years and their cost-of-living allowances, said two UAW sources familiar with the talks. The contracts also limit overtime pay and supplemental unemployment, the sources said.

At Chrysler, workers also will forfeit a $600 Christmas bonus, the sources said. Automotive News first reported the concessions on bonuses, overtime and supplemental unemployment Tuesday.

Detroit Three and UAW officials are keeping mum on the agreements until workers have an opportunity to vote on the provisions. Details about the concessions were not released when GM and Chrysler revealed the viability plans to the U.S. Treasury Department.

UAW vice president Bob King and GM manufacturing and labor chief Gary Cowger declined to comment when asked about the changes at an event Wednesday in suburban Detroit.

Still left to be negotiated is future funding of retiree health care trusts. Loan provisions require the union to take carmaker equity in lieu of cash for half the remaining money owed the multibillion-dollar voluntary employees’ beneficiary associations.

In the case of GM, the UAW is being asked to take GM equity for half of the $20 billion that the carmaker owes the VEBAs.

Nevertheless, the UAW engaged Detroit Three negotiators in marathon bargaining over the past week to meet the filing deadline for the viability plan. As a requirement of $17.4 billion in federal rescue loans, GM and Chrysler must bring their work rules and labor costs in line with their Japanese counterparts in the U.S.

Although Ford isn’t getting loans, it may ask for a $9 billion line of credit and wanted to be a part of a contract pattern to stay competitive with Chrysler and GM. Ford said the UAW agreement would help it avoid asking for financial assistance.

In the plans released Tuesday, GM and Chrysler said they would need up to $21.6 billion to weather the current dismal sales climate.

The Detroit Three got the UAW to move on several fronts, one of the sources said. Instead of paying overtime for work beyond eight hours, they will pay overtime only for work beyond 40 hours during a week, the source said.

The union gave up two of the four lump-sum bonuses due workers during the four-year contract, the sources said.

Supplemental unemployment benefits, or SUB, also have been limited.

Idled workers with more than 20 years of service can collect SUB pay for 52 weeks at the traditional 72 percent of gross pay and another 52 weeks at half pay, the source said. Workers with less than 20 years get 72 percent SUB pay for 39 weeks and half pay for an additional 39 weeks, the source said.

Those SUB provisions are all that UAW members can get now that the Jobs Bank has been eliminated. The Jobs Bank was a program that guaranteed idled workers 95 percent of pay and full benefits indefinitely if no other job could be found for them.

Chrysler and GM were required by the 2007 contract to pay up to $4 billion for the Jobs Bank and SUB pay during the four-year agreement.

Details of total cost savings have not been made public.

Filed by David Barkholz of Automotive News, a sister publication of Workforce Management. To comment, e-mail

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