UAW Reaches New Agreements With Detroit Three; Debt-for-Equity Talks Continue

By Staff Report

Feb. 17, 2009

The United Auto Workers union has reached tentative agreements with the Detroit Three on concessions to help the automakers weather the recession.

But the thorny issue of swapping debt owed to retiree health care funds for company stock remains unresolved.

General Motors and Chrysler were seeking concessions as part of their viability plans for federal bailout money. Ford Motor Co. is not seeking bailout money but wanted parity with Chrysler and GM.

A source familiar with the talks said the concessions involve overtime, bonuses and limits on unemployment benefits.

But the UAW had not reached agreement on a proposed debt-for-equity swap with Chrysler and GM, a condition of federal aid to the automakers. The Bush administration, which loaned money to GM and Chrysler in December, wanted the UAW to take half of the remaining money owed to its voluntary employees’ beneficiary associations in company stock.

In a statement Tuesday, February 17, UAW president Ron Gettelfinger said, “Discussions are continuing regarding the Voluntary Employees’ Beneficiary Associations at all three companies.

“The UAW is withholding the terms of the tentative understanding pending completion of the VEBA discussions and ratification of the agreements.”

A source involved in the talks said that Chrysler has reached agreement with the UAW on concessions including limiting overtime and supplemental unemployment benefits.

On the eve of filing its viability plan to the federal government, Chrysler got the UAW to move on several fronts, the source said. Instead of paying overtime for work beyond eight hours, Chrysler 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 source said.

Supplemental unemployment benefits also have been limited. Idled workers with more than 20 years of service can collect supplemental pay for 52 weeks at the traditional 72 percent of take-home pay and another 52 weeks at half pay, the source said.

Workers with less than 20 years get 72 percent supplemental unemployment pay for 39 weeks and half pay for an additional 39 weeks, the source said.

Those supplemental unemployment 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 supplemental unemployment pay during the four-year agreement.

The source did not have a dollar savings for the concessions. Chrysler and GM are turning in their viability plans today detailing how they are cutting costs and restructuring for long-term survival.


The following statement was released Tuesday, February 17, by UAW president Ron Gettelfinger:

“The UAW has reached tentative understandings with Chrysler, Ford and General Motors on modifications to the 2007 national agreements. The changes will help these companies face the extraordinarily difficult economic climate in which they operate.

“Our vice presidents and bargaining committees are to be commended for doing the best job possible for our membership under these difficult circumstances. The solidarity, support and patience of our membership, active and retired, have been instrumental in helping all of us through these challenging and unprecedented times.”

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

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