UAW may give up jobs bank to revive auto loans

[Bozita]

Source: Detroit Free Press

UAW may give up jobs bank to revive auto loans
BY KATIE MERX AND JUSTIN HYDE • FREE PRESS BUSINESS WRITERS • NOVEMBER 20, 2008

The UAW is negotiating the possible elimination of its controversial jobs bank and is considering other concessions to help Detroit's automakers win low-cost loans from Congress, people familiar with negotiations said late Thursday.

Union officers from several locals said they did not know if the concession had been made but expected the jobs bank to be ended as part of a package of shared sacrifice when the automakers and UAW President Ron Gettelfinger return to Congress early next month. The jobs bank pays laid-off workers, sometimes for years.

The disclosure came after Congress kicked back the cash-starved U.S. automakers' urgent pitch for a $25-billion rescue Thursday, saying executives failed to convince lawmakers and the public that the industry knew how to fix itself.

Democratic leaders demanded that automakers submit plans by Dec. 2 for how the loans might be used to transform them into viable companies, promising to bring Congress back into session Dec. 8 if the plans measure up -- a dangerously short time frame for two automakers who may run out of cash before paying bills in January.

Read more: http://www.freep.com/article/20081120/BUSINESS01/311200023

[Mojorabbit]

1. What is a job bank? nt

[RamboLiberal]

5. While a good idea for a short term

So a worker could transition to another job, problem was according to my understanding this could go on forever.

There's also the "jobs bank," a feature of the UAW contract that drew fire from senators, in which workers get 95 per cent of their base pay and all of their benefits if they are laid off or their plant is closed.

In the past, workers could stay in the jobs bank forever unless they turn down two job offers within 80 kilometres of their factory. GM's new contract imposes a two-year time limit, and workers are out of the jobs bank if they turn down one job within 80 kilometres or four jobs anywhere in the country.

GM has about 1,000 workers in the jobs bank now because it's been thinned out by early retirement and buyout offers. At its peak, the jobs bank had 7,000 to 8,000 people, Sapienza said.

To be fair, Toyota also has paid workers whose plants were temporarily closed due to slow demand for their products. Employees attended training during the shutdown.

http://www.google.com/hostednews/canadianpress/article/ALeqM5gN_RRvKZJznG4eQ4w1jfs32SK-xQ

Article from 2005:

Dean Braid does not have a job, but the 49-year-old auto worker is not unemployed either.

The Michigan native, who once helped develop the V6 engine for General Motors Corp., was laid off after about 20 years on the job -- yet he still collects his full salary.

''I'd much rather be working, doing what I enjoyed doing," Braid said. ''But things could be worse, I suppose."

Braid is one of thousands of US autoworkers who, instead of working on engines or installing car parts, spend their time doing crossword puzzles, watching movies, or doing community service -- and keep getting paid by GM's jobs bank program.

The jobs bank was established in 1984, during contract talks between the United Auto Workers Union and the Big Three -- General Motors, Ford Motor Co., and Chrysler Corp. The program guarantees pay and benefits to union members whose jobs were eliminated due to technological progress or plant restructurings.

Some analysts estimate GM has about 5,000 employees in its jobs bank, but the auto giant does not disclose figures. However, according to a four-year labor contract GM signed with the UAW in 2003, the automaker agreed to contribute up to $2.107 billion over four years.

http://www.boston.com/business/articles/2005/11/30/gm_program_gives_laid_off_nearly_full_pay/

It was one of the RW talking points of course against the UAW.

[exboyfil]

7. Right Wing talking points

The biggest problem with GM's job bank is that they should be requiring the workers to be doing something productive with their time. If nothing more they should try to negotiate with the union to allow the workers to take other jobs (even away from Michigan) and defray a portion of the money that would have otherwise been paid to them. Even better would be to set up educational opportunities for the employees to get their B.S. degrees in technical fields.

Could they not get them to assemble something else besides cars (fans, lamps or any other crap we currently import from China)? The labor is free if they are going to get paid anyway.

To have adults sit around and do crossword puzzles and watch movies is insane.



The whole concept of 95% of your base salary for holding in place is also insane.

Nature abhors a vacuum. If you start with the premise of global unfettered trade, then GM worker's salaries and benefits are unsustainable. If we close our markets, then these salaries become more possible but costs of their product will go up dramatically. Also, my employer, which has a relatively healthy manufacturing export business, will probably be shut down from exports in the resulting global trade war.

Anytime a worker exists that will do a job for less than you, you have a problem. I see it in my own profession from globalization (both H1B Visas as well as Indian technical centers). The time to think about protectionism is when the economy is humming. Right now I think protectionism would cause a replay of the Great Depression.

$25B is not nearly enough to save the automakers. If the only thing GM has in the pipeline is a $30K electric car, then they are doomed.

[dkf]

2. How does this jobs bank work?

[Historic NY]

3. Thats about time paying people to do nothing.

[Fovea]

4. according to teh story

In the "jobs bank," laid-off workers receive 95 percent of their pay and benefits.

Gods know we wouldn't laid off workers to eat, or keep their homes.

[Doremus]

18. There may have been a place for it at one time but it's often abused

and mismanaged.

A GM worker I know has spent his working hours assigned to the "gen room" for the past several years. They send him out once a day to deliver meals on wheels (which is fine) but after he's done he tours the flea market/garage sale/estate sale circuit. He's a very big buyer of watches, gold and antiques. The guy probably makes as much buying and selling as he does for doing nothing at GM. Meanwhile, all of his friends and acquaintances know what he is doing. A GM goodwill ambassador he isn't.

Sweet setup for him, but lousy PR for a company with its hand out.

Now, I am not in the slighest bit against unions, on the contrary in fact. My husband is a proud member of the Ironworkers and we are loyal, vocal supporters of organized labor.

But there are aspects of UAW contracts that have done more harm than good for labor. The jobs bank is one of them and I'm glad they're willing to let it go.

[Kalyan]

6. job banks

The entire "job banks" is a sham! This is the "looting" at it's other extreme.

GM would be better served if:

1. All employees above $200k agree for a freeze in salaries till the company repays govt loan
2. Union agree to a 2 stage dismantling of "job banks"
a. In the first step, there wouldn't be any new additions to the job bank if the company provides an alternate role for the worker within 500 miles. The company will pay for relocation as well as partial relocation (if the worker's family cannot relocate immediately & would do so within 6 months)
b. The elimination of "job banks: within 5 years. While "no worker" should be left behind, the companies shouldn't pay if the workers don't co-operate
3. How come Toyota can have just 1,500 dealers for selling the same or more volume of cars than GM which has 7,000 dealers. GM should reorganize it's dealer network.

These points hold true for the other 2 Big Three majors as well

As far as the govt goes, US govt should provide a level playing field for all auto companies. Import tariffs, levies on hidden foreign govt benefits should be considered.

[Sadie5]

8. You don't understand

What you are commenting on. To the person who commented on the 200,000K jobs, those would be in management, not union salaried workers. There is no employee who makes that kind of money in a GM hourly position. The jobs bank was created in part with the union because of long unnecessary down time. Very few in the jobs bank were idle, and to the poster who proposed they be sent to other facilities that might not make cars, they were, GM plants at one time were spread far and wide. The first opening that came up was usually taken. Those with disabilities or work restrictions were the ones who had to wait and they did other work around the plants. Poor management is responsible for GMs woes, not the hourly union worker who for years worked hard and provided well for their family. You naysayers would do well if you were to ever get in a union, I expect some of you would change your mind about unions if you were taking home a decent dependable wage. You put down unions but would you rather have a decent wage, a protected workplace, insurance, all of the things a union negotiates for their workers or would you rather have a BUSH 'merica where you need at least three part time burger joint jobs to make ends meet. Stop believing everything you read in the papers.

[Sadie5]

9. To Kalyan

As far as the govt goes, US govt should provide a level playing field for all auto companies. Import tariffs, levies on hidden foreign govt benefits should be considered.
-----------------------------------------------

You are right on the money about this. These foreign companies have enjoyed a free ride with the Re-pugs, it might be time to end the party for them. Another thing that would help out is no outsourcing to china and Mexico. Let the workers do the jobs right here in the USA for good union wages, not some child in a third world country for pennies where in the end the tariffs eat up any profits.

[JDPriestly]

11. You are so right, Demo5

If Toyota makes cars in the U.S. the profits should stay here in the U.S.

Same goes if GM makes cars in China, the profits (and the cars) should stay in China. Companies should be entitled to recoup investments, but the profits should stay in the country in which they are earned as should the products. Products that are imported into the U.S. (or into another country from the U.S.) should be subject to import taxes. Our country was founded on import taxes.

What taxes do you think the British were protesting in the Boston Tea Party? It wasn't income taxes. Americans wanted the right to decide on import and export taxes and policy for themselves. Americans did not want to pay taxes that would be sent to Britain.

The right to control trade in and out of a country is the basis for sovereignty. As we are about to find out, you can't really claim to control your country unless you can control what goes in and comes out of it. These trade agreements have not helped our economy. I guess they are great for India, Taiwan and China and a few other countries. But they have really pulled us down.

I hope that we can persuade Obama and Hilary Clinton to rethink and renegotiate these onerous agreements. They are literally destroying our country.

[WriteDown]

17. That would be a disaster...

You could also make an argument that no personal "wealth" should ever leave a country, but just imagine that in practice.

[gizmo1979]

22. A Unions job is to

make layoffs as difficult and complicated as possible,That's how you get job banks and such.If you make the layoff procedure simple and straight forward companies will use them often and for nefarious reasons,There is always two sides to a story.Once you understand the madness it's not so insane after all.

[JDPriestly]

10. The jobs bank could be limited as to length of time, but

to end the concept of funding the transition for laid off workers would be devastating for the economy.

[Hugabear]

12. This is all about taking power away from the unions

Let's not blame this on horrible management practices over the past few decades.

Let's not blame this on stubbornly continuing to produce gas-guzzling trucks and SUVs, despite the growing popular demand for fuel efficient vehicles.

No, let's blame this on the evil unions. Now is the time to break them, take away their power. Get them to start making concessions, and within a few years, we'll be back to minimum wage workers on the assembly lines with little to no benefits. Just the way the corporate fatcats want it.

[Spouting Horn]

13. But why should

failing business (GM) be subsidized by business that perform well?

Corporate Welfare is thievery, pure and simple, because it's taking from business who made good decisions and are run well to pay for businesses that made poor decisions and are run poorly.

When will the subsidies end once they get started? GM will burn through their new credit line quickly, and what then?

[pampango]

14. What then? At the rate GM is losing money, their portion of the $25 billion

will last a few months. The economy and car sales will still be terrible. In all likelihood, the Big 3 will come back in the spring or summer and make the same pitch for loans/bailout. They will make the same "threats" of what will happen to the economy and their union jobs if we don't help them, so we will again.

Loans with no strings attached would allow current management to keep losing money. Attaching strings related to restructuring the companies and making them more viable is the only way to go, but even that will take a long time to turn things around (if that is even possible), so this $25 billion is just the beginning of the help the auto industry will need.

[Spouting Horn]

15. Bankruptcy is the only

logical way out for GM.

They were successfully slaughtered by Government mandates and the UAW.

[amandabeech]

23. If GM goes bankrupt, nobody will buy their cars,

and they won't get debtor-in-possession financing, because they can't get any financing now.

That Chapter 11 will become Chapter 7 in a couple of weeks.

They may very well take down Chrysler and Ford by causing buyers to avoid U.S. brands. Ford actually has a plan to turn itself around, is executing and is in much better shape than GM.

Don't forget the suppliers. They'll go, too.

So will lots of businesses in towns with auto plants.

As a nation, we will gut yet another basic industry and leave ourselves even more dependent on imports and more beholden to the countries that make things.

That's not a road that I want to go down because I'm mad at the investment houses, banks and insurance companies who had NO STRINGS attached to their big $$$$.

[customerserviceguy]

19. That's probably the biggest single hurdle to a bailout

how do we keep this from happening again? I really don't trust Congress to write up a success formula for the Big Three, when management which has theoretically kept focus on this cannot do it.

Simply put, this crisis was finally triggered by high gasoline prices for the vehicles that Detroit had made a profit from producing (in effect, subsidizing the high-mileage cars, and research into them), then double whammied by the credit crunch. We've had a weakening economy for some time now, housing prices have been either stagnant or falling for the last couple of years.

Only a true economic recovery will lift Detroit out of this situation for the long term. Congress already has more than enough incentive to do what it takes to make that happen, the question then becomes: Will the bailout help or hurt economic recovery efforts that will need to be undertaken? It's hard to come up with an answer that says that it helps.

[amandabeech]

24. Please don't lump the Big 3 together, because they are not similarly situated.

Ford is in much better shape and doesn't really need the money now. Chrysler has problems, and GM has big problems.

I've written about this so many times in so many ways this past week. I suggest that you google my screen name.

I'm more familiar with Ford. Its plan is to retool some of its truck, SUV and van plants and re-tool them to make the Fiesta, now made in Europe and which gets better gas mileage than the Focus, maybe the Ka, which is smart-car size, and then the new Focus currently made in Europe. Making essentially the same cars here and in Europe will save Ford LOTS of money and provide small cars popular in Europe here in the U.S. The Escort, which was very and popular in Europe, an the Focus came from the Ford Europe design shop.

You'll have to read about Chrysler and GM yourself, but their SEC filings talk about their plans.

EAch of the Big 3 has submitted a plan to the government for loans under the 2007 energy bill which can be used ONLY for re-tooling their plants. The money can't be used to tide them over right now that the banks won't lend to GM and Chrysler and none of the Big 3 can float any short-term commercial paper.

The loans that they are now asking for will make up for their normal bank financing since the TARP bill has failed to get the banks lending and the commercial paper market trading normally.

If the TARP had worked, you might not see the Big 3 asking for loans.

Expect other industries and trade groups to look for government financing so long as the banks and the commercial paper markets aren't functioning.

These are not normal economic times, just like the Great Depression was not a normal economic time.

Herbert Hoover pretended that the early Depression years were normal, and did very little out of the ordinary.

FDR came in in 1933 and tried all kinds of economic policies that were completely abnormal and the economy started to revive. In 1937, he tried to balance the budget, like in normal times and the economy took a nosedive again.

I believe that our economic problems could lead easily to the Great Depressions II. I don't want to waste time advocating Hooverish business-as-usual policies.

Instead, I want to try everything like FDR did, and get this country moving again as soon as possible, economic orthodoxy and mistakes be damned.

I hope that the Congress, Boosh and DU take the FDR path to the future, not the Hoover lane.

[Romulox]

21. The same reason AIG alone got $150 billion of taxpayer funds and counting...nt

[uncle ray]

16. no it is not all about union busting.

i support unions, but dammit, some concessions have to be made by the unions and workers. it may not be fair in your utopian union world, but such is life. i don't make anywhere near UAW wages, but i realize when times are slow, we all have to give a little, at my company it's common to take more unpaid time off in tight times. i would rather have a smaller paycheck than me or my coworker be out on the street with NO job. paying thousands to do nothing is unsustainable. something has to change, they cannot continue to pay people FULL wage to wait for another job that isn't going to come. there is a world of difference between firing someone to hire labor at 1/3 the cost, and giving someone the option of keeping their job at a lower, but still much higher than average wage. it beats the company going out of business. sorry but unions need to evolve. yes, management is mostly to blame for the automakers faults, but look around, the entire country is hurting, people really are buying fewer cars. the job banks are a logical place to make changes. i would support time limits on the amount of time spent in the job bank, along with allowing and encouraging the workers to actively look for other employment, rather than sit around in the job bank. i'd also support a severance package that pays former workers to relocate to other parts of the country if need be.

i work in manufacturing, and it is clear to me that when an industry that pays double the labor cost of the rest of the manufacturers in this country is failing, then along with changes in management, at least a small adjustment in labor cost should be looked at.

[Sadie5]

25. I don't see your point

The union negotiates decent wages which were never a problem when the economy was booming under Clinton. To date Bush and his union busters have been able to destroy almost every business with his neocon business model and squash the decent wage the American worker enjoyed. We need unions to keep employers on the straight and narrow, otherwise we will all be working for third world wages in some unsafe work place from dawn to dusk for pennies.

[amandabeech]

26. The 2007 UAW contract with each of Ford, GM and Chrysler gave back a lot.

New hires, if there ever are any, start at $14. They will have a defined contribution pension plan only, which works like a group 401(k). Some current workers will go to the defined contribution plan now. I suspect that if the defined benefit plan has not been closed as of now, it will be.

Current workers won't get raises. If the loans go through, I suspect that they will get some cuts.

Each of Ford, Chrysler and GM will pay into a Voluntary Employee Benefit Association trust through 2010. The trust will be administered by the UAW, and at some point during 2010, the Union, not the companies, will pay all retiree health benefits out of the VEBA.

I suspect that the Job Bank will take big current hits and then be phased out, and buyout payments will be reduced substantially, since the Senate went bonkers over them.

A lot of white collar employees have been laid off, too, and I expect that top execs will be expected to decline most, if not all, of their salaries.

Nonetheless, the 2007 contract will save the Big 3 millions and is a huge breakthrough.

Getting the plan and enough cuts by Dec. 2, though, will be problematic, and GM may not last to the New Year, they're in such bad shape. Chrysler is in better shape. Ford will last until at least February.

Time is of the essence for everyone.

[Strawman]

20. 95% for years might be extreme, but it's something that every worker should get

Why not push for something like that for everyone instead of trying to take it away from those few that do? We need some form of wage insurance especially for those times when a person the end of his or her career loses a good paying job where they have accrued a middle class salary.

95% is probably unsustainable for any company trying to compete. And paying people not to work is not something people in this country are ever going to support. But that's the kind of saftey net the government ought to be providing to all of us. Some insurance that covers a reasonable portion of the gap between a worker's peak salary in their old job and their lower salary in their new job.

Not everyone is going to get these high skilled, high paying jobs we're trying to create. Some people are going to lose an office job or a manufacturing job that paid a middle class wage and go to work at Lowe's. That's just reality.

It's just strange how we American's are wired. We are so much more inclined to resent the guy next to us in the same economic boat who is getting a fair shake than to say "hey let's give everyone a similar opportunity."