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What are we to make of the past round of bargaining between the Canadian Auto Workers (CAW) and the Big Three (GM, Ford, and DaimlerChrysler)? While Telus, Stelco, and CBC workers were in the midst of bitter struggles, the reputedly difficult auto talks were in the end remarkably amiable. The question on many labor activists’ minds was: What happened to the CAW’s role in challenging the rest of the labor movement to push further, its status in opposing corporate-inspired globalization, its reputation for practicing social movement unionism?

The CAW achieved significant pension increases at a time when others were worried about hanging on to their pensions; it got a wage increase for its members guaranteeing over a dollar an hour over three years (which will most likely be more than doubled when the union’s cost of living clause is factored in); and though there were caps placed on a few benefits, the CAW’s rich benefits package remained intact. Moreover, the agreement received high ratification votes.

LOWERING EXPECTATIONS

But the vote, however, also reflected the union’s conscious lowering of expectations going into bargaining and it was this, along with the implicit lessons the union seemed to convey in this round of bargaining, that was so troubling.

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Read the rest

[ 30 October 2005: Message edited by: robbie_dee ]

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When Delphi Corporation filed Chapter 11 on October 8, the world’s second-largest auto parts maker was crystal clear about its goals. CEO Steve Miller said he needed to cut wages by 63 percent, from about $26 to $10 or $12, and to get workers to pay 27 percent of their health care.

If the union protested by striking, Miller said, he would void workers’ pensions and turn them over to the federal government’s pension back-up agency, which would slash those too.

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If he does, he'll probably bring GM down with Delphi - investors are already acting as if GM is toast. I don't have a link handy but part of the deal was that, if Delphi went down before 2007 GM would pick up the benefits [I think the unfunded shortfall at Delphi is about $11 Billion (that's the upper end of the range, but what's a few billion among friends) while the unfunded shortfall at GM is $31 Billion - and those are pension only numbers, Í don't know what retiree health care amounts to]. Add to that the fact that the
SEC has subpoenaed GM for information on its pension benefits and transactions with Delphi Corp., the parts supplier that GM spun off in 1999. The subpoenas signal that the SEC has begun a formal inquiry of GM's accounting. The SEC does not comment on investigations.

From elsewhere on the latter link:

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Adding to concerns is that the PBGC estimates the auto industry's pensions, among the nation's largest, are underfunded by $45 billion to $50 billion. The agency started an informal investigation of GM, Delphi and Ford Motor Co. in October 2004.

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It doesn't look good for anyone. And you should start worrying big time when unions achieve settlements that tout that they achieved significant pension increases at a time when others were worried about hanging on to their pensions. Just ask United Airlines employees.

[ 30 October 2005: Message edited by: abnormal ]

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Originally posted by abnormal:
And you should start worrying big time when unions achieve settlements that tout that they achieved significant pension increases at a time when others were worried about hanging on to their pensions.

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Should I worry less if the union had done worse?

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Not at all. The point is that unexpectedly large pension increases are, or at least can be, symptomatic of other problems. Because of the complexities of pension accounting promises made today don't have to be faced up to for years. It's to the benefit of both cash strapped companies and the unions to promise big increases in retiree benefits down the road as opposed to increased wages or other benefits. The fact that the company may never be able to meet those obligations is not something that either the current management or union executive will likely have to face (they wish). If you look at the top of page 5 of the NYT article you'll see a little snippet about Studebaker:

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Thus in 1959, Studebaker, a manufacturer fallen on hard times, agreed to increase benefits - its third such increase in six years. In return, the U.A.W. let Studebaker stretch out its pension funding schedule. This bargain preserved the union's wages, as well as management's hopes for a profit, though it required each to pretend that Studebaker could afford a pension plan that was clearly beyond its means. Four years later, the company collapsed.

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