UAW strike may hang on administration of retirees’ healthcare benefits

UAW retirees expressed concerns today to Michigan Messenger that administration of retirees’ health care benefits may have been the sticking point in UAW-GM contract negotiations.  While the UAW won’t strike over retiree benefits themselves, the union may be pushing back at what these retirees felt were administrative expenses.

In a press conference today after the strike deadline, UAW’s Ron Gettelfinger emphasized that GM had not made progress on a substantive number of topics on the table.  At least one of the retirees with whom Michigan Messenger spoke believed that Voluntary Employees Beneficiary Association (VEBA) was not the reason for the strike, but that the details and expenses related to this program may have been a critical stumbling block.  They speculated GM might expect the union to offset administrative costs through reduced wages, reduced workforce numbers or by a reduction in benefits, potentially increasing job insecurity rather than decreasing it.  These former workers noted that GM has paid out stock bonuses to executives but appears unwilling to bear what they perceive are administrative expenses driven by GM, which stands to benefit most by the shedding of health care benefit liabilities.

Continued -As related by one of the retirees, GM had been negotiating establishment of a health care fund not unlike the one bankrupt Dana Corporation negotiated with GM earlier this summer.  VEBA would allow GM to move its liability for retiree health care to this fund and off its books.  With approximately 73,000 active UAW employees and more than 300,000 retirees and families, the fund would be sizable as well as unfunded at its inception; contract negotiations would likely determine how GM would fund its obligations to current and future retirees.  If Dana Corporation’s fund is a model for funding, GM would deposit into VEBA an amount of cash and company stock, to be managed by UAW.  A potential flaw in the model that the Dana agreement offers is that Dana negotiated from a distressed position, having declared bankruptcy in March 2006; while competitively challenged, GM is not similarly distressed.

Michigan Messenger will have more coverage on the UAW strike later this evening.