UAW steps up

Published 4:00 am Friday, December 5, 2008

While there’s still no guarantee Congress will give the three major American automakers the financial help they say they need, their case has to have been helped by the United Autoworkers Union. The union announced late this week that it’s willing to bear part of the brunt of keeping car manufacturers healthy.

That’s good. The Big Three are in such dire straits in part because of obligations to union members. UAW pensions are among the best in the world, for one thing, guaranteeing retired auto workers benefits far beyond what most other private sector workers can hope to receive.

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For now, the UAW has agreed to suspend its “jobs bank” at General Motors, a nifty little item that assures laid off workers as much as 95 percent of their regular pay. And it will allow automakers to delay payments into a trust fund that will take over health insurance costs for retirees in a couple of years, if courts approve.

Still, the UAW may well have to consider something far more permanent than suspension of one expensive program and delays in payments to a second if the Big Three are to get back on sound financial ground.

In fact, labor costs are huge for American automakers, far higher than they are elsewhere in the world. According to Mark Perry, a professor of economics and finance at the University of Michigan’s Flint campus, General Motors paid an average of $73.26 per worker per hour in 2006, a figure that surely has gone up in the intervening two years. Hourly wages account for about half of that — not chump change by itself — and the rest went into such things as health insurance, pensions and other benefits.

Unless all three companies, GM, Chrysler and Ford, can get a handle on those costs, they’re likely to continue to court financial disaster whether the government steps in or not. Their largest union has recognized the need for change, at least for the short term, and that’s good. It will have to go beyond the short term, however, if the Big Three’s problems are to be permanently solved.

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