Auto Bailout: UAW Chief Draws a Line

If General Motors (GM) and Chrysler executives want federal loans beyond the initial $17.4 billion provided by President Bush and the Treasury Dept. on Dec. 19, they will need to wring concessions from the United Auto Workers. And that means dealing with Ron Gettelfinger.

As became clear in mid-December, Gettelfinger, the 64-year-old union president, is no pushover. With the fate of an industry hanging in the balance, he refused to back down when Senator Bob Corker (R-Tenn.) demanded that the UAW commit to cutting wages to secure a bailout of Detroit's Big Three. Gettelfinger's stance—critics call it intransigence—pushed a government rescue to the brink until the Bush Administration stepped in.

But even after the Administration released funds for GM and Chrysler, Gettelfinger bristled at the labor concessions that Treasury is insisting on. In response to the Administration's demands for wage and benefits cuts, he said: "We are disappointed that he [Bush] has added unfair conditions singling out workers." Gettlefinger even said he would go to the Obama Administration—which promises to be more labor-friendly—to work out a deal.

Push from Bush

That sets the stage for negotiations beginning in earnest in January with management at GM and Chrysler as the union and the carmakers try to craft a restructuring plan. Gettelfinger and his staff will first face off against a team headed by GM President Fritz Henderson.

The Bush Administration has already laid out some concessions that it wants from the union. The plan closely mirrors what Senator Corker wanted Gettelfinger to agree to in advance of getting any government money. In documents spelling out the loan terms, Treasury asked to close down the JOBS bank—an anachronism that keeps UAW workers on the payroll even when they aren't working—and make UAW wages, benefits, and plant floor work rules competitive with those of foreign-owned factories in the U.S. by the end of 2009. (The union agreed to suspend the JOBS bank in early December.) The union also must take company stock instead of cash for half of the money that car companies pledged to finance a health-care trust.

The talks themselves are historic: The most powerful industrial union in America will be asked to reopen its contract to ensure the survival of the automakers. And Gettelfinger himself will be walking a tightrope.

On the one hand, he knows that the stakes are too high for the government to walk away from an industry that directly and indirectly employs an estimated 3 million people. On the other, he knows concessions are inevitable and that to sell them to his 640,000 members he needs to be seen as a defender of the working stiff.

Saving Jobs

"The goal is to make these companies competitive so that as many jobs as possible are preserved," says Harley Shaiken, a labor economist at the University of California at Berkeley. "The union has a devastating context in which to achieve it."

Gettelfinger's challenge is to find a way to help save GM, Ford (F), and Chrysler without destroying the union he has spent much of his life protecting. "We're very concerned, first of all, about the companies staying in business," Gettelfinger said in an interview. "Secondly, we want to maintain a decent standard of living. We're also concerned about our retirees."

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