From the ‘Careful What You Wish For’ Dept.: UAW May Be Taking Over Retiree Health Care
If I were “Detroit’s auto makers,” I’d be tempted to tell the UAW to “be our guest”:
Auto union may run some retiree benefits
Detroit auto makers and the United Auto Workers are examining a plan that would shift to the union the responsibility for tens of billions of dollars in retiree health-care liabilities, The Wall Street Journal reported on Tuesday, citing people familiar with the matter.
The preliminary discussions highlight the determination of the UAW and the auto makers to find a way to restructure the auto industry without resorting to bankruptcy-court protection, the Journal said.
General Motors Corp. has hired advisers who worked on a similar deal between the United Steelworkers and Goodyear Tire & Rubber Co. last month.
Here are more details from the UK Independent, including reference to Ford’s involvement:
America’s biggest motor manufacturers are negotiating a revolutionary plan to rid themselves of tens of billions of dollars of healthcare liabilities by transferring the responsibility to employees’ unions.
General Motors and Ford have opened talks with the United Auto Workers (UAW) union about a scheme that would see the union run a massive fund to pay the healthcare bills for tens of thousands of retired car plant employees. In return for a one-off payment into the new UAW fund, the car makers could, with one bound, be free of liabilities they say are crippling them.
The proposed scheme would be modelled on a deal that ended a strike last month at Goodyear, the tyre producer, when the United Steelworkers took over $1.2bn (£606m) of healthcare liabilities.
This is indeed very clever on the part of GM and Ford, though I’m not sure that changing who handles the money will do anything to make the monstrous healthcare liability go away, or delay necessary plan design changes to stop the bleeding.
If history is any guide, one of the biggest dangers of transferring control and responsibility to the union has to be potential for corruption reminiscent of the Teamsters of days gone by. The Teamsters ran (and may still run) “multiemployer” plans, where the trucking companies paid into health and retirement funds managed by the union. The graft and corruption that occurred are the stuff of legend.
There’s a lot of employee money flowing through benefit plans. The UAW has avoided corruption by rarely, if ever, being in charge of them. That clearly may change. The folks at Solidarity House may be the most well-intentioned people in the world, but if strong reporting, budgeting, and reporting systems and controls aren’t in place, and taken seriously, the rank and file down the road will have more even more reasons than they have already to long for the good old days of “Generous Motors” and Henry Ford.
