August 31, 2009

AP Coverage of Ford-UAW Negotiations Ignores Union’s Ownership Interests In Competitors


Ford and the United Auto Workers are set to begin new contract talks under a set of circumstances radically different from any previously faced by either party. There is the “minor” matter of the union’s ownership stakes in General Motors and Chrysler that arose in the wake of those two companies’ government-engineered bankruptcy filings, accomplished with more than a little rule-bending by the Obama administration and its car czars.

But you wouldn’t learn about any of this, let alone its potential effect on negotiations, from reading coverage of the situation by the Associated Press’s Kimberly Johnson. Additionally, there’s quite a bit of emphasis on the idea that Ford can supposedly afford to be more generous with pay and benefits than its two major Detroit rivals. How convenient — for the union and the the other two companies.

Here are key paragraphs from Johnson’s very incomplete report:

UAW bristles as Ford seeks concessions

DETROIT – The amicable relationship Ford Motor Co. has shared for decades with the United Autos Workers union may be on the verge of cracking, as the automaker seeks to cut its labor costs at time when it is in a far stronger position than its U.S. competitors.

Dearborn-based Ford and members of the UAW’s bargaining committee for Ford are meeting last week. On the table: additional concessions on work rules, strike provisions and wages for new hires.

The talks will be challenging. Ford’s union workers agreed to amend their 2007 contract in March with concessions to help the automaker cut costs and avoid taking government aid. Some local union officials say workers have no interest in accepting further cuts.

“Once you open door, it just doesn’t stop, they keep coming back for more,” said Gary Walkowicz, bargaining committee member for UAW Local 600, representing workers at Ford’s Dearborn truck plant. Walkowicz said he is opposed to future concessions and is “not surprised the company keeps coming back.”

But concessions agreed to by General Motors and Chrysler hourly workers went deeper than Ford’s, as workers feared their companies would slip into bankruptcy and be forced to layoff thousands of workers. Most of those jobs were saved during the quick trip through bankruptcy court because GM and Chrysler union contracts were already amended and approved before the bankruptcy filings.

Now Ford, the only U.S. automaker to pass on government aid and the first to get a modified contract deal approved, is back at the table looking for parity with GM and Chrysler.

Ford CEO Alan Mulally has repeatedly said the company would “not be disadvantaged” when it comes to labor costs.

…. And the company is improving. Ford turned a $2.3 billion profit in the second quarter thanks to its debt reduction efforts. July sales rose 2.4 percent, and with Ford Focuses and Escapes being among the top sellers in the Cash for Clunkers program, August sales are expected show an improvement over last year.

“Everything looks favorable for Ford. This means it’s difficult for them now to suddenly claim poverty,” said Gary Chaison, professor of labor relations at Clark University in Worcester, Mass. “It can very easily strain their relationship with the UAW.”

The claim to poverty isn’t exactly “sudden.” The fact is that the company lost an incredible $30 billion from 2006 through 2008 and had a relatively narrow loss in the first quarter of 2009. The company has one good quarter, and “suddenly” it can afford to put itself at a 4-year competitive disadvantage? Uh, no.

If the economy doesn’t (excuse the expression) pick up, a cost structure significantly higher than that found at GM, Chrysler, and its principal Japanese transplant rivals Toyota, Honda, and Nissan could hurt margins and start the cycle of losses in Dearborn all over again — and this time the company is mortgaged to the hilt.

Johnson’s failure to explore the drop-dead obvious conflicts of interest inherent in a company having to negotiate with an entity that owns and/or controls two of its principal rivals is an unfortunately likely foreshadowing of the kid-glove approach we’ll see from the establishment media in the coming years.

Cross-posted at

Media Virtually Silent About $10 Billion Union Health Care Subsidy Built Into House Version of Health Care Bill

GMandChryslerAndCapitolSome of us have been wondering how viable the Voluntary Employee Benefit Arrangements (VEBAs) set up by the United Auto Workers for its auto industry employees really are. This is of particular concern at the VEBAs tied in to General Motors and Chrysler. What happens to the employer stock these VEBAs own will heavily influence whether they have the money to pay promised benefits.

The answer to the viability question must be “not very,” because the House version of health care that has made it out of committee has a $10 billion provision tucked into it that would largely work to back the VEBAs up in case GM and Chrysler are never able to stand on their own — or in case other high-wage, high-benefit companies, many of which are unionized, follow them into serious financial difficulty.

Maybe it’s because $10 billion doesn’t mean much any more in an era of trillion-dollar deficits, but media coverage of this “little” provision has been very, very light. A Google News search on “retiree health care UAW” (not typed in quotes) came back with only about 25 relevant items of roughly 100 total results earlier this afternoon. Many of those results are outraged editorials and op-eds. There is precious little original news coverage of the topic.

One of the few examples of original coverage is an August 24 report by Justin Hyde and Todd Spangler of the Detroit Free Press that explains the provision and provides background:

$10B aimed at union retirees
Provision called welfare by some, not enough by others

….. a $10-billion provision tucked deep inside thousands of pages of health care overhaul bills that could help the UAW’s retiree health-care plan and other union-backed plans.

It would see the government — at least temporarily — pay 80 cents on the dollar to corporate and union insurance plans for claims between $15,000 and $90,000 for retirees age 55 to 64.

Big businesses with union workers are twice as likely to offer retiree benefits as nonunion ones.

Greg Mourad of the National Right to Work Committee called it “a shameless case of political payback,” saying Democrats and President Barack Obama are trying “to force the rest of us to pay billions to cover those unions’ health care.”

Labor advocates say even more funding may be needed.

“It is not enough money,” said former U.S. Rep. David Bonior, a Mt. Clemens Democrat who chairs the board at Washington, D.C.-based American Rights at Work, a labor advocacy group. “That will have to be supplemented to fill the gap.”

…. The health care debate roiling the nation promises an even greater impact in Michigan: It could determine whether the UAW’s gamble that it can insure 850,000 retirees from Detroit’s automakers pays off or goes bust.

Thanks to Detroit’s twin auto bankruptcies and other concessions, the UAW’s voluntary employee benefit association, or VEBA, had to take stock of unknown value for $24 billion in claims, while adding thousands of early retirees to its rolls.

Outside experts estimate the funds have about 30 cents in cash for every dollar of future claims, with no guarantee of what its stock assets will be worth. Lance Wallach, a New York-based VEBA expert, says if the funds “don’t get something, they’re out of business in 12 years.”

…. The $10 billion is aimed at a growing gap between the skyrocketing cost of care for early retirees — ages 55 to 64, too young for Medicare — and what President Barack Obama and congressional Democrats promise will be less-expensive coverage once, and if, the much-debated reform measures kick in several years from now.

It doesn’t seem unreasonable to suggest that the UAW might be incentivized to drive a tougher and perhaps unfair bargain in negotiations with Detroit’s automakers if this $10 billion backstop becomes law.

In an August 25 editorial, Investors Business Daily saw a link between this provision and the thuggish union behavior seen at recent health care town hall meetings:

Payday For Unions

Labor: If there’s any question as to why union toughs turned up at recent health care town halls and got violent, consider what they were gooning for: a $10 billion bailout for their mismanaged pensions — at our expense.

It’s nothing but another bailout for union-bankrupted industries that can’t sustain their contracts. In most of the private sector, companies cut back. They pay for what they buy. They scrimp.

Unions are different. When things get bad, they want taxpayers to pay. And they demonize corporate profits. When profits are a dirty word, one man’s wealth is another man’s loss, and creating value is no longer recognized as a means of earning money.

It’s no surprise that bailouts are the result.

But there’s a problem with all this largesse — the poor and middle class who don’t get these fat pensions end up paying for them anyway.

What IBD noted, more than the relatively “small” size of the legislated subsidy (which, as noted in the Free Press excerpt, might end being a mere down payment into a money pit many times the size), may well be the reason why the VEBA bailout in the health care bill has gotten scant media attention. It would be pretty hard for reporters to spin it to readers as a good or even neutral thing — because it isn’t.

Cross-posted at

The ‘Take the Field Tribute’

Filed under: Positivity,US & Allied Military — Tom @ 5:57 am

Yes, “this is a great idea” (HT Tom Elia via Larwyn):

And yes, it would be wonderful if something like this could become a routine occurrence at all road football and basketball games the service academies play.

Positivity: 40,000 pack downtown Colorado Springs to thank the military

Filed under: Positivity,US & Allied Military — Tom @ 5:56 am

WelcomeHomeInColoradoSprings0809From Colorado Springs, Colorado (HT Michelle Malkin):

…. It was just “Welcome Home.”

Thanking the troops ruled at Saturday’s Red White and Brave Welcome Home Parade in downtown Colorado Springs that drew more than 40,000 supporters ….

The parade had tanks, fire trucks, cheerleaders and marching bands along with costumed characters on stilts and unicycles.

Grandpas, moms, kids and even dogs sported flags. Thousands of people waved banners of support for the soldiers and airmen marching down Tejon Street as a squadron of vintage World War II planes thundered overheard.

….. With the Iraq war still going after six years and the 8-year-old Afghanistan war heating up again, organizers wanted to give the community a chance to thank local troops for their sacrifices. Some Fort Carson soldiers have served in overseas three times.

“It’s a morale booster,” said Teresa Meza, who brought her two children to watch their dad march in the parade with thousands of his Army and Air Force comrades. Army Sgt. Daniel Meza is home between deployments.

“It is very uplifting,” said Chris McBean, whose husband, Staff Sgt. John McBean, is deployed to Afghanistan. “You know you are not alone.”

Ernie, a white French bulldog, paraded along the sidelines with a flag poked in his dog collar.

Air Force Staff Sgt. Jill Colbert bedecked the dog to watch her husband, Army Staff Sgt. Aaron Colbert, march down Tejon. “This is amazing. I didn’t think they would do something like this. I was surprised, pleasantly surprised,” she said.

B.J. Cameron was among the seniors who came to show support.

“I’m here just to let the troops know how much we appreciate them, to stand here and say thank you for your sacrifice,” said Cameron, the mother of a 27-year-old disabled Army veteran. ….

Go here for the rest of the story.