October 10, 2010

Government/General Motors, UAW Hose Long-Time Members Twice in Two Weeks

uaw2Indy and Orion Twp., Mich. Situations Make Mockery of “Solidarity”

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Solidarity, schmolidarity.

It was one thing when the United Auto Workers agreed many years ago to temporary “two-tiered” wage structures at the plants of Detroit’s Big Three automakers. After all, it was argued, they’ll be brought up to a level of full pay and benefits in several years, and new employees aren’t as productive as the veterans.

It was another thing when the UAW agreed, as noted several months ago (at NewsBusters; at BizzyBlog), that new hourly employees would start out at lower levels of pay and stay there. After all, it was argued, the newbies are coming in of their own free will, and know the score going in.

But in two separate instances in the past several months, the UAW has crossed lines once believed unthinkable. In one case in Indianapolis that was clearly pre-planned at the time of the company’s bankruptcy filing, it told members at at Government/General Motors plant that it would shut down unless everyone accepted a 46% pay cut to accommodate a company that wished to buy it (the members said no, and the plant is slated to close). Then, in an even more blatant betrayal, it agreed with GM that about 60% of veteran workers at a reopening plant in Orion Township, Michigan, for the purpose of making small cars will get paid about 48% less than the rest, purely based on seniority.

Why, if you didn’t know better, you’d think that the UAW is starting to act like the false stereotype of a greedy, selfish capitalist instead of as an entity that is supposed to be looking out for the well-being of all of its members.

Oh, wait a minute: The UAW is an owner, through its health care plan, of a 17.5% stake in GM. I guess that’s enough to justify throwing its decades-old tradition of “solidarity” out the window. It must be, because that is what has happened.

Press treatment of these two situations has been predictably kid-glove. Very few outside outside of Indianapolis are aware of the first situation described above (though Rush Limbaugh did mention it when it was at an earlier stage a couple of months ago). Here are a few paragraphs from the Associated Press’s coverage of the situation.

The potential buyer for a General Motors stamping plant in Indianapolis has dropped its bid after workers overwhelmingly rejected pay cuts it sought.

The 457-96 vote against the concessions also was a repudiation of a deal national United Auto Workers officials had backed in hopes of keeping the factory open after GM announced last year it planned to shut it down in 2011.

But local union leaders opposed the offer from Addison, Ill.-based JD Norman Industries, which would have cut base pay at the plant from $29 an hour to $15.50.

“The contract they offered us wasn’t a contract,” UAW Local 23 bargaining chairman Gregory Clark told The Indianapolis Star after the vote was announced Monday. “It just gutted everything we had come to know as a contract between employers and employees.”

GM has been planning to close or sell the 2 million-square-foot plant west of downtown Indianapolis for three years. The plant now has about 640 hourly workers and state officials had offered Norman Industries $2 million in tax incentives if that grew to a promised 1,900 jobs.

… The plant is owned by Motors Liquidation Co., which GM set up during its 2009 bankruptcy to take over discarded property.

By keeping the plant inside “Old GM” during bankruptcy, UAW President Ron Gettelfinger, in concert with the government, threw the Indy workers under the bus. (Yes, I understand that there’s something to be said for the members being foolish for allowing the plant to close, but that’s a discussion for other posts.)

As to the Orion Township plant, in a blatant oversight that doesn’t look accidental from here, the AP’s Tom Krisher “somehow” forgot to tell readers in his October 7 story about the plant’s reopening that seniority was the basis for determining who got the 48% pay cut:

General Motors and the United Auto Workers have reached a cost-cutting deal that could help accomplish what once seemed impossible: Making a profit on small cars built in the United States.

The deal, announced Thursday, could cut in half the hourly wage of some longtime UAW workers at a factory in Orion Township, Mich. It’s the first time the union has agreed to a pay cut for workers who are not new hires.

A revamped subcompact, the Chevrolet Aveo, will be built at the plant starting next year. The plant is currently closed.

Most other automakers, including GM’s main rival Ford Motor Co., build subcompacts in Mexico or other countries with far lower labor costs. U.S.-based automakers have struggled for years to make money on small cars.

Subcompacts generally start around $14,000, so they don’t generate enough cash to cover the traditional UAW labor costs.

The plant, which was closed in November 2009, will employ 1,550 blue-collar and salaried employees. Under the wage deal, 40 percent of the line workers will be paid $15 an hour. The remaining 60 percent will make traditional UAW wages of around $29 an hour.

GM has about 3,500 laid-off workers who have yet to be recalled to factory jobs. Once 60 percent of Orion’s workers are recalled, UAW members who are still on layoff will get the option of working for $15 an hour or staying on layoff.

If GM doesn’t get enough laid-off workers to fill the lower-paying jobs, the automaker can hire new people for $15 an hour.

For the record, Christina Rogers at the Detroit News told her readers on Tuesday who gets to keep making the big bucks, and who gets the shaft:

The United Auto Workers and General Motors Co. have agreed to a two-tier wage structure for recalled workers at the Orion Township plant, a move that will help the automaker make a profit on the new Chevrolet Aveo going into production next year.

The agreement is specific to the Orion assembly plant, where the Aveo will be built. The UAW and GM agreed a year ago that there would be separate labor agreements for small-car plants. Details of the Orion contract were just made public to workers.

The deal affects UAW Local 5960 members and calls for paying about 60 percent of the 1,300 workers recalled to the plant the traditional tier-one wage of $28 an hour with benefits. The remaining 40 percent will get a tier-two wage of about $15 an hour; the split will be based on seniority.

When it announced it would restore jobs at the plant last year, GM said the move was possible because of a recently modified agreement making it now “possible for GM to produce these size vehicles in the U.S. in a cost competitive and profitable way.”

… (Plant worker Jose) Facundo said he and other workers were infuriated by the deal because GM workers with 11 years or less seniority have been suddenly told they are going to be paid the tier-two or $15 wage.

“It’s outrageous, and we never voted on this,” said Facundo, who has 10 years of seniority.

Again, as noted earlier, I understand the argument that people in this economy should be grateful for having any job, and $15 an hour isn’t too shabby. But this deal is coming from a union and a government that would be raising an endless stink if a truly private-sector company tried to pull off the same maneuvers with separate classes of existing workers.

More to the media point: Why didn’t Tom Krisher tell the rest of the nation this inconvenient and important fact? Could it be that doing so would make the UAW and GM’s government owners look every bit as heartless and soulless as the “giant corporations” they routinely criticize? Actually, I can’t imagine the union allowing an entity it doesn’t partially own to get away with what is being done in Orion Township.

Meanwhile, I wonder if the same ability to cut less-senior workers’ pay is built into the modified contract agreement between the UAW and Ford that was signed a year ago? Tom Krisher should have told us that too.

Cross-posted at BizzyBlog.com.

AP Item on Second Straight Year of No Social Security COLA Increase Fails to Explain Why (Updated: Now It Does)

Update: I’m happy to report that a later report by Ohlemacher this morning mostly got it right, but still hasn’t recognized that recipients have benefitted during the past two years by receiving payments that are higher than underlying inflation would justify — and remain slightly so. Update 2: The 3:06 p.m. report notes that “As a result, Social Security recipients got an increase in 2009 that was far larger than actual inflation.” That will do fine.

It would also appear that Ohlemacher’s extended coverage is designed to create an appetite for repeating the one-time $250 payment that occurred without underlying justification in 2009, and which is still not justified.

(original post follows)

In a report this morning (since updated — Ed.), the Associated Press’s Stephen Ohlemacher reported something that anyone watching the numbers has known for months: For the second consecutive year, unless the politicians unwisely intervene, there will be no cost of living adjustment (COLA) for recipients of Social Security.

It would have been nice if Ohlemacher had correctly told his audience why. Instead, his flawed explanation might lead readers to believe that an increase should have occurred when, based on the formula legislated deades ago, none is justified.

Briefly stated, the Social Security Administration annually compares the average of the Consumer Price Index values for July, August and September of the current year to the same average during the previous year. Normally, if there has been an increase, benefits paid go up by the percentage of that increase; if there has been a decrease, benefits don’t change. There is also no change if a further-back year had a higher average than the current year.

The calculation done in 2008 coincided with the summer of $4-a-gallon gas prices. The Social Security COLA increase that year increased 2009 benefits by 5.8%. As seen in the following table, overall prices have not since returned to their summer 2008 level, which is why there was no increase in this year’s benefits (2009 calculation applied to 2010), and why there will no increase next year (2008 and 2009 data is at this Social Security link; 2007 and 2010 data to date wer obtained from various CPI-W reports at the Bureau of Labor Statistics):

SocSecCOLAcalcs2007to2010

Nobody seems to want to acknowledge that Social Security recipients caught a nice break in 2008 (but not so nice for taxpayers, or for the long-term solvency of a system that has an actuarial liability of over $7.6 trillion), or that they have benefitted from this break during 2009 and 2010, as prices still haven’t returned to their summer 2008 level.

The AP’s Ohlemacher is either among the non-acknowledgers, or simply doesn’t understand what’s going on at all, as illustrated in this excerpt:

The cost-of-living adjustments, or COLAs, are automatically set each year by an inflation measure that was adopted by Congress back in the 1970s. Based on inflation so far this year, the trustees who oversee Social Security project there will be no COLA for 2011.

The projection will be made official on Friday, when the Bureau of Labor Statistics releases inflation estimates for September. The timing couldn’t be worse for Democrats as they approach an election in which they are in danger of losing their House majority, and possibly their Senate majority as well.

As seen in the chart above, what Ohlemacher wrote is not even in the neighborhood of the truth.

Here’s how you can improve on the bolded sentence, Steve:

“Because overall prices in June through September of this year are still lower than they were at the same time in 2008, there will be no COLA for 2011 — unless politicians intervene as they did in 2009, when the Democratic Congress and President Obama gave recipients a one-time $250 payment that wasn’t warranted by changes in consumer prices.”

I’d be okay if you omit what follows the dashes.

Positivity: Postulator says John Paul II’s beatification process in crucial phase

Filed under: Positivity — Tom @ 7:00 am

From Madrid:

Oct 7, 2010 / 02:02 pm

During a visit to Spain this week, the postulator of Pope John Paul II’s cause for beatification noted that the process is currently at a crucial moment as miracles attributed to the late pontiff’s intercession are being investigated.

In an interview with the newspaper La Razon, Father Slawomir Oder said the process “has not been blocked” as some media reports have indicated. “The only thing I can say is that the canonical process must continue,” he said.

“We have reached the end of the first phase which deals with his heroism and virtues, and now we must initiate the process dealing with miracles. When it is finished, the Church will be able to lay out the process for his beatification,” the priest said.

Fr. Oder was visiting Spain to promote his new book, “Why He is a Saint.” The priest has been John Paul II’s postulator since 2005 and was a personal friend of the revered Pontiff.

“There are two paths to sainthood,” the priest explained. “One is through martyrdom,” and the other – the path John Paul II followed – is through “heroism of virtues, how that person lived. There must be the conviction that the person was a man of God and that opinion must be shared by most, expressed by the voice of the people that he lived in holiness.

“From there, a study on his life is carried out and his virtues are identified: faith, hope, charity, obedience, purity, humility.”

Fr. Oder recalled that he was always impressed by the pastoral dimension of John Paul II more than by his role in the politics of his time. …

Go here for the rest of the story.