February 25, 2009 - UAW and Ford Motor Company, Detroit MI

UAW urged to OK Ford survival plan

It could set pattern for GM, Chrysler

UAW urged to OK Ford survival plan

In a letter addressed to all of Ford Motor Co.'s UAW members, obtained by the Free Press on Tuesday, UAW President Ron Gettelfinger paints a dire picture if union members don't vote in favor of a proposal to modify the labor agreement signed in 2007.

"Without substantial restructuring and change from all stakeholders -- senior management, general salary, bondholders and creditors, dealers, suppliers and our UAW Ford membership -- Ford cannot survive on a long-term basis," Gettelfinger said in the letter.

The letter is part of a summary of modifications to the labor agreement that are intended not only to help Ford survive the nation's worst economic recession in decades, but also to serve as a pattern for the UAW's negotiations with General Motors Corp. and Chrysler LLC.

According to the summary obtained by the Free Press, the UAW has agreed to:

• Suspend cost-of-living adjustments, performance bonuses in 2009 and 2010, and eliminate the Monday after Easter as a paid holiday.
• Suspend the controversial jobs bank and make modifications to a supplemental unemployment benefit program. That includes the creation of a job-retraining program.

Meanwhile, Ford plans to offer buyouts to its workers from April 1 to May 22 that include a voucher for up to $25,000 toward the purchase of a Ford vehicle or a $20,000 cash payment.

In addition, eligible skilled trades workers can receive up to $40,000 and production workers up to $20,000.

In return, Ford agreed to recommit to production at all current assembly plants, with the exception of the Twin Cities Assembly Plant, which makes the Ford Ranger compact pickup. Ford has said that plant is to close this year.

The summary also reveals how the UAW and Ford plan to restructure payments to fund a health care trust fund for retirees.

On Monday, Ford and the UAW announced that they had reached a tentative agreement to give Ford the option to use stock for up to 50% of its payments to fund the Voluntary Employee Beneficiary Association, or VEBA.

According to a copy of the agreement obtained by the Free Press, the UAW only agreed to receive payments of Ford stock in small installments over a long period of time, and the union may promptly sell that stock.

"It is important that investments in the VEBA be diversified," the summary said specifically about the VEBA.

GM and Chrysler have received $17.4 billion in government loans and are required by their loan agreements to ask the UAW to accept stock payments in lieu of cash for up to 50% of future funding for a VEBA.

Ford, which has not applied for government loans, owes $13.6 billion to the health care trust.

The summary also says that the value of the Ford stock will have to reflect the value of Ford stock at the time of the contribution.

That means that if Ford's stock falls, it must contribute a higher number of shares.

"We wanted to make sure that this was a change in the form, but not the value of the contributions," the UAW document says.

The UAW shared the details of its tentative Ford agreement with its workers during a meeting Tuesday at the UAW's National Program Center in Detroit.

Wilfred Littleton, a servicing representative for UAW Local 600 in Dearborn, predicted that the proposed modifications of the UAW's 2007 contract would be approved overwhelmingly by UAW membership "because it is not as painstaking as people thought it was going to be."

During Tuesday's meeting, Littleton said UAW leaders said they intend to use the proposed Ford agreement to guide talks with GM and Chrysler.

Original Story - Detroit Free Press