fyi - excerpt from today's Detroit Free
CAW to stand ground in talks
No givebacks, head of auto union says
BY JEFFREY McCRACKEN
FREE PRESS BUSINESS
Detroit's automakers won't find it easy to squeeze
costs by leaning on their workers across the border.
The president of the Canadian Auto Workers says his almost 42,000 union
members have no intention of making any concessions to Detroit's
automakers on wages, pensions or health care when the CAW begins contract
negotiations this summer.
Their reasoning: It's already cheaper to do business in Canada.
"We are not going to go backward, not on wages, pensions or other
matters. We go forward with talks and make progress for our
workers," said Buzz Hargrove in an interview Wednesday with the Free
Press. "We could work for free and they'd still have plenty of
problems. Their issues are market share and all of the business they are
losing to import vehicles. I think the automakers' problems are with
trade in Canada and the United States, and that's not going to be
something we solve at the bargaining table."
The CAW says Canada's national health care plan gives it a substantial
labor-cost advantage over the United States.
It says that savings and a weak Canadian dollar that lowers the cost of
doing business in Canada give the CAW leverage it can and will use. And
with U.S. health care costs rising at double-digit levels the last few
years, that cost advantage has only grown.
Hargrove also said the automakers "know it is less expensive and
more efficient to do business" in Canada, so they are more willing
to accede to CAW demands...
GM spokesman Stew Low acknowledged "a cost advantage with Canadian
operations," but added the automakers still must try to negotiate an
agreement that keeps down costs...
Hargrove acknowledged GM's and Ford's struggles -- and added he
understands Chrysler could slip quickly as well -- but said what ails the
automakers is not labor costs, but the flow of import vehicles from
Korea, Japan and elsewhere.
He also blamed the increasing sales of automobiles made in the United
States by foreign automakers like Toyota, Honda and Nissan, which have
plants in states like Kentucky, Ohio and Tennessee. He said U.S. auto
consumers should understand that those automakers don't typically create
as many direct and indirect U.S. jobs as do Detroit's
"We still expect progress for our members, despite things like the
junk-bond downgrade, which is something we can't control or fix at the
bargaining table," said Hargrove, who has been CAW president since
1992. "If the Big Three were at 70% market share in the United
States, they'd be sitting on a pile of money. This is about the
transplants and the imports, who are having a huge impact on Big Three
Market share for Detroit's automakers is down to 59.9% for the first four
months of the year, an all-time low. Meanwhile, market share for Toyota,
Honda, Nissan and Korean automaker Hyundai are all up this year.
The CAW estimates that Canada's national health care system saves
automakers about $4 per hour per worker. Automakers still provide some
benefits to Canadian workers, for items like prescription drugs, private
hospital rooms and dental and vision coverage.
Hargrove says the cost works out to $150 per vehicle built in Canada,
versus an estimated $1,400 or more in the United States.
The average CAW worker makes about $67 an hour Canadian -- including
benefits like pensions and medical care -- which works out to about
$54.17 an hour in U.S. dollars. By comparison, GM estimated its U.S.
labor costs at $78.39 an hour in 2003.
"Canada is such a low-cost, efficient place to build vehicles, so
there is an overall advantage to building in Canada, which Buzz makes the
most of," said Dennis DesRosiers, Canadian auto analyst with
DesRosiers Auto Consulting in Toronto.
"He will get most of what he wants because he knows Canada is such a
great place for the automakers. The feather in his cap is that the
Canadian taxpayer subsidizes the cost of health care for GM, Ford and
Chrysler to the tune of billions of dollars," he said.
Of course, the per capita expenditure on health care in Canada is also
qualitatively less than in the U.S. due primarily to lower administrative
costs largely due to the elimination for the most part of parasitic
health insurance companies.
disclosure: I'm not only a Bolton Valley ski patroller, but a former auto
worker and current proud union member
No. The time is not right for
universal health care.
There must be a crisis.
It is unclear how another massive underfunded
government entitlement program is supposed to make our
economy more "efficient". Our already high tax burden
has huge negative effects.
The government has ~$24 Trillion in unfunded
liabilities as it is. Is universal health care a good
thing because it will collapse the entire rotting
Actually the corporations are already doing an impressive job of
"externalizing" or shifting their costs/risks onto the
taxpayers - expect taxpayers to be forced to should a multi-billion
dollar bailout of the Pension Benefit Guaranty Corp.:
New Strains On Safety Net For Pensions
By Albert B. Crenshaw
Washington Post Staff Writer
Thursday, May 12, 2005; E01
A bankruptcy court's approval Tuesday of a deal
between the government's pension insurance agency and United Airlines
marks the latest, and perhaps most spectacular, in a series of changes
that are restructuring the relationship between American workers and
It also places severe new strains on the social safety net that has
underpinned traditional private pensions since enactment of the Employee
Retirement Income Security Act (ERISA) in 1974.
Under terms of the deal, many United workers, particularly pilots, will
get far lower pensions than those promised by the airline years ago. At
the same time, the government insurer, the Pension Benefit Guaranty Corp.
(PBGC), formally takes on four pension plans that are underfunded by
billions of dollars.
The United plans, which together cover more than 120,000 workers,
retirees and dependents, have assets that are $9.8 billion short of what
is needed to pay the full promised benefits. But because the PBGC's
annual guarantee is $45,613.68 for workers retiring at age 65, those who
have been promised more could see their pensions reduced. Taking that
into account, the PBGC figures it is taking on about $6.6 billion of the
But the PBGC is also increasingly nervous about the fate of the remaining
"legacy" carriers that still have pension plans. If they cannot
compete with United and other carriers that do not have large pension
costs, they, too, may file for bankruptcy and shift their pensions onto
The PBGC has been hit with a series of blows in recent years that have
reduced its own funding status from a surplus of $9.7 billion in 1999 to
a deficit of $23.3 billion last fall. The PBGC's deficit, which already
included United's costs, anticipated by the agency, consists of the
present value of its liabilities minus its assets...
However, a model by the Center on Federal Financial Institutions, a group
that studies government insurance and lending, predicted last fall that
the agency would run out of cash about 2020.
The question of what to do now confronts policymakers and employers in
"We are at a real inflection point when it comes to figuring out
what retirement security is going to look like" in the future, said
Kevin Wagner of benefits consultants Watson Wyatt Worldwide. And, he
said, a key question is, who will bear the risk of saving for retirement?
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