Ron Gettelfinger
03/01/2007
The social contract that once defined the U.S. auto industry—good jobs at good wages in exchange for hard work at reputable companies—has been replaced by a ruthless competition to see where a job can be done for the lowest wage, at the lowest tax rate and with the fewest possible government regulations. For those investing in the manufacturing sector, this new arrangement might look just fine. You may see higher returns—in the short run—as companies slash labor costs and relocate operations overseas. But in the long run, no one—not even an investor—really benefits when the law of the jungle takes over and wages, healthcare and retirement become less secure for tens of millions of people. No investor wants uncertainty in his or her portfolio, and no worker wants it in his or her paycheck either. One group cannot prosper without the other.
We must question if society as a whole benefits when wages are imploding at the same time that executive pay is exploding. Ultimately, investors do not benefit when consumers lose their buying power. The U.S. economy cannot sustain itself forever on a sea of consumer debt. At some point, living standards must rise to accompany rising productivity—or consumer demand will crash, and that won’t be a pretty picture for anyone.
UAW members know that we cannot succeed unless our employers return to profitability. Restructuring at companies like Ford and GM requires painful sacrifices—and we have made them. By modifying healthcare coverage for active and retired workers and agreeing to worker buyouts to reduce the companies’ payroll, UAW members have helped save GM and Ford billions of dollars in both long-term obligations and annual operating costs. With these difficult measures, we have put these companies in a position to succeed, providing that they are able to design and market vehicles consumers want to buy. We are confident the contribution made by UAW members will be fully recognized during next year’s contract talks.
Daily Battles
Now we need more balance in our Economy. A vital first step is a serious effort to reform our failed employer-based healthcare system. Domestic automakers and our union are often criticized for negotiating “unrealistic” and “gold-plated” health benefits. First, there is nothing gold-plated about getting first-rate medical care when you are sick. Second, these critics are unable to explain why GM pays $1,000 per vehicle less for healthcare in Canada than in the United States. Canadian GM workers, after all, also have union contracts—so it is evident that labor agreements are not the problem.
The problem is our patchwork, employer-based healthcare system, which suffers from a risk pool that is too small, a lack of effective cost controls, and no mechanism for guaranteeing quality care. To worsen the problem, we manage to exclude 47 million U.S. residents from receiving any health insurance coverage at all. A new approach would help not only the auto industry, but every industry in the United States, because all employers are now struggling with how to provide affordable healthcare.
Because many UAW members work in auto manufacturing, aerospace and other transportation-related industries, we are also concerned with our nation’s energy future. The UAW is backing a Marshall Plan for the U.S. auto industry that includes targeted tax credits for companies that build advanced vehicles and their key components here in the United States.
President Bush, unfortunately, has turned a blind eye to such issues, barely finding time on his schedule to meet with the CEOs of the domestic automakers. His only answer to energy policy seems to be to drill for more oil and gas. We’re hopeful that the newly elected Congress will take a more thoughtful, bipartisan approach that positions the U.S. as an important player in developing alternatives to current technologies.
UAW members are already building hybrids, clean diesel engines, fuel-saving transmissions and flex-fuel vehicles that can run on ethanol, as well as gasoline. Give us a chance, and we can do even more. But we cannot—and will not—agree that the only way to compete is by surrendering the livable wages and decent working conditions that workers in this country fought for decades to achieve. We are not interested in an economy based on the law of the jungle. We are interested in an expanding economy, based on good jobs and good wages, that responds to the need of workers, employers and investors alike.
 | Ron Gettelfinger has been president of the United Auto Workers since 2002. |