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UAW president vows to preserve jobs bank



Published: Thu, October 12, 2006 @ 12:00 a.m.



A Wall Street analyst thinks the union chief is just talking tough.

DETROIT FREE PRESS

DETROIT -- UAW President Ron Gettelfinger said he will fight to keep the jobs bank -- a controversial program that requires automakers to pay laid-off workers -- intact as part of the 2007 contract with General Motors Corp. and other local automakers.

The jobs bank provides full pay for workers laid off for a year or more. The union sees it as a needed cushion in the brutally cyclical auto industry. But critics paint it as a grotesque symbol of labor's excess and a key reason why Detroit automakers struggle to compete with Asian rivals.

Gettelfinger's comments help ensure that its fate will be a matter of contention when a new contract is negotiated next year. He characterized it as a useful tool for management to deal with unsuccessful cars and trucks while treating workers humanely.

"We don't have any reason to be convinced to do away with it," Gettelfinger said.

Laid-off workers typically receive a fraction of their pay, plus unemployment benefits. But after 48 weeks, they are switched into the jobs bank, where they receive full pay.

Number of workers

GM CEO Rick Wagoner said in August that the jobs bank hampers GM's bottom line. The company does not publicly disclose figures on the jobs bank. In recent years, it has been estimated that about 5,000 GM workers were in the bank at a cost of 500 million a year.

But that was before Gettelfinger negotiated an attrition plan with GM and Delphi that cleared the companies of 54,500 hourly workers, some of whom were in GM's jobs bank.

It is unclear exactly how many workers are left in the jobs bank, but the number could rise as GM cuts production to meet demand, spokesman Dan Flores said.

Cost

Laurie Harbour-Felax, president of Royal Oak, Mich.-based research firm Harbour-Felax Group, said the jobs bank programs put GM, Ford Motor Co. and Chrysler at a disadvantage because Japanese automakers do not have that burden.

Maintaining 5,000 workers in the jobs bank costs a U.S. automaker between 99 and 197 per vehicle sold in North America, according to a recent Harbour-Felax Group study. If jobs bank numbers grow to 15,000, the costs increase to between 297 and 591 per vehicle, putting GM, Ford and the Chrysler Group at a severe cost disadvantage.

Brad Rubin, a senior credit analyst with BNP Paribas in New York, said he doesn't expect GM or other automakers to allow the jobs bank program to remain open after 2007.

"If that's the case, it's going to have a lot of negative ramifications among the Wall Street types," he said.

Rubin suggested that Gettelfinger was posturing for political purposes.

"I think most people will realize that it's saber-rattling. I don't think he has any intention of being able to justify the jobs bank remaining in existence in the future."




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