DETROIT, Sept. 13 — The United Automobile Workers union has chosen General Motors as its lead company in negotiations on contracts that are set to expire at midnight on Friday, people with knowledge of the union’s decision said on Thursday.þþThe choice may signal the union’s willingness to negotiate on a health care trust, the major demand by G.M., the Ford Motor Company and Chrysler. G.M. has pushed the most heavily for such a trust because it faces a health care liability of about $55 billion for its workers, retirees and their families.þþThe selection of G.M. as the lead company followed a meeting of the union’s executive board, which is made up of its top officials, including the U.A.W. president, Ron Gettelfinger. þþThe U.A.W. traditionally negotiates with all three companies, then selects a company where it focuses its efforts. That company is the one that would be the target of a strike, although such an action is considered unlikely in these talks.þþLocal union presidents were notified of the decision by e-mail, and the union scheduled a conference call for Friday to give them an update, these people said. They spoke on condition of anonymity because of the private nature of the talks.þþCompany and union officials had no comment on the choice of G.M., but Ford and Chrysler both announced that they had signed extensions of their contracts with the U.A.W. G.M. stock jumped Thursday on reports that the U.A.W. was ready to discuss creating a voluntary employee benefit association, or VEBA, that would shoulder the responsibility for nearly $100 billion in health care liabilities. G.M. shares closed at $33.29, up $3.04. The union would administer the trust, which would be financed by contributions of cash, stock and possibly real estate from the car companies, allowing them to take the obligation off their books. þþAutomakers would not be required to cover their entire liability in the trust, but it would be in the union’s interest to get as big an investment as possible to ensure its soundness.þþPublicly, U.A.W. leaders have been steadfastly silent on the subject, even though they are discussing the concept with company officials. But the idea has prompted a rising debate among union dissidents. þþThese union members regard a benefit trust as another setback for the U.A.W., whose ranks have been thinned by the auto industry downturn, and as a threat to the main benefit, along with pensions, that workers hold dear.þþOne group, the Soldiers of Solidarity, passed out leaflets at last week’s Labor Day parade in Detroit, declaring that VEBA stands for “vandalizing employee benefits again.” þþThe group’s leader, Gregg Shotwell, led a grass-roots movement opposed to concessions to the Delphi Corporation, G.M.’s former parts subsidiary, which filed for Chapter 11 protection two years ago. þþAnother longtime dissident battling the idea is Jerry Tucker, a former union regional director and member of its governing executive board. He led a movement called New Directions, which fought union concessions during the 1990s. þþMr. Tucker predicted that the 200,000 workers at the Detroit companies would be asked to give up future raises to help finance a benefit trust, and that more than 400,000 retired workers would be required to pay a greater portion of health care expenses for themselves and their families.þþ“No one has confidence that a VEBA would support itself over a long period of time. Across the board there is concern about where the risk is going, because those risks will shift,” Mr. Tucker said.þþLocal U.A.W. leaders would have to approve any tentative settlement before it was presented to about 80,000 G.M. workers for a vote. Then the union would have to repeat the process at Ford and Chrysler, although contract terms are likely to be similar under the U.A.W.’s practice of pattern bargaining.þþVEBAs are not new to the union. At G.M. and Ford, it agreed to small trusts that were set up two years ago in an effort to help the companies cut their medical expenses while they were suffering billions of dollars in losses. As a result, both active and retired workers pay a greater portion of their health care expenses.þþSimilar trusts have been set up at Caterpillar and most recently at the Dana Corporation as part of its effort to emerge from bankruptcy protection.þþAnalysts say the car companies must address their health care liabilities to rescue their sagging debt ratings, which have been cut deep into junk status. Agencies like Standard & Poor’s Ratings Services view benefit trusts as a reduction of companies’ debt.þþ“The automakers think that health care is too expensive right now, and that if they don’t lower those numbers they will go out of business,” said Ken Goldstein, an analyst with the Conference Board.þþIndeed, the trusts could protect workers if the companies filed for bankruptcy protection, because they are protected in the event of bankruptcy, experts say. That sets them apart from pensions, which the carmakers could seek to terminate and replace with less expensive retirement plans.þþBut S.& P., in a report this summer, said that a trust would not automatically result in an upgrade for G.M. or Ford (Chrysler’s debt has been rated as part of DaimlerChrysler, which sold it on Aug. 3 to Cerberus Capital Management, a private equity firm). “The ratings on these companies have been driven down to their current levels by more than just health care liabilities,” the S.& P. report said. “These obligations are only one factor among many in our credit analysis.”þþStill, individual workers remain concerned. “I’m not ready to retire yet, but when I do I’m afraid I’m going to be cut short when I need health care,” said Doug Hanscom, 51, who has spent 31 years at G.M.’s plant in Wilmington, Del. “I’m afraid the fund’s going to be underfunded and run out of money.”þþJonell Sayles, 55, of Mount Morris, Mich., retired from Delphi last May, but receives health care under the G.M. plan. She said she had put off seeking medical treatment for pneumonia because she could not afford the fees she now must pay for doctor visits.þþ“I’m at a total loss as to how to project this outcome,” Ms. Sayles said. “All I know is that any time the company wants to save money, it’ll be at my expense.”þþOpponents frequently cite the experience at Caterpillar, which reached agreement with the U.A.W. on a health care trust in 1998.þþBy 2005, however, the trust’s assets were smaller than its obligations. The union subsequently agreed to a series of concessions, including a two-tier wage plan, to replenish the fund. þþLarry G. Solomon, 65, a former local union official at Caterpillar, who is covered by its fund, said he would prefer that the company, not the U.A.W., administer health benefits. þþ“If I work for a company, and I give my life to that company, I expect the company to take care of me, not the union,” said Mr. Solomon, of Cerro Gordo, Ill. Of his fellow union members in Detroit, Mr. Solomon said, “When workers look back, I think they’ll be sorry they voted for it.”þþThere is no guarantee that even after months of work, the companies and the U.A.W. will agree to the plan. There has been talk of contract sweeteners, like a signing bonus of several thousand dollars for each worker, to persuade U.A.W. members to agree to the plan.þþEven so, “the deal will be very bitter, if there is a deal,” Mr. Goldstein of the Conference Board said. “In a way, U.A.W. leaders are in three-way negotiations. They are negotiating with the automakers, and with their own members.”þþ
Source: NY Times
