Decision Time in Detroit
June 9, 2006
Decision Time in Detroit
By MICHELINE MAYNARD and JEREMY W. PETERS
DETROIT, June 8 — It's crunch time for the United Automobile Workers.
Union members like Rick Yrlas, a 51-year-old auto worker in Flint, Mich., must decide in the next couple of weeks whether to accept a buyout offer from General Motors, where he has worked for 30 years.
If he takes the buyout, he would be giving up a job that pays $75,000 a year and provides the medical benefits that helped him stay afloat when he became sick in recent years. He is already eligible for retirement, and the buyout would give him seed money to start his own tamale business and for his wife, Lolly, to open a hair salon.
For G.M. and Ford, which is offering a similar program, the buyouts provide a way to reorganize in a more efficient way than if they stuck to the letter of their union contracts.
For the U.A.W. leadership, however, the offers represent far more than the "take it or risk it" discussions playing out around the kitchen tables of nearly 150,000 of its members.
The buyouts are a symbol of a lost fight, an admission that the jobs the union worked so hard to win can no longer be preserved and that the protection long offered to laid-off workers has become too expensive for struggling auto companies to afford.
That creates pressure on U.A.W. leaders to forge a new direction during their national convention, which starts in Las Vegas on Sunday. The conventions are held once every four years to elect leaders and set strategy.
The union's membership is at the lowest point since World War II and is shrinking every day as more plants are closed and workers accept the buyout offer.
In its only official word on the buyouts, the U.A.W. said last month that 12,400 G.M. workers had accepted the packages, which range from $35,000 to $140,000. But the number now is believed to be closer to 20,000, according to Wall Street analysts. And if there is a rush at the end to accept, as union and company officials expect, then the number of workers opting to retire or leave should be close to G.M.'s goal of 30,000.
G.M.'s chief executive, Rick Wagoner, declined to say at the company's annual meeting this week how the buyout plan was progressing.
Ford is offering workers up to $100,000 to leave their jobs, including $35,000 to those eligible for retirement. The company is also offering a plan that pays up to $15,000 in college tuition, plus half a worker's salary for three years. Ford has no target for reducing its payroll, but the buyouts are being offered to workers at plants that it plans to close.
Without the deals, the two companies, which collectively plan to cut 60,000 jobs over the next few years, would have to provide full pay and benefits to laid-off workers under programs like the Jobs Bank at G.M. and the G.E.N. pool (for guaranteed employment numbers) at Ford. About 6,500 workers are in the G.M. program and about 1,100 in Ford's plan.
Adding more workers to those job-protection programs would put G.M. and Ford at a "substantial competitive disadvantage" to their rivals, including Asian auto companies, which took a record 40 percent of the American market in May, said Joe W. Laymon, group vice president for human resources and labor relations at Ford.
And there is no guarantee that the income security programs would survive beyond the 2007 contract talks scheduled to begin next summer, when executives are expected to push for them to be curbed if not eliminated.
Mr. Yrlas, who inspects pickups for defects at the Flint plant, is still fence-sitting.
Even after 30 years, he has little personal savings and would be throwing himself and his family at the mercy of the unforgiving Michigan economy without much cushion.
Mr. Yrlas's colon ruptured three years ago and he was on sick leave for six months, collecting half his pay. The bills started to pile up. The last few years, he said, "it just seems like I've been playing catch-up."
He has, however, been testing his wings with a fledgling tamale business. Each Friday, he cooks up about 150 tamales, and takes them to work, where he sells them for $12 a dozen. They usually sell out in two hours, he says.
He envisions turning his garage, now cluttered with a freezer, lawn equipment and a few gasoline cans, into a catering kitchen.
Mrs. Yrlas, he says, could help with the cooking and also work from their basement, where she already cuts hair during her time off from a local beauty parlor, where she makes $7.50 an hour plus tips.
"It could happen some day," he said. "This place has got potential. I could spin my wheels fast, spend the money and we could do things."
At least in theory, Mrs. Yrlas, 52, agrees: "It'd be nice to fix this up better, have our own business," she said.
Mr. Yrlas said that almost every other day, "I say, 'Where are the papers, I'll sign.' "
But he's holding off.
"There's a gamble here," he says. "If things don't work out, then I'm stuck and I'd have to go get that $8 job."
The uncertainty, coupled with Mrs. Yrlas's reluctance to quit her job despite its low pay, helps explain why he has not made a final decision. Workers have until June 23 to sign up, and until June 30 to change their minds.
Mr. Yrlas said he had not received any financial advice from his union local, which held an informational session about the buyouts a few weeks ago. Ben Mata, the local's president, said Thursday that he had been flooded with calls from about two dozen financial planners, offering to counsel workers.
But like the national union, whose leaders have refrained from encouraging or discouraging G.M.'s 113,000 hourly workers to accept the deals, Mr. Mata said he left it to members of Local 598 to seek out financial advice.
That does not mean leaders do not have opinions, however. Mark Hawkins, the local's chairman, said he believed that any workers short of retirement who accepted the deals were "crazy."
Referring to the payments of up to $140,000 for workers to leave, Mr. Hawkins said: "Their jobs are worth way more than that. Management is making this offer to reduce people. Once they reduce people, they'll reduce plants. We're not excited about that."
Mr. Mata, for his part, is more pragmatic: "Here's the bottom line: if they don't make money, we don't make money. We're aware that they're in trouble. So rather than be reactive, we'll be proactive."
The union is wise not to push its members either way, said the former U.A.W. president Douglas A. Fraser. After all, putting the onus of a decision entirely on workers allows the union and its president, Ron Gettelfinger, to avoid the appearance that they are working hand in glove with the company.
"The beauty of the buyout is that it is an individual decision, and individuals are motivated by different reasons," Mr. Fraser said this week.
Ford, for its part, views the buyouts as "solutions or reactions to the reality in our industry right now," Mr. Laymon said.
"I think it's a good thing, I think it's a very responsible thing, to release an unbelievable pressure point," he added.
But the buyouts will do nothing to relieve the pressure on Mr. Gettelfinger next week in Las Vegas, said Gary N. Chaison, professor of industrial relations at Clark University in Worcester, Mass.
Union leaders will have to walk a fine line, Professor Chaison said. They may feel a need, as a show of strength, to oppose further concessions. But there is no denying that "the pay is going, the jobs are going and these are extraordinary times," he said.
Professor Chaison added that the U.A.W. president, in his main speech on Monday, will need to somehow make sense of this difficult time for its members. One tack, he suggested, would be to stress that "the greatness of our union lies not only in our power but our flexibility, and in our ability to make changes to reflect our times."
The Yrlas family has long relied on G.M. for their livelihoods. Mrs. Yrlas took a $35,000 buyout from G.M. 15 years ago, but did not receive benefits. Three of Mrs. Yrlas's six brothers, and Mr. Yrlas's father and sister, worked there as well.
But with jobs disappearing, the Yrlas family sees no prospect of G.M. work for their three sons, aged 16, 17 and 21, who all still live at home. Their fourth son, 32, worked at G.M. for a short time as a temporary worker, but quit for a higher-paying bartending job in an affluent suburb of Detroit.
"It's a G.M. family," Mrs. Yrlas said, but then corrected herself. "Was a G.M. family. Our kids won't work there."
Micheline Maynard reported from Detroit for this article and Jeremy W. Peters from Flint, Mich.
Copyright 2006 The New York Times Company
Decision Time in Detroit
By MICHELINE MAYNARD and JEREMY W. PETERS
DETROIT, June 8 — It's crunch time for the United Automobile Workers.
Union members like Rick Yrlas, a 51-year-old auto worker in Flint, Mich., must decide in the next couple of weeks whether to accept a buyout offer from General Motors, where he has worked for 30 years.
If he takes the buyout, he would be giving up a job that pays $75,000 a year and provides the medical benefits that helped him stay afloat when he became sick in recent years. He is already eligible for retirement, and the buyout would give him seed money to start his own tamale business and for his wife, Lolly, to open a hair salon.
For G.M. and Ford, which is offering a similar program, the buyouts provide a way to reorganize in a more efficient way than if they stuck to the letter of their union contracts.
For the U.A.W. leadership, however, the offers represent far more than the "take it or risk it" discussions playing out around the kitchen tables of nearly 150,000 of its members.
The buyouts are a symbol of a lost fight, an admission that the jobs the union worked so hard to win can no longer be preserved and that the protection long offered to laid-off workers has become too expensive for struggling auto companies to afford.
That creates pressure on U.A.W. leaders to forge a new direction during their national convention, which starts in Las Vegas on Sunday. The conventions are held once every four years to elect leaders and set strategy.
The union's membership is at the lowest point since World War II and is shrinking every day as more plants are closed and workers accept the buyout offer.
In its only official word on the buyouts, the U.A.W. said last month that 12,400 G.M. workers had accepted the packages, which range from $35,000 to $140,000. But the number now is believed to be closer to 20,000, according to Wall Street analysts. And if there is a rush at the end to accept, as union and company officials expect, then the number of workers opting to retire or leave should be close to G.M.'s goal of 30,000.
G.M.'s chief executive, Rick Wagoner, declined to say at the company's annual meeting this week how the buyout plan was progressing.
Ford is offering workers up to $100,000 to leave their jobs, including $35,000 to those eligible for retirement. The company is also offering a plan that pays up to $15,000 in college tuition, plus half a worker's salary for three years. Ford has no target for reducing its payroll, but the buyouts are being offered to workers at plants that it plans to close.
Without the deals, the two companies, which collectively plan to cut 60,000 jobs over the next few years, would have to provide full pay and benefits to laid-off workers under programs like the Jobs Bank at G.M. and the G.E.N. pool (for guaranteed employment numbers) at Ford. About 6,500 workers are in the G.M. program and about 1,100 in Ford's plan.
Adding more workers to those job-protection programs would put G.M. and Ford at a "substantial competitive disadvantage" to their rivals, including Asian auto companies, which took a record 40 percent of the American market in May, said Joe W. Laymon, group vice president for human resources and labor relations at Ford.
And there is no guarantee that the income security programs would survive beyond the 2007 contract talks scheduled to begin next summer, when executives are expected to push for them to be curbed if not eliminated.
Mr. Yrlas, who inspects pickups for defects at the Flint plant, is still fence-sitting.
Even after 30 years, he has little personal savings and would be throwing himself and his family at the mercy of the unforgiving Michigan economy without much cushion.
Mr. Yrlas's colon ruptured three years ago and he was on sick leave for six months, collecting half his pay. The bills started to pile up. The last few years, he said, "it just seems like I've been playing catch-up."
He has, however, been testing his wings with a fledgling tamale business. Each Friday, he cooks up about 150 tamales, and takes them to work, where he sells them for $12 a dozen. They usually sell out in two hours, he says.
He envisions turning his garage, now cluttered with a freezer, lawn equipment and a few gasoline cans, into a catering kitchen.
Mrs. Yrlas, he says, could help with the cooking and also work from their basement, where she already cuts hair during her time off from a local beauty parlor, where she makes $7.50 an hour plus tips.
"It could happen some day," he said. "This place has got potential. I could spin my wheels fast, spend the money and we could do things."
At least in theory, Mrs. Yrlas, 52, agrees: "It'd be nice to fix this up better, have our own business," she said.
Mr. Yrlas said that almost every other day, "I say, 'Where are the papers, I'll sign.' "
But he's holding off.
"There's a gamble here," he says. "If things don't work out, then I'm stuck and I'd have to go get that $8 job."
The uncertainty, coupled with Mrs. Yrlas's reluctance to quit her job despite its low pay, helps explain why he has not made a final decision. Workers have until June 23 to sign up, and until June 30 to change their minds.
Mr. Yrlas said he had not received any financial advice from his union local, which held an informational session about the buyouts a few weeks ago. Ben Mata, the local's president, said Thursday that he had been flooded with calls from about two dozen financial planners, offering to counsel workers.
But like the national union, whose leaders have refrained from encouraging or discouraging G.M.'s 113,000 hourly workers to accept the deals, Mr. Mata said he left it to members of Local 598 to seek out financial advice.
That does not mean leaders do not have opinions, however. Mark Hawkins, the local's chairman, said he believed that any workers short of retirement who accepted the deals were "crazy."
Referring to the payments of up to $140,000 for workers to leave, Mr. Hawkins said: "Their jobs are worth way more than that. Management is making this offer to reduce people. Once they reduce people, they'll reduce plants. We're not excited about that."
Mr. Mata, for his part, is more pragmatic: "Here's the bottom line: if they don't make money, we don't make money. We're aware that they're in trouble. So rather than be reactive, we'll be proactive."
The union is wise not to push its members either way, said the former U.A.W. president Douglas A. Fraser. After all, putting the onus of a decision entirely on workers allows the union and its president, Ron Gettelfinger, to avoid the appearance that they are working hand in glove with the company.
"The beauty of the buyout is that it is an individual decision, and individuals are motivated by different reasons," Mr. Fraser said this week.
Ford, for its part, views the buyouts as "solutions or reactions to the reality in our industry right now," Mr. Laymon said.
"I think it's a good thing, I think it's a very responsible thing, to release an unbelievable pressure point," he added.
But the buyouts will do nothing to relieve the pressure on Mr. Gettelfinger next week in Las Vegas, said Gary N. Chaison, professor of industrial relations at Clark University in Worcester, Mass.
Union leaders will have to walk a fine line, Professor Chaison said. They may feel a need, as a show of strength, to oppose further concessions. But there is no denying that "the pay is going, the jobs are going and these are extraordinary times," he said.
Professor Chaison added that the U.A.W. president, in his main speech on Monday, will need to somehow make sense of this difficult time for its members. One tack, he suggested, would be to stress that "the greatness of our union lies not only in our power but our flexibility, and in our ability to make changes to reflect our times."
The Yrlas family has long relied on G.M. for their livelihoods. Mrs. Yrlas took a $35,000 buyout from G.M. 15 years ago, but did not receive benefits. Three of Mrs. Yrlas's six brothers, and Mr. Yrlas's father and sister, worked there as well.
But with jobs disappearing, the Yrlas family sees no prospect of G.M. work for their three sons, aged 16, 17 and 21, who all still live at home. Their fourth son, 32, worked at G.M. for a short time as a temporary worker, but quit for a higher-paying bartending job in an affluent suburb of Detroit.
"It's a G.M. family," Mrs. Yrlas said, but then corrected herself. "Was a G.M. family. Our kids won't work there."
Micheline Maynard reported from Detroit for this article and Jeremy W. Peters from Flint, Mich.
Copyright 2006 The New York Times Company
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