Auto workers may see big signing bonuses
Reports say UAW, GM discussing payments as a way to sell rank-and-file workers on the idea of union assuming retiree health-care costs.
NEW YORK (CNNMoney.com) -- A deal now in the works between the United Auto Workers and General Motors could include a large signing bonus for workers at the plant as a way of winning approval for the automaker shedding billions in retiree health care costs, according to published reports.
The Detroit News and Detroit Free Press reported that bonuses could be part of any labor agreement, which will need ratification by nearly 73,000 UAW members still working at the nation's largest automaker.
The News reports that GM is also interested in a signing bonus because management sees that as preferable to wage increases that it might not be able to afford down the road if it continues to lose U.S. market share.
Negotiations recessed about 9 p.m. Monday after a weekend that saw two marathon bargaining sessions that went virtually all night. The previous contract expired at 11:59 p.m. ET on Sept. 14, but the union has kept its members on the job working on an hour-to-hour extension of that pact since then.
GM (Charts, Fortune 500) and U.S. rivals Ford Motor (Charts, Fortune 500) and Chrysler Group are seeking to find a way of getting out from nearly $100 billion in estimated cost of retiree health care coverage going forward. GM, which has nearly 270,000 retired UAW members and an additional 70,000 surviving spouses for which it is responsible, has an estimated $51 billion in health care costs for which it does not have funds.
The automakers would like to set up union-controlled trust funds, which would then receive billions in cash, stock and debt from the automakers to pay those future expenses.
Negotiations on a new deal are believed to have bogged down working out the difficult details of how much to put in those funds, what kind of mix of assets will be accepted and what responsibility the automakers will have if rising health care costs exceed those assets.
The union is open to the idea of the trust funds because it would be a protection for those retirees' health care benefits in case one of the automakers go bankrupt.
The union also wants to see the automakers stop losing market share to nonunion rivals such a Toyota Motor (Charts) and Honda Motor (Charts), which are not burdened by those costs. The drop in market share by the U.S. automakers has led to widespread plant closings and and staff reductions in recent years.
But even if the UAW negotiators can be convinced that such trust funds are a good idea, they will need to convince rank-and-file membership that such a radical change in the contract is a good idea. The Detroit papers reported Tuesday that the union and management are discussing a large signing bonus as a way of winning that support.