Powerless, retirees fear losing benefits
They remind workers, who will vote on deal, of sacrifices
By Louis Aguilar
The Detroit News
Tuesday, July 17, 2007
Retirees are typically fiercely proud of their auto careers and
staunch defenders of the United Auto Workers union. But they
are growing increasingly concerned about the fate of their
health care coverage and pensions during upcoming contract
They will have no vote on a contract that could dramatically
overhaul their benefits, known as automakers' legacy costs. And
many current workers say they expect to approve a deal in which
everyone, including retirees, will have to make sacrifices.
"Sweeping changes need to be made especially concerning our
legacy costs," said Jonathon Tuttle, a worker at Chrysler's
Warren Truck plant. "Let's face it, with rising oil prices, our
waning political clout in Washington and spiraling health care,
we have an almost perfect storm."
Times haven't always been so tough. Ray Bailey got a voucher
for a new Buick LeSabre when the former electrician retired from
GM's Willow Run Transmission plan in 1993. "It was a good job,
the pay was great and they treated you decent," Bailey said of
his 42-year career at GM.
For years, he didn't pay anything for his health care. Now,
like most GM retirees, he pays up to $752 annually for family
health care, including deductibles, co-payments and premiums.
Bailey's costs went up after the UAW reached unprecedented
agreements with GM, and Ford Motor Co. in 2005 that raised
retirees' out-of-pocket costs even as active workers agreed to
forego raises to help pay for retiree care. The deals slashed
$1 billion from GM's retiree health bill and more than $850
million from Ford's.
Many retirees know they still have the Cadillac of health care
deals. "But we should never forget that we fought for
everything," Bailey said. "We took benefits instead of wages a
lot of times, so our feeling is we've already paid for our
benefits. Why should they be able to take it away?"
Many retirees wonder how much fight today's UAW workers have in
them and wonder if they remember how much earlier generations
sacrificed -- long strikes, layoffs -- to win generous pay and
Younger workers say they haven't forgotten, but they know how
tough the situation is now. Many believe the talks will produce
a landmark deal that will shift retiree health care liabilities
to a trust known as a VEBA -- or Voluntary Employee Beneficiary
Association -- that would be funded by the automakers and
managed by the union. This month, the UAW agreed to such a deal
with bankrupt auto supplier Dana Corp.
"In my view, it's a great picture of labor and management
working together in a highly effective way," said David Cole of
the Center for Automotive Research in Ann Arbor. "This is a
very, very dangerous period right now. Survival is not
guaranteed. Both sides understand this and most of the rank and
file is stepping up. Do I think it means the UAW will turn its
back on retirees? No. Being flexible is not the same as giving
up the union's ideals."
Former Ford Rouge worker Rod Lare doesn't trust the VEBA
concept. Lare took a buyout last year but gets to vote on the
contract because he didn't accept a cash payment and has less
than 30 years seniority. He fears a VEBA fund could run dry.
"If that happens, co-pays and premiums from workers skyrocket."
William Reese is trying to be realistic. He landed a Chrysler
factory job in 1942, when he was 19. Most of society was deeply
segregated, but the UAW fought for Reese's rights in the plant.
Later, jobs at the Warren Truck plant provided a good life for
his son, Vernon Morrow, and his granddaughter, DeAnita Morrow.
Reese and Vernon Morrow are both retired. DeAnita Morrow has 19
years in at the truck plant. She says she won't approve a
contract that gives "too much away" but admits the contract will
include givebacks. "We have to protect our families," she said.
Reese, a survivor of triple-bypass heart surgery, sees the tough
reality of the union's situation.
"I know how much the UAW fought for us," said Reese, now in his
80s. "But now I think we are going to take a hit."
You can reach Louis Aguilar at (313) 222-2760 or