2007 UAW contract talks: GM puts two-tier pay deal on table

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Union hasn't designated a lead company in talks

General Motors Corp. is pursuing a two-tier wage system that would allow the company to pay new hires less than veterans as negotiations heat up between the UAW and Detroit's automakers, sources close to the bargaining said.

With the contract deadline a day away, the two sides still are far from resolving the core question of paying for retiree health care, but two-tier pay is one of several issues also on the table.

At the same time, the United Auto Workers union is pushing hard to stem plant closings and the outsourcing of factory jobs to nonunion workers at each auto company.

People familiar with the talks said bargaining is continuing at each of Detroit's automakers, but at a very deliberate pace.

None of Detroit's Big Three had emerged as the lead company in the talks as of Wednesday.

Historically, the UAW has designated one automaker as the lead in bargaining and, upon reaching an agreement with that company, has worked to get the other two to accept the same terms.

UAW President Ron Gettelfinger is said to be shuttling between bargaining at GM, Ford Motor Co. and Chrysler LLC, often visiting each of the companies during the course of a day.

At GM, the automaker is pursuing a two-tier wage structure because it has an older work force and may have a need for new hires in coming years.

"GM would really benefit from a tiered wage structure more than Ford and Chrysler," said David Cole, director of the Center for Automotive Research in Ann Arbor. "Even with the buyouts, GM's average (hourly worker) age has only dropped from 51 to 49. They're going to have retirements and may need to bring in 15,000 to 20,000 new people down the road. A two-tier wage structure would help quite a bit."

Cost-saving two-tier wage structures already have become a reality for plant workers at auto suppliers Delphi Corp., American Axle & Manufacturing Holdings Inc., and most recently Dana Corp.

The UAW agreed to let Chrysler hire long-term temps -- who are paid a lower wage -- at its Belvidere, Ill., assembly plant in exchange for adding a third shift of production.

Gettelfinger, however, has been prickly when questioned about whether the union would accept such a deal with the auto companies.

He has stressed that the Delphi and Dana were both in bankruptcy, and thus in a different situation than the automakers.

It is unclear whether Ford and Chrysler also are pursuing two-tier pay schemes. If GM is successful, it may be a starting point for the entire industry.

With negotiations running from early morning until late evening, sources said on Wednesday that the union and automakers have yet to agree on what has become the central issue of this year's negotiations: the creation of a union-run trust to administer retiree health care, known as a voluntary employee beneficiary association, or VEBA.

Sources said that GM has offered to finance retiree health care trusts at 65-to-67 percent of their total obligation on the books.

Ford also is believed to have offered funding at a similar level. However, union negotiators are holding fast for a higher level of funding that reduces the risk of a shortfall if health care costs escalate.

While the union is said to be looking for protection if medical insurance costs rise, the companies want the opportunity to reduce VEBA contributions if, for example, any national health-care legislation is passed that affects UAW retirees.

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