I’m not surprised that the strike against GM was a relatively short one. We’ll see what the details are as they emerge over the next few days. Obviously, the key was the establishment of the Voluntary Employee Benefit Association, or VEBA. Here’s what The Wall Street Journal has to say this morning:
Mr. Gettelfinger noted the UAW was able to get 80 years worth of funding for the independent retiree health-care liabilities trust it is setting up on behalf of its retirees.
The creation of an independent trust to take over some $50 billion owed to GM-UAW retirees for health care would represent a significant boost for GM, which has had its credit ratings knocked down to junk ratings in part because of concerns about the huge debt, which is more than double GM’s current market capitalization.
GM has an estimated $51 billion retiree health-care obligation to UAW members and retirees.
In a radio interview on WJR-AM 760 about three hours after reaching the tentative contract, Mr. Gettelfinger said retirees will be secure in their benefits. "I’ll be glad to stand up in front of anybody and defend that VEBA and show people how they’re going to be secure with their retiree benefits," he told WJR.
Obviously, there will be opposition to this deal. On the other hand, look at the choices: GM was close to keeling over, which would have meant the loss of tens of thousands of jobs. I don’t see how a long strike would have brought a better deal–and might have lead to larger job losses down the road if the company ended up cutting more jobs to balance its awful financial status. Dissidents are railing against the deal–but was there an alternative?
Sure, it’s true that this now means a change in historic gains set decades ago but that horse is already out of the barn (maybe that’s not the right metaphor here but, hey, it’s morning, I’m still on the road and have to get to a darn meeting). There is a big risk that the VEBA money will run out and that the UAW will be in the position of having to cut benefits to members–that’s down the road a bit. But, what was the alternative? To let the company cut the benefits now?
The bigger challenge is taking on the rapacious economic system that got us here. That’s a huge challenge. But it shouldn’t have been on the UAW to do it alone.
