Word: unionizers
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Dates: during 2000-2009
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...Future cost projections are even more chilling, since money to meet those projections is dwindling fast. In 2007, GM and the union estimated that it would require an investment of $57 billion to provide future health care for GM's blue collar retirees, even after trimming some benefits. GM's VEBA is more than a little shy of that number. It had $14.4 billion in the middle of 2008, and now has only $9.4 billion in assets, which is beyond the reach of creditors but would barely last three years in the face of escalating health-care costs. Gettelfinger describes...
...Chrysler has only 78,000 retirees, compared with GM's army of 377,000, but the financials don't line up any better for its VEBA, which has only $1.6 billion in cash - a fact that is already raising anxiety inside the union. Chrysler is expected to get $6 billion in new federal aid as it steps out of bankruptcy court, but Chrysler/Fiat is obligated to steer just $381 million into the VEBA next year. One possible save: in a little-noted facet of the new labor contract with Fiat, the VEBA can sell its shares to the Italian automaker...
...Gettelfinger insists that the union has already made substantial cuts to health-care costs. In less than four years, blue collar retirees have gone from modest co-pay fees and deductibles to footing 25% of the bill for their health care. The new UAW contracts also include reductions in benefits: dental and vision coverage will be dropped, effective July 1. "The UAW has always been willing to sacrifice to help these companies," Gettelfinger says. "When this started, we were on third base before the other stakeholders were even in the ballpark...
...Even within the UAW, that note of selfless sacrifice rings a little less than true: "The government made us do it," says a union official...
...Meanwhile, many union members fear this is only the beginning of the cuts that will be imposed on retirees, who were once promised health-care benefits for life. "This is very, very painful for the union," says Harley Shaiken, a labor expert from the University of California, Berkeley. "It's a huge risk because the VEBA could run out of money if these companies don't do well," he said...