General Motors Corp. auto workers will begin voting this week on a proposal that would have workers and retirees pay more for their health care, in a test case for U.S. automakers, who say they can’t afford the hard-won union benefits of the past.
GM and the United Auto Workers reached the tentative agreement on health care last month but it must be ratified by UAW members. Voting begins Thursday, and the UAW has asked local unions to finish voting by Nov. 10, UAW spokesman Paul Krell said.
UAW Local 14 in Toledo, Ohio, which represents nearly 3,300 active workers, will be the first to vote starting Thursday night, shop chairman Burt Wagner said. The vote will run for 24 hours to accommodate all shifts.
Wagner said he expects Toledo members to ratify the agreement. He said local members believe UAW leadership did the best they could considering GM’s financial situation and falling U.S. market share.
“We just have to understand that the market share isn’t what it was before,” Wagner said. “They don’t like it, but they understand it.”
GM’s U.S. market share fell to 22 percent in October, down from 33 percent 10 years ago, the result of increasing competition from Asian brands.
The world’s largest automaker lost more than $3 billion in the first nine months of this year, and the company says soaring health care costs are among its biggest burdens. GM expects to spend $5.6 billion on health care this year for salaried and hourly employees, up from $5.2 billion in 2004.
GM spokesman Stephan Weinmann said the company had no comment on the ratification vote.
“It’s really a part of the overall process that the UAW manages, and we recognize that and respect that,” he said.
GM pays for health care for 750,000 U.S. hourly employees, retirees and their dependents. Under the proposed agreement, GM retirees would have to pay up to $752 annually for families and $370 for individuals for their health care. Right now, retirees pay no monthly premiums and pay a small fraction of the rest of their health care costs.
The agreement would exclude around 74,000 low-income retirees whose GM pension is $8,000 a year or less.
The agreement would require GM hourly workers to contribute $1 per hour in future pay increases to a new fund to help pay for retirees’ coverage. GM would contribute $3 billion to that fund over the next six years. It also would require hourly workers and retirees to pay slightly more for their prescription drugs.
Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group have already said they will seek similar concessions from the UAW. The Big Three’s combined health care costs are expected to top $11 billion this year, versus $10 billion in 2004.
Wagner said many workers at his plant have told him they would have given up more in order to protect retiree benefits.
“If they could have a part in the agreement, they might go a little deeper into their pockets to make sure retirees don’t have to pay anything,” Wagner said. “They’ll be retirees someday as well.”
Keith Brooks, a member of UAW Local 599 in Flint who is currently laid off from his job at GM’s historic Buick City complex, said he was tempted to vote against the agreement because he believes the federal government should relieve GM’s health care burden. He said he will probably vote for the contract, however.
“It’s better to give up a dollar an hour than not have a job,” he said.