Wednesday, January 23, 2008

Text of speech by UAW President Ron Gettelfinger to the Labor and Employment Research Association (LERA), Jan. 17, 2008

Thank you, President Emeritus Don Boggs for your kind introduction, and good evening everyone.

To President Ruth Okun, members of the LERA Board, our local union leadership, members of management and all of you thank you for being here this evening. On behalf of the UAW International Executive Board and the men and women of the UAW, I want to thank the Detroit Chapter of the Labor and Employment Relations Association for your invitation to speak with you this evening.

I also want to recognize UAW Vice President General Holiefield, his staff, the staff representing Vice Presidents Bob King and Cal Rapson, our Public Relations Director Roger Kerson and Linda Ewing, director of our Research Department. I also want to acknowledge Bill Cook from the School of Labor and Industrial Relations at MSU and the students who are with him.

Our union has great respect for the people who work in the field of labor relations at the worksite everyday and for those professionals who work to bring labor and management together to solve common problems.

Obviously, there will always be disagreements at the bargaining table during negotiations and on public policy issues, as well as in other arenas, but as long we maintain a commitment to work together and search for positive solutions we can find an answer to the most difficult of challenges.

For example, there has been a great deal of commentary on the outcome of the 2007 negotiations at Chrysler, Ford and GM and the savings to the auto companies. The estimates vary but it is probably safe to say at somewhere in the neighborhood of $1,000 per vehicle.

These contracts will allow the companies to invest in U.S. plants for the products of today and tomorrow.

While we made great strides in 2007, there is still a significant competitive gap between different sectors of the global automotive industry.

I’m referring to the extraordinarily high cost of executive compensation at U.S.-based companies. It’s simply out of line when compared to executive compensation in Japan and other industrialized nations.

In 2004, according to the Economist magazine, the average CEO in the U.S earned 475 times the pay of the average worker. In Japan, the ratio was just eleven to one. That means U.S. executives are earning 43 times more than their Japanese counterparts, when their pay is compared to that of the average worker.

It’s time for a thorough review of compensation in the U.S. auto industry – from the Board of Directors, the officers, to the supervisors and everyone in between.

Executives at the auto industry and throughout American business have to be aware that the American people are not going to tolerate, forever, a situation in which a CEO can earn more money in a single day than an average worker can earn in an entire year.

The ever-growing income gap between the rich and the poor is a critical problem for America. It is leading to the erosion of the middle class. If American business leaders don’t address this situation themselves – and soon – someone else is going to address it for them. Saving realized by the companies is one thing. But the picture is not complete unless we also look at the progress that was made at the bargaining table.

First and foremost, we won enhanced job security for our members by negotiating unprecedented product and investment guarantees.

That means our members can focus on what we do best: building great quality cars and trucks for our customers.

These agreements also deliver financial gains to our members, in the form of continued cost-of-living allowances, and lump-sum payments throughout the life of the agreement. Current and future retirees will see income gains as well, through increased pension payments and an improved pension formula.

We also succeeded in protecting top-quality health care for our active membership. Active UAW members at Chrysler, Ford and GM will still have access to the very best employer-paid health care in America.

Finally, as has been widely discussed, we reached agreements that secures lifetime health care for current and future UAW retirees, including every seniority worker who was on the active rolls on Sept. 14, 2007.

We accomplished this through the creation of VEBAs or Voluntary Employee Beneficiary Associations at each company.

We originally proposed the VEBA in 2005, when we took the step of negotiating, mid-contract, modified health care for retired workers at GM and then Ford. Given the current state of our industry and the current state of the American political debate about health care there is no risk-free way to guarantee lifetime health care coverage.

Not for active auto workers. Not for retired auto workers. Not for anyone. That’s a disgrace, because every other industrialized nation manages to guarantee health security for its citizens at a far lower cost than we pay here in the U.S. The fact is that health care paid for by an independent VEBA trust, with funds that can only be used for that purpose, is more secure than a promise of health care from a company. The independent VEBA trusts will be funded by tens of billions of dollars in cash, stock and other securities contributed by our employers. It is the largest transfer of assets from capital to labor. Because the trusts are pre-funded, Chrysler, Ford and GM can remove projected retiree health care costs from their books, which will improve their financial positions. But because we bargained hard for sufficient funding and because the independent trusts will receive up-front funding and begin earning interest right away we're confident the VEBAs will provide high-quality health care benefits for our retirees for the next 80 years. Our confidence is based on rigorous analysis by internal specialists and outside experts.

The UAW takes our obligation to our retirees very seriously. Anything you’ve read to the contrary such as news articles that suggest the VEBAs will run out of money in a few years is wrong.

Speculation by individuals who haven’t seen the necessary data has no value. Everything we do in this area is subject to court review and approval. As part of this process, UAW retirees will receive complete and timely disclosure of all relevant information.

We will mail detailed information to every one of the hundreds of thousands of retirees who are affected by this agreement. UAW retirees built our union. And they spent decades of their lives helping their employers earn enormous profits. They deserve full information about their health benefits and they will receive it.

In the meantime, we can share some basic facts: the VEBA trusts will not be run by the UAW. They will be administered by an independent board approved by federal court, which will include trustees with expertise in health care, financial management and related areas. The trustees will manage and pay benefits for UAW retirees from Ford, Chrysler and General Motors, and oversee the long term solvency of the VEBA.

Some commentators have suggested that by encouraging healthier lifestyles, finding more efficient doctors or realizing efficiencies of scale, the VEBAs will blaze a nationwide trail toward lower health care costs, and everyone in America will live happily ever after. For this to be possible, you would have to assume that our union, Chrysler, Ford and GM have been blindly writing checks for billions of dollars in health care expenses each year without making serious efforts to control costs. That is simply not the case. The reality is that our union has worked for decades with employers, policy makers and legislators to contain costs while still providing quality health care.

We have promoted wellness programs, disease manage-ment, evidence-based medicine, and certificate-of-need standards. We’ve also insisted on transparency with pharmacy benefit managers, and tough negotiations with medical providers.

The VEBA trustees will certainly continue these practices and improve on them where possible.

Such efficiencies are desirable, and are important for the VEBA trusts to succeed in their mission of providing long-term benefits to the beneficiaries they are obligated to cover. But these measures, by themselves, do not represent a long-term path to health security for all Americans.

What's needed, as our union has long advocated, is a single-payer, universal, comprehensive national health insurance program that covers every man, woman and child in the America. It took a lot of hard work to solve a serious health care issue for several major companies and several hundred thousand retirees in the auto industry. But our work is not done so long as there are 47 million Americans without health insurance.

Our agreements with the auto companies set the stage for this task as well, by establishing a National Institute for Health Care Reform.

We negotiated commitments of $30 million from the companies over the next four years to fund the Institute. It will reach beyond the bargaining table to pursue innovative research and education efforts to expand access to health care, while also controlling costs. While we pursue every possible incremental change that will have a positive impact on America’s health care crisis, it’s clear than in the long run, no solution other than a publicly-funded single-payer health care system can provide quality care for American citizens and help American companies compete in a global economy.

Can America afford single-payer? A better question is, can we afford not to have it? Medicare, our largest current government-funded health insurance program, provides health care for millions of senior citizens with administrative costs of about two percent. Compare that to private insurance plans, with average administrative costs of 30 percent or more.

Medicare, the publicly-funded program, spends more money on doctors and patients and less on paperwork. That’s the direction America needs to go. In fact, a recent CBS/New York Times poll found that an overwhelming 64 percent of Americans favor a government guarantee of health care insurance for all.

And a strong plurality, 47 percent favor a government-run system with universal coverage, as opposed to just 38 percent who would favor the current inefficient private-run system.

We have all heard a lot of talk about “change” during the political campaigns. It’s time, we believe, to create the change that most Americans want universal health care for our entire country.

In addition to the significant gains we won for our active and retired membership, there will be a limited number of employees at each company, for example, who can be hired at a lower wage, with a different benefit structure.

At GM and Chrysler, the new hires will be limited to certain job functions; at Ford, the limit will be 20 percent of total UAW employment at the company.

By placing limits on the number of new hires, we believe these agreements will help maintain the domestic auto industry as a source of high-quality, standard-setting jobs for many years to come.

Our agreements also include a groundbreaking moratorium on outsourcing. So these contracts give the companies real incentives to retain existing work in UAW facilities, and to return work that had been outsourced elsewhere.

As I said earlier, we base our negotiating strategy on the facts as we find them. And the fact is that there has been a dramatic drop in employment at each of the domestic companies in recent years even during a period of record automotive sales in the United States.

GM, in the 1970s, had over 460,000 UAW-represented employees. Now, they are down to just over 70,000. Clearly, the status quo is not acceptable.

Many people will look at the 2007 UAW negotiations as the moment in time when the U.S. auto industry made a dramatic transformation.

But our members recognized the need for change long before 2007.

Day in and day out, the men and women of the UAW have been working to improve our industry – and our achievements are quite impressive.

On safety: For years, it has been UAW-represented plants that have set the standard on safety in our industry. We continue to lead the way with joint labor-management programs that don’t just react to illness and injury.

In UAW plants, we negotiate health and safety reviews, hazardous materials training, ergonomic investigations, and other mechanisms to anticipate what might go wrong – and we try to fix those problems before they happen.

On productivity: According to the Harbour Report, union plants outperform the competition in a head-to-head match up, time after time.

In 11 out of 12 product categories, workers in a union plant can assemble a particular type of vehicle; for example a compact, an SUV, a pick-up, or a mini-van using fewer hours than a non-union facility.

The conventional wisdom is that non-union plants are more efficient, because union work rules are a drag on production. The conventional wisdom is wrong. Our plants are better – because trained, experienced union workers with a voice on the job add value to the manufacturing process.

On quality: our members are on the line every day, working to meet the demanding standards of today’s auto industry. And we’re succeeding.

Ford is building a reputation as a quality leader in the industry, scoring numerous awards from J.D. Power and other customer surveys.

Chrysler is refreshing its lineup, and has some vehicles in the pipeline, with built-in UAW quality, that will be innovative.

GM has won Car of the Year for the second year in a row at the Detroit auto show. They very nearly won Truck of the Year for two years running as well, placing second and third in that category.

When you look at what we’re doing in our plants, and what we’ve done at the bargaining table, there’s no question about it: We have set the stage for our industry to succeed. We’ve done our part. Now it’s time for the auto companies and our government to do theirs.

Chrysler, Ford and GM must focus like never before on bringing vehicles to market that customers want to buy, at a price customers can afford to pay.

That includes responding, forcefully, to consumer and regulatory demands for greater fuel efficiency and reduced carbon emissions. The CAFE legislation recently passed by Congress will help achieve these goals.

The new mileage requirements represent the largest increase in CAFE standards since the concept was first introduced in the 1970s.

Our union supported the final bill, because these new standards are technically and economically feasible and they are good for the environment.

CAFE legislation is just one example of how government action or inaction has a dramatic impact on the auto industry.

We’ve already discussed another key area health care.

We have the best doctors, nurses and health care professional of anywhere in the world.

But without a comprehensive national health care system, we’re not delivering quality care to those who need it at an affordable cost.

It’s a crisis we can no longer afford to ignore – and members of our union are determined to be part of the solution.

We’re equally determined to help address the growing threat to the U.S. economy, U.S. jobs and U.S. consumers that has been caused by our failed trade policies.

Our trade deficit stands at more than $560 billion for the first ten months of 2007 – down slightly from the year before, due largely to the falling dollar. But it’s still an enormous transfer of wealth to other countries, which cannot be sustained indefinitely.

Nearly one-fifth of that deficit, more than $100 billion is accounted for by just one category of manufactured goods: Motor vehicles and parts.

These numbers will get worse if the proposed U.S.-Korea Trade Agreement is passed into law. It’s another one-sided trade deal that will further open our borders to Korean products, while doing little or nothing to require the Koreans to reciprocate.

Last year, South Korea sold around 700,000 vehicles in the United States, while U.S. companies sold about 7,000 vehicles in Korea. That’s not free trade. That’s not fair trade. That’s a fiasco.

The proposed U.S.-Korea trade agreement won’t solve the problem. Congress should reject it and tell the Bush Administration to start over.

The reality of our flawed trade policies hit home for many Americans this year, with repeated recalls of contaminated toys, contaminated food and other unsafe products. For years, our nation has opened its doors to products from all over the world, without any meaningful safeguards for workers, the environment or consumers. Now, we’re paying the price.

The answer is not to build walls around our country. The global economy is here to stay, and the exchange of goods and services between nations can be beneficial to all parties, if proper standards are enforced.

We don’t need walls. We need better bridges.

That means rigorous inspections and other procedures which allow in safe products but which keep out products that don’t meet internationally-recognized standards. Those standards must include protecting the human rights and workplace rights of workers overseas.

Consider this: If a toy comes into this country contaminated with lead paint, it was produced in a factory that is contaminated with lead paint.

In a global economy, the health and welfare of our own children is directly tied to the health and welfare of workers overseas.

That’s just one of the reasons we must insist that our trading partners respect the rights of workers. Because workers who have a voice on the job will surely use it to remove hazardous substances from their workplaces, which means there is less chance that hazardous products will end up in our homes.

There’s another reason that we, as Americans, must be advocates for the workers who make the products we use every day: Because it’s the right thing to do.

We built a middle class in this country, and the strongest economy in the world, by creating a strong labor movement. Workers joined together to lift themselves out of misery, to turn bad jobs into good jobs and good jobs into better ones.

The resulting prosperity created tens of millions of consumers whose spending power has been the engine of economic growth in this country, and in other countries, for many decades.

But now, the growing gap between the rich and the poor – both nationally and globally – threatens to undermine years of social and economic progress.

Members of our union believe we can do better.

At the bargaining table in 2007, when many said it couldn’t be done we rolled up our sleeves, set aside old ways of doing business, and hammered out new solutions to today’s problems.

If labor and management in the auto industry can find common ground, then we can also find common ground to address our environmental problems, America’s health care crisis, and our mounting trade deficit.

Will it be easy? No! But it can be done.

If we take the approach to national and global issues, that we want to drive change and be a part of the solution, we can improve our communities, improve our country and create a global economy that truly works for working people, all around the world.

Thank you again, on behalf of the members of our union, for the opportunity to be with you here this evening.