General Motors and the UAW: health care cost negotiations in crisis

¶ … Resolution: General Motors (GM) versus United Auto Workers (UAW) in health care negotiations between unions and management

Given the recent overall negative financial environment in the American automobile industry, the disputes between labor and management at General Motors, regarding worker's health care and benefits have proven to be some of the most significant, contentious, and 'watched' disagreements arising between labor and management in recent times in American labor negotiations. As GM goes, it is often said, so goes the nation.

"Imagine that you are running a domestic automaker ... And burdensome union contracts limit your ability to cut costs." The burdensome nature of the currently existing union contracts means that GM is forced to pay even its retired workers coffer-draining health care benefits, even while the company is losing money. Also, it seems, according to many industry analysts, GM may have lost its vision for the future. (Akst, 2005)

Declining sales alone cannot be blamed. While, "many of GM's domestic problems were laid bare in the second quarter" such as its reliance on large sport utility vehicles it is fundamentally its "enormous health care costs," that lead "two of the three major credit ratings agencies to downgrade GM's debt below investment grade in May to junk bond status." (Hakim, 2005)

Out of necessity things must changing at the major automotive factory, if the company is to survive. The traditional schism that has existed between GM's labor and management has begun to heal, for fear of workers losing their livelihoods and losing GM, no matter how much the union laborers may despise giving up the benefits the UAW labored so long to gain from the corporate behemoth. Even union negotiators recognize that rising health costs have prompted G.M. To start tapping a special fund it has set aside for retiree medical costs, taking money away from shareholders and company research and development."