US car giants in union face-off

In 1984, when the Big Three US car manufacturers wanted to overhaul production line work practices, the United Auto Workers Union cut a deal for the introduction of a jobs bank.

Arguably the single greatest trade union achievement in US history, the jobs bank allowed laid-off UAW members to continue receiving their pay and other entitlements such as health insurance and holidays until new jobs became available.

At the time, the UAW's argument was that auto workers shouldn't lose their jobs if they came up with ideas for improving efficiency on the shop floor.

The Big Three went along because they believed, arrogantly, that they ruled the world and that any lay-offs would be the result of temporary glitches in the production cycle.

They were so cocky they even agreed to open up scores of jobs bank drop-in centres in towns across the Midwest rust belt so that idle autoworkers had somewhere to chat, play cards, watch TV and read newspapers while they waited for new jobs to appear in their area.

That was 1984. Today the auto industry is much harder and much more complex. Once invincible citadels of US capitalism, the Big Three are now struggling to be competitive.

Last year, they collectively lost $US16 billion as mean and lean foreign competitors such as Toyota (which made $US14 billion in 2006) continued to increase market share with good quality cars built on the cheap and marketed brilliantly.

As a result, the jobs bank, which today has more than 4500 non-producing workers on its books, has become a serious liability for the Big Three who desperately need to cut costs. But the UAW, which over the past two years has backed efforts by the employers to shed 80,000 jobs through buyouts and early retirements, regards the jobs bank as a basic entitlement and doesn't want to give it up.

The showdown starts this week when the Big Three and the UAW get down to negotiations on a new four-year industry agreement, one that could decide the future survival of large-scale, homegrown, US vehicle manufacturing.

The process began last Friday with ceremonial handshakes between Chrysler and UAW officials. Similar rituals will occur today at Ford and GM.

Then it's down to business on the three main issues: the jobs bank, more shop floor flexibility and healthcare benefits.

By themselves, healthcare benefits add an estimated $US2000 ($2270) to the cost of a Big Three vehicle, a staggering liability due in large part to the industry's 700,000 retirees and their families who are among those covered.

The employers could easily target these retirees again, given that in 2005 they got UAW support for a deal that made retirees liable for a bigger share of their medical bills.

Another option on healthcare is a deal that would see the UAW agree to take over the responsibilities in exchange for the car makers sinking large sums into a trust fund that the union would then control.