Historic UAW contracts forged from angry words, picket lines, harsh reality 

Bill Vlasic and Sharon Terlep / The Detroit News

After 10 straight days of hard bargaining, the team from General Motors Corp. felt confident on Sunday, Sept. 23, that a deal was nearly done on a new, four-year contract with the United Auto Workers.

But Ron Gettelfinger had other ideas.

Late in the evening, the UAW president burst into the seventh-floor conference room at the UAW-GM Center for Human Resources in Detroit and shattered the notion that an agreement was imminent.

"You guys think you’re making so much progress. But I don’t think we’re getting a final agreement," Gettelfinger said, according to people familiar with the situation. "We’re going to set a strike deadline."

And at 11 a.m. Monday, Sept. 24, more than 73,000 GM workers walked off the job in what would prove to be a pivotal event in the historic 2007 auto talks.

The national strike immediately injected a sense of urgency and high drama into the marathon talks between GM and the UAW.

Within two days, the two sides had finalized a landmark contract that created a health care trust for UAW retirees, instituted a precedent-setting two-tier wage system for hourly workers, and provided iron-clad job guarantees at GM factories across the nation.

Yet the contract was more than just another labor agreement between the largest U.S. automaker and its union.

The GM-UAW deal, followed by similar pacts between the union and Ford Motor Co. and Chrysler LLC, promises to alter the competitive landscape of the American auto industry, possibly for decades to come.

After struggling under a labor cost gap with Japanese automakers of up to $30-an-hour, Detroit’s beleaguered Big Three now have a chance to compete without the burden of spiraling medical bills and high-wage, non-core manufacturing jobs.

For the shrinking membership of the UAW, the contracts provide unprecedented commitments that new products will be built in U.S. factories rather than Mexico, South America or China.

With UAW members completing their ratification vote on Tuesday at Ford, the watershed contracts are in the books — a full two months after the previous four-year agreements expired on Sept. 14.

In a series of interviews with key players at the companies and the union, The Detroit News has reconstructed events leading to the agreements. Participants agreed to discuss the talks on the condition of anonymity.

Progress slow over summer

The ceremonial handshakes between UAW and company officials took place in July, but progress on the major issues of health care and job security was minimal during the summer.

GM and Ford actively sought to be the lead company in the negotiations. But throughout July and August, Gettelfinger gave little indication that he would pick one over the other.

GM Chairman Rick Wagoner had already staked out a leadership role in the Big Three’s epic restructuring.

In the fall of 2005, GM had negotiated health care concessions from the UAW that shifted some medical costs onto retirees. Ford later got the same agreement. GM also led the way on offering buyout and early-retirement programs to slash its hourly work force.

Wagoner had privately told GM officials that the 2007 contract talks were essential to fixing the company without resorting to drastic measures such as bankruptcy or a sale to private investors.

"We can do this on our own," Wagoner told company insiders. "We don’t need the courts, we don’t need outsiders. We can figure this out."

On Sept. 13, GM got the opportunity to control its own destiny.

That day, Cal Rapson, the head of the UAW’s GM division, told company officials that Gettelfinger wanted to see Troy Clarke, president of the automaker’s North American operations.

In a tense meeting, Gettelfinger laid out the union’s stance on the tough talks to come. "We’re going to negotiate hard," he told Clarke. "We’re not going to bend over backwards."

Clarke showed little emotion, and repeatedly stated that GM needed to dramatically close the cost gap with Toyota Motor Corp. "We’ve got this problem," he said.

Later that day, the UAW informed its membership that GM would be the "strike target." A few GM officials warily noted that "strike target" sounded far different than "lead company."

With the contract set to expire at 11:59 p.m. on Sept. 14, the UAW granted Ford and Chrysler open-ended extensions. GM’s contract, the union said, would be extended on an hour-by-hour basis.

The central issue before the negotiators was never in doubt.

GM was pushing hard for the creation of a union-run trust — a Voluntary Employees’ Beneficiary Association, or VEBA — to finance $47 billion in future health care obligations for 340,000 GM retirees and surviving spouses.

Gettelfinger, in fact, had supported the idea of a VEBA ever since the 2005 health care talks. But the challenge was how to fund the trust to cover unforeseen increases in medical coverage.

The sides staked out widely divergent positions.

GM, at first, proposed putting up cash and stock totaling 50 percent of the overall health care obligation. The union wanted 100-percent funding.

Bridging the huge gulf would take days of painstaking talks. The union relied heavily on experts from investment banking giant Lazard Ltd. GM’s strategy was driven almost exclusively by Chief Financial Officer Fritz Henderson.

While the VEBA talks went on, subcommittees tackled equally sensitive topics such as lower wages for noncore jobs in GM factories, transfer policies for laid-off workers, and the placement of new vehicle programs in specific assembly plants.

Gettelfinger had lead role

Dozens of people played roles in the talks, but the central figure was always, unquestionably Gettelfinger.

The UAW president, 63, was an enigma to many on the GM side. During much of the talks, he sat secluded at a computer in a spare office in the Center for Human Resources.

He often slept there overnight, refusing a pillow offered him by GM employees. Instead, he used a plastic bag stuffed with shredded documents from the negotiation sessions.

But both sides knew instantly when Gettelfinger was engaged. On one occasion, Rapson hinted that his UAW boss wanted to turn up the heat at the table. "I’m supposed to be mad at you today," Rapson told the GM team.

In fact, Gettelfinger was playing for high stakes. As badly as GM wanted the VEBA, the union wanted rock-solid guarantees that GM would keep its U.S. assembly plants churning out new vehicles into 2011 and beyond.

On Sept. 18, the talks seemed at an impasse when Gettelfinger declared the VEBA was "off the table." GM’s lead negotiator, Diana Tremblay, then presented what company officials dubbed "plan B" — a series of deep cuts to union wages and drastic hikes in health care bills for active workers.

The confrontation put the talks back on track. By Friday, Sept. 21, the framework for the agreement on product plans had been set. And by Sunday, the VEBA funding seemed settled at roughly 68 percent of GM’s total obligation.

Then Gettelfinger shocked GM by setting his strike deadline.

GM officials were baffled when the UAW bargainers left the table just before 11 a.m. Monday, Sept. 24. Meanwhile, television camera crews were capturing the spectacle live of tens of thousands of GM workers walking off the job at plants across the United States.

In a dramatic press conference at UAW headquarters in Detroit, Gettelfinger accused GM of ignoring the union’s deadline for a deal.

"Nobody wants a strike," he said. "But there comes a time when somebody pushes you off a cliff and that’s exactly what happened."

But this was no ordinary strike. By 2 p.m., both sides had returned to the table. One insider called the pace "frenetic," as negotiators plowed through the key points of the contract in a 40-hour session. Several outstanding issues were locked up, including the final details of which plants would receive which future products.

At 3:05 a.m. on Sept. 26, Gettelfinger said the deal was done and the strike was over.

"We feel very good about this tentative agreement," he said. "I think the strike helped our side more than theirs."

Then it was Chrysler’s turn

While the GM contract moved to a series of ratification votes by workers, the question hovering over the industry was who came next — Ford or Chrysler?

On Oct. 5, Gettelfinger gave the answer by showing up at Chrysler headquarters in Auburn Hills ready to negotiate.

Chrysler promised to be a wild card in the talks. The smallest of the Detroit automakers, Chrysler had been sold in August by its German parent, Daimler AG, to the secretive private-equity firm Cerberus Capital Management LP.

After acquiring Chrysler, Cerberus shook up the automaker’s management and installed a new chief executive officer, former Home Depot CEO Bob Nardelli. The whirlwind changes had instilled UAW members with a sense of caution, even mistrust, about the upcoming negotiations.

Nardelli tried to calm the union’s fears by meeting with UAW bargainers on his first day on the job. "Cerberus wants to restore Chrysler to its rightful place," he said. "We respect collective bargaining."

But when intensive talks kicked off at Chrysler, it quickly became clear that getting a contract would be a challenge.

From the start, privately-held Chrysler was unwilling to offer the same product guarantees that GM had agreed to. Moreover, Chrysler wanted to sell off some union-staffed facilities such as its Mopar parts distribution centers.

The friction was palpable in the main bargaining room on the lower level of Chrysler’s headquarters tower. Insiders said that John Franciosi, the company’s top labor executive, had heated words early on with General Holiefield, head of the UAW’s Chrysler division.

One key member of the UAW team, Bill Parker, was also highly critical of the company’s reluctance to guarantee any products at plants beyond the life of the four-year agreement.

Talks began at a snail’s pace, but picked up steam by Monday, Oct. 8. Chrysler received more favorable funding terms for its VEBA than GM had gotten. On the thorny issue of Mopar, Chrysler agreed to keep the parts centers in exchange for the union allowing the closure of a small assembly plant on Conner Avenue in Detroit.

But by the evening of Oct. 9, the two sides were still battling over product guarantees. With a strike deadline set for the next morning, negotiations were once again going down to the wire.

Less than an hour before the 11 a.m. strike deadline on Oct. 10, Gettelfinger presented a summary of a tentative agreement to his bargaining team. Then when the UAW president left the room, the bargaining team voted overwhelmingly to reject the deal.

No negotiating team had ever rejected a proposed deal recommended by the UAW’s leadership. But with no tentative agreement in hand, tens of thousands of Chrysler workers began walking off the job at 11 a.m.

Chrysler executives were dumbfounded by the turn of events. All they could do was watch TV reports of pickets at Chrysler plants across Michigan, Illinois, Ohio and elsewhere.

Over the next six hours, Gettelfinger and Holiefield lobbied the bargaining team to support the tentative pact. A second vote failed, but on a third vote the committee voted 8-to-1 to accept it. The lone dissenter was Parker, who said in a "minority report" to leaders of Chrysler union locals that the automaker’s failure to give product guarantees amounted to "economic terrorism."

The strike was called off just after 5 p.m., but the walkout was only a prelude to one of the roughest contract ratification votes in UAW history. Over the next two weeks, the vote swung wildly at plant after plant, until the contract passed by a narrow margin on Oct. 27.

Ford needed a break

The last stop for Gettelfinger was Ford, the financially-sickest of the Detroit automakers.

The UAW chief arrived for intensive talks on Oct. 30, but the groundwork for a contract at Ford had been laid for many months.

Gettelfinger and his chief lieutenant for Ford, Bob King, had held a summit meeting on May 11 with Ford CEO Alan Mulally to prepare for the hard decisions upcoming at Ford.

"We need a more viable, profitable Ford," Mulally told the union leaders. "If we can get that, we will do the right thing and invest in America."

What Ford needed most from the union was a large break on VEBA funding, and an opportunity to replace up to 20 percent of its 54,000 UAW workers with lower-wage positions.

Ford would ultimately get a VEBA funding level of 57 percent, and a clear path to put two-tier wages in quicker than GM or Chrysler. In exchange, the union won broad product commitments at assembly plants and a commitment for new investments in flexible body shops.

The pace of talks at Ford headquarters in Dearborn was accelerated compared to the drawn-out discussions at GM or the stop-and-go negotiations at Chrysler.

By late Friday, Nov. 2, bargainers for the company and UAW had talked continuously for almost two days without a break. Negotiations were taking place simultaneously on the second, sixth and eleventh floors of Ford’s "Glass House" offices.

By 8 p.m., several exhausted members of the Ford and union teams went home for the evening. Negotiators expected to get a night’s rest and return over the weekend to wrap up details.

But Gettelfinger was having none of it. The UAW president was seen prowling the halls, peering into darkened offices and wondering where the bargaining teams had gone.

He ended up in the office of Joe Laymon, Ford’s head of human resources and labor affairs. Gettelfinger was succinct in what he thought about negotiators taking a break from the talks in the final hours.

"Get their a—- back in here and let’s finish the deal," he told Laymon.

The teams returned within the hour and resumed bargaining. Even Mulally sat in on the last stages of discussions on the VEBA. At 3:20 a.m. on Nov. 3, Gettelfinger announced that Ford and the union had reached agreement.

From the outside looking in, industry experts are still marveling at what took place at the bargaining table — and what it will mean for the Big Three and the UAW. "This agreement is the real turning point," said veteran auto analyst John Casesa. "This contract is an enabler, and without it nothing else matters."