Big Three Automakers retiree benefits at risk

The Detroit News reports:

Health care coverage for retired autoworkers will be in the crosshairs this summer as Detroit's Big Three seek to close a labor cost gap with foreign-owned auto plants in the United States.

General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group plan to push the United Auto Workers for cost savings on retiree health care during national contract talks that begin next month, according to several people close to the situation.

The Detroit automakers see reducing the $6.4 billion a year they spend on retiree health care as a crucial step toward eliminating the $20- to $25-an-hour gap with foreign automakers' U.S. factories.

While the UAW has historically fought to preserve top-tier health benefits for retirees, the union has shown some flexibility in light of the severe financial issues facing Detroit's automakers.

On Monday, UAW President Ron Gettelfinger indicated he may offer Chrysler a health care concession similar to those granted in 2005 to GM and Ford.

The deal required GM and Ford retirees to accept modest co-pays and deductibles, while active UAW employees gave up $1 an hour in raises. "We've been talking to Chrysler quite frequently -- we do need to find a way to fix the problem there now that Chrysler is in a downward mode," Gettelfinger told Paul W. Smith on WJR-760.

But while the 2005 agreements will save GM and Ford billions of dollars over time, all three companies are seeking deeper savings.

"The 500-pound elephant in the room is the retiree health care," said David Cole, director for the Center for Automotive Research in Ann Arbor.

The decline of private sector unions right now.