WAYNE -- Ken Pool is making good money. On weekdays, he shows up at 7 a.m. at Ford Motor Co.'s Michigan Truck Plant in Wayne, signs in, and then starts working -- on a crossword puzzle. Pool hates the monotony, but the pay is good: more than $31 an hour, plus benefits.
"We just go in and play crossword puzzles, watch videos that someone brings in or read the newspaper," he says. "Otherwise, I've just sat."
Pool is one of more than 12,000 American autoworkers who, instead of installing windshields or bending sheet metal, spend their days counting the hours in a jobs bank set up by Detroit automakers and Delphi Corp. as part of an extraordinary job security agreement with the United Auto Workers union.
The jobs bank programs were the price the industry paid in the 1980s to win UAW support for controversial efforts to boost productivity through increased automation and more flexible manufacturing.
As part of its restructuring under bankruptcy, Delphi is actively pressing the union to give up the program.
With Wall Street wondering how automakers can afford to pay thousands of workers to do nothing as their market share withers, the union is likely to hear a similar message from the Big Three when their contracts with the UAW expire in 2007 -- if not sooner.
"It's an albatross around their necks," said Steven Szakaly, an economist with the Center for Automotive Research in Ann Arbor. "It's a huge number of workers doing nothing. That has a very large effect on their future earnings outlook."
General Motors Corp. has roughly 5,000 workers in its jobs bank. Delphi has about 4,000 in its version of the same program. Some 2,100 workers are in DaimlerChrysler AG's Chrysler Group's job security program. Ford had 1,275 in its jobs bank as of Sept. 25. The pending closure of Ford's assembly plant in Loraine, Ohio, could add significantly to that total. Those numbers could swell in coming years as GM and Ford prepare to close more plants.
Detroit automakers declined to discuss the programs in detail or say exactly how much they are spending, but the four-year labor contracts they signed with the UAW in 2003 established contribution caps that give a good idea of the size of the expense.
According to those documents, GM agreed to contribute up to $2.1 billion over four years. DaimlerChrysler set aside $451 million for its program, along with another $50 million for salaried employees covered under the contract. Ford, which also maintained responsibility for Visteon Corp.'s UAW employees, agreed to contribute $944 million.
Delphi pledged to contribute $630 million. In August, however, Delphi Chairman and Chief Executive Officer Robert S. "Steve" Miller said the company spent more than $100 million on its jobs bank program in the second quarter alone.
"Can we keep losing $400 million a year paying for workers in the jobs bank and $400 million a year on operations? No, we cannot deal with that indefinitely," Miller said in a recent interview with The Detroit News. "We can't wait until 2007."Guaranteed Employment
The jobs bank was established during 1984 labor contract talks between the UAW and the Big Three. The union, still reeling from the loss of 500,000 jobs during the recession of the late 1970s and early 1980s, was determined to protect those who were left. Detroit automakers were eager to win union support to boost productivity through increased automation and more production flexibility.
The result was a plan to guarantee pay and benefits for union members whose jobs fell victim to technological progress or plant restructurings. In most cases, workers end up in the jobs bank only after they have exhausted their government unemployment benefits, which are also supplemented by the companies through a related program. Workers go directly into the program and the benefits can last until they are eligible to retire or return to the factory floor.
By making it so expensive to keep paying idled workers, the UAW thought Detroit automakers would avoid layoffs. By discouraging layoffs, the union thought it could prevent outsourcing.
That strategy has worked but at the expense of the domestic auto industry's long-term viability.
American automakers have produced cars and trucks even when there is little market demand for them, forcing manufacturers to offer big rebates and discounts.
"Sometimes they just push product on us," said Bill Holden Jr., general manager of Holden Dodge Inc. in Dover, Del., who said this does not go over well with the dealers. "But they've got these contracts with the union."
In Detroit's battle against Asian and European competitors that are unencumbered by such labor costs, the job banks have become a major competitive disadvantage.Breaking the banks
Analysts say the jobs bank could be a bigger issue than health care in the 2007 contract negotiations, particularly at Ford. It has a younger work force than GM, meaning any workers Ford sends to the bench are likely to stay there for a while.
"Ford is under pressure from investors to cut costs," said Roland Zullo, a research scientist at the University of Michigan's Institute of Labor and Industrial Relations. "At the same time, the unions are going to be under pressure to protect jobs."
But does the jobs bank make any sense in a climate of shrinking profits and declining market share?
While some might envy their life of leisure, workers like Cisco, 56, feel humiliated by the program.
"I felt like I was useless -- like I was put out to pasture," he said.
Most say they have no interest in retiring -- or spending the rest of their careers doing crossword puzzles.
Classes are available, the workers said. They have been invited to take courses on bicycle repair, home wiring and poker. Silk-flower arranging is also available. READ MORE ABOUT HOW THE UAW & AUTO INDUSTRY ARE MAKING TAX PAYE...
That very fact that you cite Fox News as a source says all that an intelligent person needs to know about the veracity and depth of your rant. Add to that the links to the far-right Radarsite blog and the Detroit News, and you get a real snowjob of a rant. I'm just glad that a new President and Congress will be in power within the next six weeks to begin to put things aright.
** Lower Wages and create More financial Mess - Trickle down effect in reverse
** Collapse of Auto Companies equals 2.5 MILLION jobs.. 1.4 which are not even in the Auto MFG industry There Are TWO sides to this story. It isn't black and white. Dave thanks for your reply - You are right re your comments, but I bring the CEO's up because even if we Do give the money to the Companies, if we keep the Same A@#holes in charge of the company, the money Won't go to the company, it will go to .. hmmm..
AIG comes to mind..
May be the companies should be allowed to cut costs by reducing the work force and by pruning the No of models and the government should pay the laid off employees in the form of unemployment benefits. This would definitely cost far less than the $130 bn bail out plan which will only be sufficient to give oxygen to the big 3 for few years and they will be back to the square one sooner than later! If the companies are allowed to improve efficiency, the economy might come out of recession soon and new jobs would automatically be created.
This is an extremely enlightening piece of journalistic work!
The bail out could help the automakers develop more green conscious vehicles, but if oil goes back or stays the same, who wants them! We are a capitalistic society and like our nice gas guzzlers!!!
If the Unions are not prepared to make concessions, than why should all the rest of us? We bail out banks, insurance companies, mortgage companies and now car companies...l what will be next? Maybe someone could bail me out! I am running two businesses with negative cash flow until things pick up and hopefully can last by reducing my salary, not taking a regular year end bonus, putting all revenue back into the company and innovative cost cutting, but when will it end?
Our politicians need to smarten up and get some business minded people who don't have socialist mentalities to get behind this and do what needs to be done with these companies that operate on greed and corruption. There is nothing wrong with making money or earning a nice big $$$ income or bonus, as long as it is not done at the expense of everyone else.
Now, what about our healthcare dilemma?