What have you always wondered about the economy? Tell Us

GM, UAW may put faith in trust fund

Jeff Tyler Sep 19, 2007

GM, UAW may put faith in trust fund

Jeff Tyler Sep 19, 2007


KAI RYSSDAL: General Motors and the United Auto Workers are back at the bargaining table today. The two sides are hammering out a new labor contract that could become a model for future deals with Ford and Chrysler. The contract deadline expired last Friday.

It’s been over a decade since the union and management have gone so far into extra innings. The stumbling block, once again, is health care. But as Marketplace’s Jeff Tyler reports, this time both sides are taking a very different approach.

Jeff Tyler: The radical idea on the negotiating table is a health care trust fund. Harley Shaiken is a labor economist at U.C. Berkeley.

Harley Shaiken: How it’s funded is what’s different — rather than a direct contribution by the company, the company would put a big chunk of cash into a trust fund that the union would manage.

How much money GM would put into the trust fund, and how it would be financed, remain contentious issues. But in broad terms, a trust fund appeals to both sides.

Standard and Poor’s auto analyst Efraim Levy says the deal would insulate GM against rising health care costs.

Efraim Levy: This is about $50 billion in expected obligations — [and] it will no longer be on the auto maker’s balance sheet.

Levy says the union would be protected from the company’s financial troubles.

Levy: So the main goal for them is to lock in those benefits in case of bankruptcy.

But what works for GM might need some tinkering for Chrysler and Ford. Again, professor Harley Shaiken.

Shaiken: GM has over 300,000 retirees or dependents — that’s over four for each active worker. At Ford, the ratio is two-to-one. And at Chrysler, a little above one-to-one. That’s a very different set of liabilities at each of the companies.

Still, if a deal for a health care trust fund is reached, Shaiken says it could provide a model not just for Detroit’s Big Three, but also for the rest of corporate America.

I’m Jeff Tyler for Marketplace.

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.