Not all happy with multi-billion-dollar trust negotiated in shadow of bankruptcy
A tentative settlement has been reached to create a health-care trust for General Motors retirees, though it’s not being greeted with unanimous support by former workers.
The creation of the trust to finance dental care, vision care and other benefits for retirees was demanded by the federal and Ontario governments in 2009 when General Motors Corp. sought a bailout to prevent its collapse.
The CAW agreed to negotiate the plan with GM agreeing to put up $1.8 billion to finance the fund. After two years of negotiations, the CAW says it has secured concessions and additional contributions from GM worth roughly $240 million.
Better yet, says CAW president Ken Lewenza, most retiree benefits are guaranteed, even if GM were to eventually go bankrupt.
“If GM goes belly up, the money in the HTC stays there,” he says. “Is there a possibility of a reduction in benefits? Yes. But we’re confident we’ve extracted as much out of GM as possible.”
Retirees will see coverage reduced by 77 to 84 per cent over time and may be forced to pay higher monthly contributions which currently range from $15 to $30. Actuaries for both the CAW and the retirees group determined retiree health benefits are not sustainable at current levels.
“We had a gun pointed at our heads,” said Lewenza. “It’s not the best of all worlds, but it’s better than nothing. Just look at Nortel retirees. They were shafted because the government didn’t step in. It’s been a real balancing act for me.”
Tony Sisti knows the frustration personally. He worked at the General Motors transmission plant in Windsor for almost 29 years before taking a retirement package in 2009, a year before the plant was closed for good.
“The world has changed and that’s what has to happen,” says Sisti, chairperson of CAW Local 1973 Retired Workers. “I’m kind of disappointed but at the end of the day I have to look at how globalization affected us.”
Some of his former co-workers are less charitable. Following a meeting in Windsor earlier this month, they told the local newspaper the union had “sold us out.” Sisti disagrees.
“Anyone who says the union sold us out has been living under a rock and didn’t see the crisis at GM or Chrysler or Ford,” he says.
Sisti adds workers would have been “the last to get a piece of the pie” in bankruptcy, whereas the union succeeded in getting a guarantee there would be something in future.
“We need to reduce benefits to 80 – 85 per cent of what we get today if we really want to sustain this over the next 80 years,” he says.
In Oshawa, retirees have hired a lawyer to advise them on whether to file an objection, though they’ve been told not to comment on the case for now.
The health-care trust has been a sore spot in Oshawa since last May when an internal memo suggested GM wasn’t committing to building the next generation Impala in Canada because the trust had not yet been established.
The CAW interpreted that to mean jobs would be lost if the union couldn’t convince retirees to agree with the company’s vision for the structure of the trust.
Lewenza says the negotiation simply dragged on too long.
“If this was done in the first years following the crisis there would be no controversy,” he says. “The difficulty is that GM started making money and some retirees are saying, I’m not going to take a haircut if the company’s making a profit.”
Retirees in Ontario and Quebec had until this week to file written objections. The deal is expected to be finalized by the fall.
CORRECTION: In last week’s story, John Craig was quoted as saying that it is “quite different” for striking workers at Infinity Rubber “to get attention through classic picketing.” The quote should have read “quite difficult.”
