Official

Scandal-rocked UAW extends Ford, FCA contracts, prepares to strike GM

This as criminal investigation of union leaders hangs over the whole process

DETROIT — Leaders of the United Auto Workers union have extended contracts with Ford and Fiat Chrysler indefinitely, but the pact with General Motors is still set to expire Saturday night.

The move puts added pressure on bargainers for both sides as they approach the contract deadline and the union starts to make preparations for a strike.

The contract extension was confirmed Friday by UAW spokesman Brian Rothenberg, who declined further comment on the talks.

The union has picked GM as the target company, meaning it is the focus of bargaining and would be the first company to face a walkout. GM’s contract with the union is scheduled to expire at 11:59 p.m. Saturday.

It’s possible that the four-year GM contract also could be extended or a deal could be reached, but it’s more likely that 49,200 UAW members could walk out of GM plants as early as Sunday because union and company demands are so far apart.

Picket line schedules already have been posted near the entrance to one local UAW office in Detroit.

Art Wheaton, an auto industry expert at the Worker Institute at Cornell University, expects the GM contract to be extended for a time, but he says the gulf between both sides is wide.

“GM is looking through the windshield ahead, and it looks like nothing but land mines,” he said of a possible recession, trade disputes and the expense of developing electric and autonomous vehicles. “I think there’s really going to be a big problem down the road in matching the expectations of the union and the willingness of General Motors to be able to give the membership what it wants.”

Plant-level union leaders from all over the country will be in Detroit on Sunday to talk about the next steps, and after that, the union likely will make an announcement.

But leaders are likely to face questions about an expanding federal corruption probe that snared a top official on Thursday. Vance Pearson, head of a regional office based near St. Louis, was charged with corruption in an alleged scheme to embezzle union money and spend cash on premium booze, golf clubs, cigars and swanky stays in California. It’s the same region that UAW President Gary Jones led before taking the union’s top office last year.

Jones and other union executives met privately at a hotel at Detroit Metropolitan Airport on Friday. After the meeting broke up, Jones’ driver and others physically blocked an AP reporter from trying to approach him to ask questions.

In a 40-page criminal complaint, the government alleged that over $600,000 in UAW money was spent by union officials at businesses in the Palm Beach, California, area, including at restaurants, a golf resort, cigar shop and rental properties, between 2014 and 2017.

The union said the government has misconstrued facts and said the allegations are not proof of wrongdoing. “Regardless, we will not let this distract us from the critical negotiations under way with GM to gain better wages and benefits,” Rothenberg said.

At UAW Local 22 in Detroit, picket line schedules for three days were posted on the lobby windows. The local represents workers at a plant that straddles the border between Detroit and the hamlet of Hamtramck.

The 24-hour schedules don’t list any date to start but a separate schedule has a group reporting to the union hall at 6 a.m. on Sunday. The factory, which makes the Chevrolet Impala and Cadillac CT6, is one of four that GM plans to close.

Here are the main areas of disagreement:

— GM is making big money, $8 billion last year alone, and workers want a bigger slice. The union wants annual pay raises to guard against an economic downturn, but the company wants to pay lump sums tied to earnings. Automakers don’t want higher fixed costs.

— The union also wants new products for four factories GM wants to close. The factory plans have irked some workers, although most those who were laid off will get jobs at other GM factories. GM currently has too much U.S. factory capacity.

— The companies want to close the labor cost gap with workers at plants run by foreign automakers. GM’s gap is the largest at $13 per hour, followed by Ford at $11 and Fiat Chrysler at $5, according to figures from the Center for Automotive Research, an industry think tank. GM pays $63 per hour in wages and benefits compared with $50 at the foreign-owned factories.

— Union members have great health insurance plans but workers pay about 4% of the cost. Employees of large firms nationwide pay about 34%, according to the Kaiser Family Foundation. The companies would like to cut costs.

If there is a strike, it would be the union’s first since a short one against GM in 2007.

The union may have to strike at least for a while to show workers that it got as much from the company as it could, Wheaton said. Some workers, he said, mistrust union leaders due to the corruption scandal.

Negotiators are usually tight-lipped about the talks, but a week ago, Vice President Terry Dittes wrote in a letter to local union leaders that GM has been slow to respond to union proposals. GM answered in a letter sent to factories that said it is moving as quickly as it can.

“We are working hard to understand and respond to UAW proposals and we have offered to meet as often as needed,” the letter said.

Highlights of the criminal complaint:

Reuters

— As part of a probe into dealings between the UAW and Fiat Chrysler Automobiles, federal agents discovered a multiyear conspiracy involving "senior UAW officials stealing and unlawfully and willfully abstracting and converting UAW funds to purchase luxury items and accommodations for their own personal benefit" by submitting vouchers that misrepresented payments as official business.

— In addition to Pearson, who was charged, the complaint named "UAW Official A," who a source says is UAW President Gary Jones. Three unidentified former UAW officials were also named.

— Federal agents said UAW conferences for Region 5 typically lasted three to five days, but Pearson and others would spend weeks or months living in the same city where they were held, "enjoying an extravagant lifestyle paid for with UAW funds."

— More than $600,000 of UAW money paid to the Renaissance Palm Springs Hotel in Palm Springs, California, between 2016 and 2018 was used by the hotel to satisfy debts incurred by senior UAW officials at local businesses, including restaurants, golf resorts and more.

— Between 2016 and 2018, more than $60,000 of UAW funds were used for meals at the Palm Springs area restaurants LG Prime Steak House and Johnny Costa's Ristorante.

— In one instance on New Year's Eve in 2016, the tab at LG Prime Steak House totaled almost $6,600, including four bottles of Louis Roederer Cristal champagne costing $1,760. The complaint quotes the Louis Roederer website as saying Cristal was "created in 1876 to satisfy the demanding tastes of (Russian) Tsar Alexander II." The bill also included $1,942 for liquor, $1,440 for wine and what appears to be a $1,100 tip.

— The UAW paid Indian Canyons Golf Resort more than $80,000 between 2015 and 2018 for food and beverages, green fees, club rentals and the purchase of such items as visors, sunglasses and "fashion shorts."

— Agents determined the union paid over $60,000 for cigar and tobacco, humidors, cigar cutters and related expenses between 2014 and 2018 at stores in Palm Springs and Parker, Arizona.

— Agents found similar spending patterns around Region 5 UAW conferences between 2014 and 2018 at the Loews Coronado Resort in Coronado, California. UAW headquarters paid more than $200,000 to the resort and the union's Southwest regional council paid more than $195,000. Large sums were spent on chauffeured transportation to private dining events and excursions to the San Diego Zoo's Safari Park and horseback riding on the beach, as well as more than $70,000 between 2015 and 2018 for green fees at three different golf clubs.

— Agents also found similar spending patterns around Region 5 events in Lake of the Ozarks, Missouri, where between 2014 and 2018 UAW headquarters paid more than $300,000 to the Lodge of Four Seasons hotel and the union's Midwest regional council paid more than $190,000. The payments included more than $45,000 for meals and liquor, over $75,000 for golf related expenses, more than $8,000 for spa treatments and over $1,000 spent at a local gun range.

— Agents described a "culture of alcohol" that existed in the top ranks of the UAW, crediting the term to a cooperating witness who was a senior UAW official. Vendors in Palm Springs told federal agents "there was 'no limit' on the amount of alcohol they would purchase for requesting union officials."

— Vendor records and witness testimony detailed two parties costing over $50,000 thrown by Norwood Jewell, a former UAW vice president who headed labor relations with Fiat Chrysler. Jewell was sentenced in August to 15 months in prison. His parties featured ultra-premium liquor, a skilled so-called torcedor to roll choice cigars and scantily-clad "kandy girls" to light them.

— Agents also outlined the search warrants they executed on several homes and work locations of senior UAW officials in late August. Federal officials confirmed at the time that the home of Jones, the UAW president, was among those searched. Thursday's complaint revealed that agents had seized over $30,000 in cash from the residence of UAW Offical A.

Share This Photo X