NEWSWEEK: UAW President Gettelfinger on GM Request to Give Concessions on Benefits: 'If We Don't Fix Some of the Basic Problems That Exist When It Comes to the Product, ...No Matter What We Did, It Wouldn't Be Enough. Ever.'

Says the Company Has Some Issues, But He 'Wouldn't Rate It as a Crisis'

NEW YORK, June 12 -- United Auto Workers President Ron Gettelfinger tells Newsweek that although GM CEO Rick Wagoner says the automaker's turnaround is threatened by accelerating health-care costs, there's more to be done than just give concessions on the medical benefits. "If we don't fix some of the basic problems that exist when it comes to the product," Gettelfinger says in the current issue, "then it seems to me that no matter what we did, it wouldn't be enough. Ever."

Wagoner has asked the UAW to give concessions on its generous medical benefits (no deductibles, tiny copays). The union has steadfastly refused to reopen its contract, which runs until 2007. As Detroit Bureau Chief Keith Naughton reports in the June 20 issue of Newsweek (on newsstands Monday, June 13), analysts expect GM's North American car business to lose $4 billion this year, as SUV-fatigued buyers reject its aging lineup of guzzlers in favor of stylish sippers from Toyota, Nissan and Hyundai.

The UAW and GM are in intense negotiations to reach a compromise because neither "side wants to see this thing go in the ditch," says Gettelfinger. Wagoner once made it his personal mission to improve GM's historically horrible labor relations. But now that he's taking a harder line, a relationship that has been carefully nurtured since the '98 strike hangs in the balance. "Without question," says Gettelfinger, "this will be a test."

The big question now: will GM try to break the contract if the UAW won't agree to benefit cuts? A roadblock to any deal is the union's feeling that GM brass is not sharing in the sacrifice. Wagoner just took a $2.5 million bonus (while Bill Ford swore off compensation until his company is fixed). And GM shareholders still receive $1.1 billion in yearly dividends. That makes the union suspicious that Wagoner's big job cuts are merely saber rattling, especially since they reflect the automaker's normal attrition rate. "Do they have problems?" says Gettelfinger. "They've got some issues. But I certainly wouldn't rate it as a crisis."