Wednesday, June 06, 2007

Comments by UAW President Ron Gettelfinger at the Senate Democratic Manufacturing Summit

The following are comments made by UAW President Ron Gettelfinger at the Senate Democratic Manufacturing Summit with the UAW, General Motors, Ford and Chrysler, June 6, 2007.

Thank you Senator Levin for the kind introduction. Good afternoon

I would want to thank Senators Stabenow and Reid for their leadership in arranging this summit on manufacturing. I also want to thank all of the distinguished Senators who are in attendance. The UAW appreciates the opportunity to participate and to share with you our views on the current crisis in the U.S. auto industry.

The UAW is deeply concerned about the enormous loss of jobs in our domestic auto industry. In recent years we have seen numerous auto parts suppliers file for Chapter 11 bankruptcy, close factories and lay off thousands of workers. Meanwhile, the Detroit-based auto manufacturers have undergone a tremendous downsizing, closing many facilities and significantly reducing their workforces.

There is a myth that has been peddled by the administration and some pundits that this downsizing of the traditional auto and auto parts companies does not pose a problem for our country, because it is being offset by the expansion of foreign transplant operations.

Unfortunately, the harsh reality is that the U.S. has lost 326,000 jobs in the motor vehicle and parts industry since February 2000.

The main reason for this loss of automotive jobs is clear – increasingly vehicles and components are being sourced from overseas operations.

As a result, the U.S. auto trade deficits with Mexico, Japan, Korea and China have continued to rise.

Meanwhile, the auto and auto parts companies are continuing to make massive investments in other countries.

Looking to the future, we are faced with the troubling question of whether the United States is going to continue to have a vibrant auto industry, or instead see it go the way of textiles and electronics.

The UAW does not believe the demise of the U.S. auto industry is inevitable. Rather, the future of the industry depends on decisions that will be made by corporate management, by the UAW, and by the federal government.

We urge Congress to begin to pursue policies – in trade, energy and health care – that will help to revitalize the domestic auto industry, and allow it to prosper and grow once again.

The first thing the federal government needs to do is to stop making the problems in the auto industry even worse by negotiating one-sided trade deals that will ship even more auto jobs overseas.

Specifically, the UAW urges Congress to reject the U.S.-Korea free trade deal that was recently negotiated by the Bush administration.

Korea has the most closed auto market in the world. For a long time it has used tariff and non-tariff barriers to keep its market closed to U.S.-built automotive products, and to generate a large and growing auto surplus with our nation. In 2006 Korea shipped 700,000 vehicles to the U.S., while our country was only allowed to export about 5,000 vehicles to Korea.

The U.S. negotiated trade deals with Korea in 1995 and 1998 that sought to dismantle the Korean automotive barriers. But these agreements were miserable failures, and the Korean auto surplus with the U.S. continued to grow.

Unfortunately, the latest trade deal negotiated by the Bush administration promises to make our auto trade imbalance with Korea even worse.

The trade deal eliminates U.S. auto tariffs immediately, and phases out our 25 percent pickup truck tariff over 10 years.

But Korea is allowed to keep many of its non-tariff barriers in place, including discriminatory engine taxes, insurance requirements and safety standards. There is nothing to stop Korea from coming up with new regulatory barriers to keep its market closed to U.S.-built vehicles. And there is no guarantee that Korea will begin to accept more imports of U.S.-built vehicles.

After the trade deal was announced, the Korean government publicly stated that they project it will allow them to INCREASE their auto surplus with the U.S. by $1 billion each year, and that Korean auto companies will begin to export pickup trucks to the U.S.

Thus, it is clear that this trade deal will lead to a surge in imports from Korea that could jeopardize tens of thousands of American automotive jobs.

That is why we need Congress to reject this unfair trade deal.

At the same time, the UAW calls on Congress to take positive steps to encourage the auto manufacturers and parts companies to build the cars and trucks of the future, and their key components in the United States.

The future clearly belongs to advanced technology vehicles – the hybrids and clean diesels and fuel-cell vehicles. These vehicles can make significant contributions to reducing oil consumption and greenhouse gases. To address the pressing problems of energy security and climate change, the UAW believes Congress should pursue policies that will accelerate the introduction of these advanced technology vehicles.

But currently many of these vehicles are assembled overseas, and most of the key parts are built in other countries.

For example, although the Ford Escape Hybrid is assembled in Kansas City by UAW members, it has much lower domestic content that a traditional Ford Escape, because the key hybrid components all come from Japan. In our judgment, there is no reason why these components cannot be built in this country.

To make sure this happens, the UAW believes Congress needs to provide incentives to encourage investment in domestic production of advanced technology vehicles and their key components. As indicated by a 2003 study by the University of Michigan, this would be good for the environment and good for jobs!

This proposal was previously included in the energy bill that was unveiled by the Senate Democratic caucus in 2006. We urge the Democratic caucus and the entire Senate to make sure this same policy is included in the energy bill that will soon be considered by the Senate.

Finally, to help restore the vibrancy of our domestic auto industry, the UAW believes it is critically important for Congress to take steps to level the playing field on health care costs.

As is widely known, the Detroit-based auto manufacturers are struggling with enormous retiree health legacy costs.

This is mostly because of the demographics of the Detroit-based auto manufacturers. GM has 4 retirees for each active worker; Ford has 2 ½; Chrysler has over 1. In all, there are 525,000 retirees plus their dependents, who receive health care benefits from these companies.

In contrast, the foreign automotive operations in this country have virtually no retirees.

The net result is a cost differential of almost $15 per hour attributable just to retiree health care benefits.

Make no mistake – this problem cannot be solved at the collective bargaining table. The UAW believes it would be immoral and irresponsible to abandon the hundreds of thousands of retirees who helped build GM, Ford and Chrysler. We are simply not going to do that.

Instead, we urge Congress to take action on health care initiatives that can address this serious problem. This could include catastrophic reinsurance, a Medicare buy-in or other initiatives.

In conclusion, the UAW recognizes that there are serious challenges facing the U.S. auto industry. We are prepared to do our part to help reinvigorate the industry. And we will certainly be calling on corporate management to do so as well. But we need the federal government to be an active partner in this process.

The UAW hopes that this manufacturing summit can be an important part of fostering this new direction for our nation.

Thank you.