APRIL 17, 2009
White-collar retirees of the Big Three auto makers and supplier Delphi Corp. are banding together in hopes of preserving their benefits and pensions.
Representatives of more than 200,000 salaried retirees from General Motors Corp., Chrysler LLC, Ford Motor Co. and Delphi this week plan to renew a push for a meeting with the Obama administration's auto task force.
Retirees at GM and Chrysler fear they could be stripped of many benefits in the government-led reorganization of those two companies. In March, Delphi, which has been stuck in bankruptcy protection for more than three years, cut the health-care benefits of its salaried retirees.
"We do have a vision of what happens...because Delphi has gone through it," said Michael Kane, a spokesman for the National Chrysler Retirement Organization. "So we're not just raising our arms saying 'we're frightened.' "
Salaried retirees are among the most vulnerable groups in restructurings and bankruptcies because they typically aren't represented by unions, and companies are generally free to slash their retirement packages.
Representatives of salaried retirees from GM, Chrysler, Ford and Delphi are scheduled to discuss ways of protecting their retirement packages in a conference call on Friday, members of the groups said.
Under the government's direction, GM and Chrysler could follow Delphi into bankruptcy court. GM has until June 1 to work out new labor terms with the United Auto Workers union and a debt-reduction agreement with its bondholders. Chrysler has only until May 1.
Salaried retiree groups have asked to meet with the auto task force but haven't yet been granted a meeting.
Over the years, GM has increased the share retirees must pay for their health care and, starting this year, GM eliminated medical coverage for retirees and dependents older than 65, who are eligible for Medicare. In lieu of company-funded benefits, GM gives these retirees a "medical expense credit" to help offset additional costs.
"We have been neglected," said Jack Dickinson, president of the GM National Retiree Association who also runs a Web site www.overthehillcarpeople.com for GM retirees.
The white-collar retirees typically pay a larger share of their medical benefits than their hourly counterparts, but still have generous benefits relative to the overall work force.
GM's salaried retirees for years have seen increases in their premiums and co-pays as the auto maker raced to slash its crushing health-care burden.
The groups formally joined forces late last month to make sure their concerns are heard. In a letter to Treasury Secretary Timothy Geithner and National Economic Council Director Larry Summers, dated March 24, the groups argued that, "just like their union counterparts, nonunion workers contributed greatly to building our economy and this nation."
On Wednesday, Sen. Sherrod Brown (D., Ohio) wrote a letter on behalf of the groups to Mr. Geithner. Sen. Carl Levin (D., Mich.) sent a similar letter earlier this month.
The groups' biggest problem is that they have few bargaining chips. Unlike the UAW, salaried retirees aren't locked into labor contracts requiring protracted negotiations. Instead, their contracts often include clauses that allowed benefits to be cut. "We're the people who invented the stuff, built the stuff, designed the stuff," said Dennis Black, interim chairperson at Delphi Salaried Retirees Association. "But we're not represented."
Write to Sharon Terlep at sharon.terlep@dowjones.com
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