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The Constitutional Death of the UAW


By William D. Hanline and friend


During the recent rounds of negotiations between the UAW and General Motors Corporation over healthcare and legacy cost, the UAW, International Union officers committed a betrayal of trust of their members and betrayed their oath of office to uphold the UAW Constitution. This took place all for the sake of preserving their "Cooperation Partnership" with General Motors Corporation. This betrayal of trust and confidence encompasses both active and retired members. This action happened when the misleaders, with forethought and collusion, agreed to reopen the 2003 UAW-GM National Agreement. Consequentially, their act resulted in a contract that is morally and with out conscience, contrary to the stated purpose in the UAW Constitution.


This newly proposed deal between the UAW and General Motors Corporation shows without question, beginning with the 2003 contract and ending with the 2005 negotiations, the extent the UAW and their cooperative partner GM will go to maximize the automaker’s competitive position. How their cooperative efforts to divide, whipsaw and pit the workers and retirees against one another (Young against the Old) for the sole purpose of transferring wealth from those who can least afford it, the retirees, to the Stakeholders of the company. 


As a matter of historical fact, Corporate Industrial Relation’s fundamental initiative, whether a work force is unionized or not, is to pit the young against the old, men against the women and races against each other. The distasteful reality of this labor management relationship between the UAW and GM fully manifest itself in this latest example of cooperation.


The UAW-GM highlights recently rolled out to the active workers in GM for their vote, clearly demonstrates the main strategy of the "Cooperation Partners." In the highlights, they unashamedly sent a message to the active workers voting that says, "there is no cost to the active worker." While at the same time, they remained silent on the fact that real dollars will be taken (ROBBED) from the retirees who are helpless to defend themselves from this pillaging by being denied a right to vote on this matter.


Though it sounds in this letter that the retirees have no VOICE, that is not absolutely true. The UAW has selected two political sycophants, outside any political process, to be the voice of the 380,000 GM retirees during the law suite the "Cooperation Partners" (the UAW and GM) filed. Furthermore, they kept the names of those two retirees out of the press until after the law suite was filed in Federal Court. This was supposedly done to protect all retirees but in reality, it was done to give General Motors Corporation Safe Harbor from future law suites. While at the same time binding the retirees to an illegal negotiation (read NLRA) as the UAW negotiated the new retirement package for retirees. That act can only be described as a cowardly act in itself.


Finally yet importantly, it has to be said that the evil brilliance of the UAW and GM "Cooperation Partners" to divide and conquer now creates a two tier social structure among the retirees! By negotiating terms that say the retirees whose monthly pensions are less than 33 dollars a month for each year of service will not have to pay any of the premiums imposed in the new agreement is simply pitting retiree against retiree! This is evil genius, for the "Cooperation Partners" have pitted every one in the UAW against themselves, seniority members against new hires, skilled members against production, active workers against retirees and now retirees against retirees.

So what is this really all about? We have a pretty good idea! We know General Motors needs cash. Therefore, GM’s "Cooperation Partner" (the UAW) pursuant a partnership contract with GM better known as the Articles of Incorporation of the "Center for Human Resources" Article II, makes the UAW obligated to help GM get cash so the company will remain competitive. 


Now the question becomes, where can GM get cash? The answer lies in a term and program little known by most people; it is the "VEBA" or Voluntary Employees’ Beneficiary Association. VEBAs are IRS, CODE 501(c) None Profit trusts that are designed to allow corporations to invest money in for the purpose of providing benefits to their employees. The money for various benefits plans is raised by the tax exempt interest earned from different investments (Stocks Bonds ETC). The Employee Benefits Security Administration of the DOL has oversight of VEBAs. They are recorded annually and are made available to the public by simply calling the EBSA of the DOL in Washington, D.C. and requesting that information.


The old General Motors VEBA that was providing benefits to GM-UAW employees also covered members represented by the "IUE-CWA" "USWA" and the other three unions. Salary employees and none union hourly employees benefits are also covered by the same VEBA. When a company combines more than one benefits fund under the umbrella of one great big Master trust (or VEBA) this is known as a commingled trust. What is more, there is nothing in the law that prevents a company from using the money in the VEBA for capital expenditures. GM reported doing exactly that in the companies Proxy statement of 2001. During the year 2000, General Motors raided the VEBA for over 1 billion dollars 1) for a 500 million dollar equity purchase in Suzuki (to build a plant) and 2) for a 500 million dollar equity injection into GMAC to show a profit that year. In other words, they looted the health care trust to build a plant over seas and transfer money from our healthcare VEBA to the stockholders. All while the "Cooperation Partner" looked the other way!


In the beginning of year 2005, General Motors was telling Wall Street and the world they had 21 billion dollars in cash. Where was that money? You guessed it, "in the VEBA." In the beginning of the year General Motors decided to take 6 Billion dollars out of the VEBA to cover three consecutive quarters of one billion dollar losses. Loses that grew from poor sales, rebates, the employee discounts made available to the public and massive recalls. However, during that time nobody, neither in General Motors or their "Cooperation Partner" (the UAW) spoke of the VEBA. 


Consequentially, General Motors and their "Cooperation Partner" had to come up with some kind of scheme to free up that VEBA money. Naturally, the plot was propagated in the media, newspapers


across the country and in GM and Delphi plants as "Excessive Healthcare & Legacy Cost." 


In the media, the centerpiece of the negotiations was to find a way to HELP UAW members, most of who never ever heard of a VEBA or knew one existed. Who on the shop floor associates Healthcare with a VEBA?


The cleverly designed scheme provides General Motors with the right to absolve its existing VEBA and replace it with a new VEBA. Clearly, new trustees, chosen from a consortium of five industrial unions that represent GM workers, will manage the new VEBA. The member’s benefits of those five unions were and are covered in the old and new VEBA respectively. Interestingly enough, by transferring control of the new VEBA over to the unions, General Motors will only have to maintain enough money in the old VEBA to cover white-collar employees’ benefits. Why, because all the union represented workers have been thrown out of the old VEBA and placed into the new one.


Now consider this, the old VEBA has 15 billion dollars in it while the new VEBA will only have 1 billion dollars. Secondly, GM reported in the news that it cost $200 millions a year to administer the old VEBA. Common sense and logic makes it difficult to understand how workers healthcare and legacy cost are better secured by 1 billion dollars, than they are by 15 billion dollars. Nevertheless, the "Cooperation Partners" have decided that this is what is best for the workers.


In the mean time General Motors can let the GOOD TIMES ROLL because they have found another source of income. Obviously, it is not from selling cars, but then again we know they do not make their primary income from selling cars because every year they continue loosing market share. Therefore, since there is nothing else to sell off in GM except GMAC, which they are trying to do now, they get their hands on at least 10 billion dollars in the old VEBA and they look forward to the time they sell off GMAC and maybe get another 25 billion.


Much like the automaker, the union is fast arriving at the point where the institution, the UAW International Union, can survive maybe with out any dues paying members at all. The latter is possible because the UAW has alternative sources of income as well. At present day, only one third of the UAW’s annual flat line income is generated from union dues. The other sources of income are from interest earned off the strike fund, retirement trust, joint funds charge backs and service charges on those joint funds charge-backs. 


General Motors on the other hand is probably walking into a $10 billion win fall they can do what they want. More importantly, GM has absolved the company of a 25 billion dollar legacy cost. It is a great deal for the "Cooperation Partners" but a terrible deal for the helpless masses of retirees who have been denied any democratic input, democratic voice, or democratic due process. Equally, it is a tragedy yet to happen to active workers who have been duped into believing that this negotiations is going to be NO COST to them, of course, not until such time when workers themselves become helpless retirees.


The real tragedy is the betrayal of trust of both our members and retirees and the very instrument that was written and designed to protect members from this type of tyranny, "The UAW Constitution." If you do not feel like reading the entire book may we encourage you to read the preamble? Moreover, if you have never read it before, you need to NOW!


Then again we believe the actions taken during these negotiations by the UAW International Union delivered the finally blow to the Union by driving a dividing rod through its heart and sole of the union "THE UAW CONSTITUTION." 


Next year members will be selecting delegates who will attend the UAW Constitutional Convention. WHY we ask? Why even hold a Constitutional Convention? The officers of the international union have proven they have no regard and have abandoned the principles set forth in the constitution and lest we forget they made a solemn pledge to uphold when they took office. Instead, the "Cooperation Partners" choose to do as they damn well please in spite of those beautiful words and the intent of that book.


A lawyer and friend recently asked the following question. "Will the UAW as we have known it be around in the next five years?" We concurred that it would NOT! Ironically, we did not have any idea at that moment that the end was so close at hand.


Keep in mind the "Cooperation Partners" will survive, but the UAW as a Trade Union is already constitutionally dead. 


"I never did give anybody hell, I just told the truth and they thought it was hell." Harry S. Truman 

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