General Motors Co. cancelled the health-care plans for thousands of striking workers and while the move was not unexpected, the company didn’t formally notify the United Auto Workers of the move, ratchetting up tensions in already stressful confrontation.
“We understand strikes are difficult and disruptive to families. While on strike, some benefits shift to being funded by the union’s strike fund, and in this case hourly employees are eligible for union-paid COBRA so their health care benefits can continue,” GM said in a statement.
The UAW had asked GM for a clarification on the health-care issue, but GM moved to cut off the plans before it notified the UAW’s GM Department.
Terry Dittes, the head of the UAW’s GM Department, said in a note to UAW members that the union was stepping up to pay for the health benefits of the 49,000 striking union members.
“We received a letter, today, confirming that our striking members’ health-care coverage has been cut-off by General Motors.
“During this period, the UAW will provide medical assistance or a COBRA option, if necessary, for you and eligible family members. If you have any questions, please direct them to the auditor assigned to your location by the Secretary-Treasurer’s office.
“Additionally, this answer provided by GM, today, will be reviewed by UAW Legal to see if any further action is required. In the meantime, know that our Union has you and your family covered,” said Dittes, who has emerged as the UAW’s point man in the walkout against GM.
Dittes has not been implicated in the scandal that has tarnished other members of the UAW executive, including UAW president Gary Jones. The exchange about strike’s health benefits, however, points to the difficult communications between the two sides.
Meanwhile, GM’s credit rating could fall into junk bond status if the strike lasts more than a week or two, Moody’s rating service warned. Moody’s cut Ford to junk-bond status last week.
GM’s debt rating is currently just one step above junk-bond status.
Having its credit rating reduced would make borrowing money more difficult and expensive. GM was downgraded into junk-bond status in 2005, several years before it ended up in bankruptcy court and in need of a federal bailout.
It took until 2013 for it to shake off that rating, and have its debt classified as investment grade and GM executives have made a point in recent years of saying it would not sink below investment grade again.