The end of the Jobs Bank, a symbol of excess

Corker: Jobs Bank was not acceptable

EDITOR'S NOTE: This story originally appeared in the Jan. 27, 2014 issue of Automotive News. It is being republished here as part of Crossroads 2015, our look at this year's contract negotiations.

DETROIT -- Perhaps nothing did more to damage the reputation of the UAW -- and the U.S. automakers that employed its members -- than the Jobs Bank, a program that paid excess workers to do nothing all day.

Created in 1984 to deter automakers from downsizing, the Jobs Bank became nationally known as a symbol of Detroit's broken business model and backward thinking. Stories spread about thousands of workers whiling away months of downtime playing checkers, watching movies or even taking naps.

"There is no other business in this country where that would be tolerated," Sen. Bob Corker, R-Tenn., said during the congressional bailout hearings in November 2008.

The UAW agreed to end the Jobs Bank five years ago this month to help General Motors and Chrysler meet the terms of the initial government loans they received before filing for bankruptcy protection.

King: Image of UAW improved

"The Jobs Bank has become a sound bite that people use to beat us up," the UAW's then-president, Ron Gettelfinger, said at the time.

At its peak around 2006, some 15,000 workers were in the Jobs Bank, costing GM, Ford and Chrysler billions of dollars. The program encouraged companies to keep plants running even if the vehicles they produced were selling poorly.

That, in turn, led to a broad range of habits that added to the industry's miseries in 2008 -- overproduction, factories forcing excess cars onto dealers and the proliferation of profit-sapping incentives to sell those cars.

The Jobs Bank allowed workers to receive 95 percent of their pay while on layoff. Many workers spent the time volunteering or taking classes, though some simply reported to a company-designated location and waited until their plants needed them again.

Lutz: "Boulder" put on Detroit 3

The Jobs Bank actually was an idea proposed by GM to the UAW during contract talks. GM officials believed it would never even be necessary because the company expected to fully use its production capacity, former executive Bob Lutz wrote in his book Car Guys vs. Bean Counters.

"Exactly the opposite happened," Lutz wrote, "and the Jobs Bank, albeit to a lesser extent than health care, became yet another major boulder placed on the backs of America's Big Three as they continued their footrace against Japan's burden-free car companies."

The UAW's current president, Bob King, said this month that collaboration between the union and the automakers during the industry's crisis has been "tremendously positive for the UAW public image."

By agreeing to end the Jobs Bank and making other sacrifices, King said, "people know that we're deeply concerned about the success of the companies."

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