Toyota is leaving a $131-million pension shortfall to the Pension Benefit Guaranty Corp. as it closes the New United Motor Manufacturing Inc. plant in Fremont, Calif., April 1, said Sergio Santos, president of UAW Local 2244. But the PBGC, a federal corporation charged with protecting pension benefits of 44 million Americans, wants to discuss ways Toyota can reduce the gap.
The agency has taken legal action to gain control of the NUMMI pension plan. PBGC spokesman Gary Pastorius said the agency wants to talk to Toyota about alternatives to a takeover, "but it just hasn't happened yet. We still have questions."
NUMMI said it had met its obligations regarding the plan when the PBGC began court action, according to a memo issued by Tracy Wakefield, a human resources manager.
Toyota operated NUMMI jointly with General Motors from 1983 until GM's withdrawal last summer.
Santos said NUMMI and Toyota imposed a "gag order that I believe violates our First Amendment rights," preventing workers from commenting on the plant closure.
NUMMI spokesman Lance Tomasu said the union voluntarily pledged not to denigrate NUMMI or Toyota as part of the shutdown agreement.
In recent days, Toyota sweetened the severance offer from $253 million to $281 million for the about 4,500 NUMMI workers, Santos said. Each hourly worker will receive a base severance of $21,175, plus supplements that vary based on years of service, the union president said.
On March 3, the PBGC said it would cover $126 million of a $131-million underfunding in the pension covering NUMMI's UAW workers. The agency said $5 million of supplemental benefits are not insured.
Harley Shaiken, a University of California Berkeley professor and labor relations expert, said the pension shortfall adds to Toyota's public relations challenges.
"For the world's most profitable automaker to walk away from a pension covering people who, in some cases, worked for more than a quarter of a century doesn't look good," Shaiken said. "Especially in the wake of Toyota's recent recalls."
