It is not all rose petals and honey cake anymore, as reality sets in.  On the eve of Detroit’s latest date with fate in Washington, the United Auto Workers have surrendered the union’s version of corporate jets.

The union is suspending its most ridiculed perk, called the JOBS bank. That program, set up as part of a contract agreement reached between Detroit’s Big Three and the union decades ago, pays auto workers 85% of their pay while furloughed. Some workers reported for years to meeting rooms where they would sit and wait for an assignment or be sent to clean public parks. All the while, they would get paid most of their wages.

The union also agreed to defer payments that the Big Three will make to a union-led health-care trust that is to take responsibility to pay medical benefits to auto workers starting in 2010.

The JOBS bank was costly in more ways than one for General Motors (GM), Ford (F), and Chrysler. By making labor a fixed cost, it altered their manufacturing strategy. For most of the past 10 years, the car companies preferred to discount models with big rebates rather than cut production, because they had to pay workers no matter what.

so long, entitlements

The provision also became an emblem of union abuse and what industry outsiders call Detroit’s entitlement culture. “The JOBS bank became a sound bite that people used to beat us up,” said UAW President Ron Gettelfinger. “It became a lightning rod.”

The JOBS bank has become less of a financial burden since the union has accepted tens of thousands of job cuts over the past two years, though. In 2006, GM had as many as 7,000 workers in the bank. Today, the three carmakers combined have just half that number awaiting a new assignment.

On Dec. 4, the CEOs of Detroit’s Big Three and Gettelfinger will take another stab at convincing Congress that the government should lend the automakers big bucks to stay afloat. Their request has climbed to $34 billion from $25 billion (BusinessWeek.com, 12/2/08) since last month’s hearings, when the CEOs were turned away after being lambasted for not adequately explaining how the money would make their companies competitive with Japanese rivals. They didn’t help their case by flying in on company planes. Members of Congress derided the auto execs for failing to display proper willingness to sacrifice. The UAW came in for criticism of its own, some of it focused on the JOBS bank.

It was a good job and a good life until the cheap workers were brought over to take away our jobs.  For Daryl Johnson of Orange, Tex., work as a rigger on pipe-laying barges seemed like a pretty sure bet. The pay was good—$18.50 an hour—and with oil exploration booming, Johnson felt secure with Houston-based Horizon Offshore Contractors, which had hired him in 1999. But Johnson, speaking through his attorney, says he got concerned when managers told him there were no openings for friends whom he referred for jobs, even while Horizon continued to hire Mexican and Malaysian nationals. Then, in 2007, Johnson lost his job. “They gave me no explanation,” says Johnson.

However, in Johnson’s mind and in those of other oil workers in the Gulf, the connection to the cheaper foreign workers is clear. His allegations are part of a lawsuit moving forward in federal court in Texas, which claims that a group of U.S. energy services companies operating in U.S. waters on the Outer Continental Shelf in the Gulf of Mexico are using workers recruited from Malaysia, Mexico, the Philippines, and other countries to displace U.S. workers, at less than half of the pay. According to the lawsuit, the staffing is illegal because non-U.S. workers are working without proper visas aboard foreign-flagged vessels that are in fact controlled by American companies.

“Paid Pennies on the Dollar”

For years, immigration has been a tense topic, mostly centered around the estimated 12 million low-wage, undocumented workers and the ability of Silicon Valley companies to secure extra visas (BusinessWeek, 3/6/08) to import thousands of skilled technology workers. But now, as a recession looms and the Presidential election heats up (BusinessWeek.com, 7/28/08), attention is turning to another booming industry: oil services. It’s not widely known, but both onshore and offshore in the Gulf of Mexico, non-U.S. workers can be found doing shipbuilding, pipe-fitting, welding, rigging, and related jobs. Some of them are here on temporary visas and some may be undocumented.

Johnson’s suit, Cunningham, et al v. Offshore Specialty Fabricators, Inc. et al, was filed in U.S. District Court in the Eastern District of Texas, Texarkana Div. in December 2004. On July 21 the judge issued a scheduling order that calls for both sides to begin discovery and depositions on Aug. 10.

The case is about working conditions for both U.S. and non-U.S. workers, says plaintiff’s attorney Tony Buzbee of Buzbee Law Firm in Galveston, Tex. The foreign workers “were paid pennies on the dollar, worked grueling hours for days on end, and were essentially captives on the rigs because they were paid when repatriated,” says Buzbee. “This suit seeks remedy for the American workers who were paid less due to wage market suppression or who lost their jobs due to being replaced.”

The oil services and staffing companies named as defendants in the suit declined to comment.