UAW vs. the UAW?
Published by Bob Foster
One of my readers asked what my take was on the ownership of Chrysler and GM stock by the United Auto Workers (UAW) union. Here is what I see today.
Restructuring of the auto industry by the government auto task force (Treasury staffers, and the Boston Consulting Group) requires the United Auto Workers (UAW) to become shareholders in both Chrysler and GM. This is because the union’s employee trust–VEBA–(this is the one that manages health care for workers and retirees) is owed about $9 billion by Chrysler, and about $20 billion by GM. Yes…that’s BILLION dollars. So, the government task force is forcing the UAW to take shares of stock for one-half of those obligations.
The UAW has taken about 55% of Chrysler’s total shares, and is expected to take about 39% of GM’s total shares. Although the union plans on selling their shares “eventually,” they are now faced with some unusual issues for a union. Here are just some of them:
- The union’s trust (VEBA) needs the money owed them in order to remain solvent. So, if the value of the shares received does not go up rather quickly, so the union can sell their shares, the trust will run out of money. Hard to say which will come first, or if Chrysler, for instance, ever does create shareholder value.
- Many people have the perception that the UAW is to blame for the downfall of the auto industry, and now owns a great deal of it. This will be a problem when the union tries to organize the workers of other industries, like casino workers in Atlantic City.
- When the UAW tries to organize another automaker (Honda?), they will be viewed as a substantial owner of competitors, and therefore will have a conflict of interest.
- When bargaining for the next contract, every dollar the union gains for the workers is a dollar of value the UAW may lose from their shares in the company. If bargaining reaches an impasse, and the union goes out on strike, thus crashing the stock value…who are they actually hurting?
There are other more subtle problems the union is going to have in this situation, but as UAW President, Ron Gettelfinger pointed out…this is still the best option available.
What do some others think about this situation?
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2 Responses to “UAW vs. the UAW?”
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Wow! I didn’t think about most of those points! That really opens up a huge can of worms since now “stock owners” are also working for competitors!
It will be very interesting to watch all of this unfold… and hopefully not at the expense of the workers themselves.
Jeff – That’s the really sad part. Not only are 10′s of thousands of workers going to become unemployed (between plant and dealer closings), but how will the remaining workers receive any real, unbiased, representation? With the government calling the shots, and their union owning a major portion of their employer, I don’t see how the workers are going to receive a fair shake.