General Motors Death Watch 14: GM Vs. the UAW

Let's be clear about this: the United Auto Workers is not going to let General Motors cut ANY union benefits without a long and vicious fight. GM Vice President Rick Wagoner knows it. UAW Vice President Richard Shoemaker knows it. GM workers know it. Wall Street knows it. And if you don't know it, listen up: last Friday, The General formally asked the UAW to re-open its contract. The UAW told them to fuck off.

Of course, we don't know if Shoemaker's crew used that expression. Both GM's request and the UAW's rejection took place behind closed doors. Still, you can get a feel for the UAW's perspective from their official response to Wagoner's promise to trim health care payments. Shoemaker ended his three paragraph reply with a simple statement: "We will do all that is possible to protect the interests of our members and their families." In other words, fuck off. And don't fuck with us.

As far as the union is concerned, GM should leave UAW-negotiated benefits alone. The company needs to concentrate on offering "the right product mix of vehicles with world-class design and quality." Health care costs adding $1500 to each and every one of those "world class" vehicles? That's YOUR problem. You guys are supposed to be the brains of this outfit. Design a 300C or something. Meanwhile, if you think we're going to let a GM exec pulling down $7m a year take away our members' right to health care and a decent living, you're nuts.

It's a powerful argument, but I don't imagine that Shoemaker's yearly salary puts an XLR or three out of reach. (The UAW pockets over $360m per year in members' dues.) And anyway, all that old-fashioned "us vs. them" class warfare rhetoric isn't exactly what you'd call helpful. Not when GM is shedding market share, burning through its cash reserves, gambling on big trucks (as if) and sloping towards bankruptcy– which would free the corporation from ALL its union obligations.

You'd think that UAW would take a hit just to help The General stay in business. You'd think wrong. The UAW has some 109k active GM members and at least twice as many retired GM employees. The organization also represents some 500k members working for other automakers and suppliers, and a huge number of non-GM retirees. Figure a constituency of over 1m.

If the union agreed to roll back their GM contract prior to its expiration, all Hell would break loose. Members would revolt (strike) and all the other struggling car companies, both large and small, would use the precedent to try to wiggle out of their union strait jackets. Expecting the union to act in its GM workers' long-term interests is like expecting GM to have a coherent marketing strategy.

The situation leaves GM with three scenarios. One: the company continues to downsize through [now] normal attrition, pays its UAW workers not to work and limps along until their labor agreement expires in '07. Two: GM doesn't make it. The General files for bankruptcy. The union contracts are void and management escapes to safe houses in Spain, France and Fiji. The union goes on strike. Someone buys up the remnants, the union settles and we start again.

Three: aliens land in Michigan and inject GM top brass with testosterone. They (the execs) instruct their army of lawyers to find a God damn loophole, and bail out of their contractual obligations. The UAW goes on strike. The union wins the strike and we go back to scenario two. Or the union loses the strike, GM's labor costs decline and we go back to scenario two (the extended re-mix version).

You see, all this talk about health care benefits is a bit like the man looking for his car keys under a street lamp because the light's better. There's a lot more about the UAW's contract that's hamstringing The General: seniority clauses, plant closure restrictions, rigid working practices, rigid job classification systems, etc. There are literally hundreds of union rules and dozens of grievance procedures constraining the corporation's creativity. Multiply that times eight divisions, factor in decades of executive incompetence and territoriality, and you can understand why GM products are losing out to vehicles made by leaner, more flexible companies.

To meet its competitive challenges, both GM and the union would have to change the rules of engagement. Clearly, neither side wants to face that kind of chaos. The main players are too set in their ways. There's too much at stake. The situation reminds me of those TV fights where the hero and the baddie– locked in mortal combat– fall into a river. Except there is no good guy, and both of them are going to drown.