General Motors Death Watch 44: As Witchita Falls

Robert Farago
by Robert Farago
general motors death watch 44 as witchita falls

Forget GM's Toe Tag sale, which failed to extinguish the automaker's low sales idiot light and sealed their reputation as the K Mart of cars. Ignore GM's eternal promise of new and better products. Disregard Rabid Rick's pathetic bleating to the Wall Street Journal that lawsuits, fate and the federal government are responsible for GM's $4.8b black hole. The General's immediate future depends entirely on whether or not the United Auto Workers' (UAW) calls a strike against bankrupt GM parts supplier Delphi.

This January, the UAW's leadership may tell Delphi Prez CallMeSteve Miller to shred his salary and benefit-reducing proposal and flush it down the toilet of his Gulfstream Challenger. Miller will then ask a federal bankruptcy judge to terminate the UAW's contract. The UAW will retaliate with a strike that will starve GM of parts. GM's assembly lines will close. Should the UAW strike last more than a couple of months, The General will burn through its multi-billion dollar cash reserves. The world's largest automaker will be forced to file the world's largest Chapter 11.

Conventional wisdom says it ain't gonna happen. Most GM watchers think the UAW will do whatever it takes to keep Delphi/GM afloat. Supporters of this "acting in their own best interest" theory posit that UAW President Big Ron Gettelfinger is smart enough to understand that the nuclear option would terminate his employer's future, and thus, the union's. Yaysayers dismiss yesterday's comment by UAW Veep Richard Shoemaker that a strike appears "more likely than not" as posturing. Why would the UAW initiate a chain of events that would lead to its destruction?

Simple: they don't see it that way. The UAW knows that the fallout from a Delphi disruption would increase arithmetically; with each passing day, it gets harder and harder (and more and more expensive) for GM to restart its assembly lines. In that sense, the prospect of The General lurching towards strike-related bankruptcy is a good thing; GM's glimpse into the abyss ensures that The General, and thus Delphi, surrender to the union's demands. In other words, the union works on the principle that they can pay us now (GM subsidizes Delphi's UAW contract), or they can pay us later (GM subsidizes Delphi's UAW contract), but either way, they're gonna pay.

In fact, the UAW is spoiling for a fight. Big Ron's stated goal in all this is to forestall the 'dismantling of America's middle class". But his real agenda is, and always will be, the preservation of union power. A successful strike would reassert the UAW's hold over its membership, Delphi, GM and any other automaker or supplier stupid enough to ask UAW workers to surrender one dollar of their salary or a single solitary benefit. While Rabid Rick has proven himself pathologically incapable of drawing a line in the sand (on any issue, ever), Big Ron and his boys are in the sand scribbling business. Anyone who thinks that the union's going to let their adversaries step over the line without retribution faces a rude awakening.

In any case, the UAW doesn't really care what anyone thinks about the virtue of their arguments. They believe (with no small amount of justification) that epic mismanagement caused Delphi and GM's perilous finances. Union members consider the idea that they should take a major hit to compensate for these blunders, helping corporate fat cats and their shareholding paymasters to prosper from their mistakes, beyond preposterous. It's insulting, veering towards evil. The UAW rank and file can just about imagine participating in a plan that would spread the pain equally– trimming corporate salaries, eliminating bonuses, cutting dividends, etc.– but not quite. Just fork over the dough you overpaid bastards, and let's get on with it.

What UAW members CAN conceive, and the analysts can't, is a scenario in which Delphi and GM disappear. The threat of losing everything– salary, benefits, pension, the works– is not the foolproof anti-strike palliative that white collar pundits believe it to be. In fact, the possibility of a cataclysmic GM failure holds a certain Alamo-esque romantic allure– especially for people who see themselves as working class heroes. Or, as one autoworker told the Detroit news: "If we're going down, we're all going down together."

Think it can't happen? Then you don't live in Worcester, Pittsburgh, Fall River or a dozen other rust belt cities and towns where unions drove up the cost and complexity of doing business, and watched it leave. Obviously, it's not unionism per se that caused these economic catastrophes. It was a combination of management arrogance, greed and stupidity; and union arrogance, greed and stupidity. There's only one way to untie this Gordian knot: the UAW must assume greater responsibility for Delphi– and GM's– destiny. They should have a seat on their boards and a large slice of equity. Profit sharing didn't save American Motors, but it just might save GM. Anyway, it's worth a shot.

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  • Demetri Demetri on May 10, 2010

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