The Case Against UAW Representation On Automaker Boards
One of the many defining differences between this year’s contract negotiations between the Detroit automakers and the UAW is a new possible concession on the table: boardroom representation for the union. Inspired by the German system of works councils and union representation on supervisory boards, UAW President Bob King told Bloomberg that
If I had a magic wand, I’d take the German law and put it in the U.S… Workers should have representation on the board
But, in a thoughtful editorial, the Detroit News’s Daniel Howes warns that board representation may be more of a challenge to the union than a benefit. Howes notes
The UAW’s pursuit of board-room seats, to the extent it becomes a key demand in this post-implosion bargaining season, is fraught with potential complications. Among them is the cultural misperception that what is deeply embedded in Germany’s corporate reality is easily transferrable to 21st-century industrial America.
Don’t bet on it. Thanks to federal bailouts, the union’s health care trust funds have representatives on the boards of GM — Vice Chairman Stephen Girsky — and Chrysler Group LLC in former Michigan Gov. Jim Blanchard. But neither the Wall Street veteran nor the professional politician carry the kind of labor pedigree typically found on the labor side of, say, Daimler AG or Volkswagen AG.
Yes, retired UAW President Ron Gettelfinger occupied a labor seat on the defunct DaimlerChrysler AG supervisory board, a reflection of the German concept of Mitbestimmung, or co-determination, that has governed corporate Germany since the early 1950s.
And, yes, two UAW presidents — Doug Fraser and then Owen Bieber — sat on the Chrysler Corp. board following the No. 3 automaker’s near-miss with bankruptcy, its federal loan guarantees and the concessionary contracts that followed.
But the experiences, which culminated each time in the union relinquishing its board seats, offer a valuable lesson: being inside the room confers responsibility, meaning you can’t credibly denounce decisions made there that adversely impact hourly employees or product allocations.
A board seat also means you don’t always get your way. Just ask Gettelfinger, whose fellow board members green-lighted the plan to sell Chrysler to the sharpies at Cerberus Capital Management LP, accelerating a downward spiral at Chrysler culminating in bankruptcy.
Howes brings up a incisive point: ever since the bailout, the union has struggled to convince its membership that its VEBA stakes in the automakers don’t fundamentally align its interests more closely with management than workers. This challenge and the resulting worker backlash has defined the union since the bailout, with anger erupting into scenes at NUMMI, Orion Township and the Detroit Auto Show. And if UAW leadership gives up concessions that might benefit workers in exchange for a seat on the board, the rank-and-file will feel (with good reason) that their representatives have taken the new kumbaya tone too far, and are selling them out to cozy up ever closer to management. With its credibility with its own workers already hurting, the union should shelve its dreams of a board seat and focus on benefiting the workers it’s supposed to represent.
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Not always, but much of the time the kinds of things discussed at corporate board meetings tax the intellectual capabilties of the most seasoned corporate executives, deeply familiar with financial, tax and operating issues. Yes, there are plenty of buffoons sitting there too but, by and large, there are sharp people in the room. Union representatives are not the business experts I would look to for solid decision making in the board room. The only thing they are experts in is increasing costs, reducing efficiency, and killing businesses.
This article actually makes the case for why the UAW should have a board seat - by having a board seat, they can no longer sit on the sidelines and cry about being disenfranchised. If the definition of the union is to systematically oppose every board decision, then I suppose the article is correct. But if the union is supposed to work in concert with the board for the greater good of the company and its workers, then board representation makes sense. The UAW needs to decide what its true role will be, whether it will be a chronic complainer (no board seat), or team player (board seat).