Bailout Watch 370: More GM and Chrysler UAW Buyouts. Or Not.
Announcing the single greatest transfer of wealth in the world in the last six hours. Well, GM and Chrysler would like their United Auto Workers (UAW) employees to take your tax money and quit. That way the ailing American automakers can replace the highly-paid union workers with lower paid union workers (that would still pay the same union dues, ‘natch). And, thus, prove to someone on Capitol Hill that they’re satisfying the provision of their $17.4b “bridge” loans. To that end, GM’s offering its high wage union workers a $20k “bonus” and a $25k car voucher to piss off. Chrysler’s offering $50k and a $25k voucher. But there are all kinds of problems with this plan.
First, the offer is worse than the last go. As The Detroit News reports, last time ’round there was more money on the table. This time, a car voucher replaces cash.
While The DetN (and perhaps GM and ChryCo management) wishfully suggest that the “gift certificate” provision will boost sales, UAW workers are the last people who’d ever consider a new car voucher on a one-for-one basis with George Washingtons.
Second, the union workers simply aren’t buying it. Nor are they likely to. The take-up rate was low for the last round of UAW buyouts. That was before the bailout. Now that Uncle Sam is footing the bill, after their boss vowed to reverse the Big 1.8’s promise to institute wage and benefit parity with their transplant equivalents, why should they?
Third, GM and Chrysler are still chasing falling sales and market share. Even if the take-up rate was higher, they don’t need to replace anybody. So those “replacement hires” are a myth.
I know the automakers must be seen to be trying to satisfy their loan conditions. But this is farce. Punishment glutton and taxpayer that I am, I can’t wait to hear GM CEO Rick Wagoner and Chrysler CEO Bob Nardelli explain this one to my elected representatives. In their desperation to stay alive, will the automakers throw the UAW to the wolves? Are there any wolves left?
More by Robert Farago
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Oh yes I agree. And I WANT a domestic car industry as well. I want to be able to buy a car I really like from an American car company. But when I bought my last car, I wanted an AWD coupe with a reasonably powerful engine, decent handling, and a stick. No American company made such a car, but Mitsubishi made the Eclipse GSX. Too bad they don't make that anymore, either. I don't know what I'll get when this one dies.
The Detroit automakers can be successful, or they can employ a lot of US workers with union work rules and high pay and benefits. They cannot do both. If you want them to do the latter then you are sabotaging their ability to do the former.