GM (NYSE: GM) and its rivals Ford (NYSE: F) and Chrysler have been exploring setting up a fund, managed by the union but financed by the car companies, to handle union member health-care benefits. The move would take tens of billions of dollars in liabilities off the companies' balance sheets, but funding it could take as much as $60 billion.
The union has not warned to this program as fast as GM would like, so it has proposed an alternative--huge job cuts. According to The Wall Street Journal (subscription required), this plan would results in "deeper, more-painful cuts." That would probably include jobs and benefits.
The deadline for the UAW negotiations to finish is September 14. While it would not be odd for talks to go beyond that, the tension between the car companies and union is likely to grow.
While the UAW management may be patient, its membership may feel otherwise. Benefits are important to them, but having jobs is probably higher on the list. Any hint of massive firings is likely to rub them the wrong way.
The union does not have to go straight to a nationwide strike to send its message. It could stage work stoppages at plants that produce popular cars which are in low supply.
And, then it gets ugly.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
9-11-2007 @ 3:29PM
Connie said...
The UAW takes over healthcare, GM cuts more jobs and Wagoner gets a bigger bonus this year than he did last year! snafu$$$
10-21-2007 @ 11:45PM
Dan said...
As a non-union consumer, I have decided that I will never buy another union made car. I'm sick and tired of unions complaining about wages, retirement, and health benefits while the rest of the world struggles to survive. I realize that the economy is geared towards supply and demand - so maybe enough people will feel the same way I do and put these "unions" (crooks) out of business so the carmakers can once again be successful.