Something has to give if Detroit is going to get Congress to loan it money. Some suppliers may have to take haircuts on their prices. Some debt-holders may have to convert their paper to equity or accept cents on a dollar for payouts.
But, the UAW may be the party that gets hammered the most. Labor costs are still the largest problem for The Big Three. It is not just daily wages. It is the tremendous health and pension benefits for current employees and retirees. It is the funding of the VEBAs created to move pension liabilities off the car company books into funds controlled by the UAW.
The Wall Street Journal reports "UAW officials, including its president Ron Gettelfinger, are said to understand that they are under pressure to deliver cost concessions." That may mean elimination of "job banks" which allow certain workers to be paid even when they are not working. Those are mostly people who can be recalled quickly if the car companies need to up production. The need for more people is unlikely to be necessary as sales keep falling.
The question becomes how often UAW management can go back to the rank-and-file and request they they take less. That is on top of the less they took less than two years ago when the union agreed to concessions to help keep The Big Three healthy. That certainly did not work out.
While the union's president may recommend that the cuts are necessary to keep Detroit open and keep some jobs intact, UAW workers may not feel that way. Their ultimate leverage is a strike. US auto companies can't to stay open for long if workers walk off the job. And, one thing the industry cannot handle is an inability to ship cars.
UAW members know they have power. Now, the question is whether they will use it.
Douglas A. McIntyre is an editor at 247wallst.com.











Reader Comments (Page 1 of 1)
12-01-2008 @ 10:14AM
David said...
Nobody gets paid for not working. The union bosses don't do a damn thing except steal from the union treasury and get paid huge salaries and benefits. Organized labor is nothing more than a legalized mafia. The thugs that run the unions belong in jail.
12-01-2008 @ 11:23AM
sherry said...
Plug in cars would cost the equivalent of 60 cents per gallon to drive at the current average electric rates. The electricity to charge them could conceive ably come from solar or wind.This past year the high cost of gas seriously damaged our economy and society. While we are doing the Happy Dance around the lower pierces at the pump OPEC is planning straggly to raise the price per barrel back up to between 7-100. again. We really need to get on with alternative energy. Bail us out of our dependence on foreign oil and the control it has over our economy and society. There is a great new book out called The Manhattan Project of 2009 Energy Independence NOW by Jeff Wilson. I highly recommend this book for anyone who is worried about our economy and would like to see our country become energy independent. www.themanhattanprojectof2009.com
12-01-2008 @ 11:34AM
BHarrison said...
The UAW workers "have a choice"? Yes, they can either moderate their wages and benefits or join the unemployyed. This is an unprecedented event in American history.
Even if they agree to lower wages and benefits, there still isn't any guarntees that the BIG 3 won't go bankrupt; but a strike will surely bankrupt the BIG 3, and the UAW workers will definitely be out of work . . . yeah, the choice IS their's to make.
If they bankrupt the manufacturers, then I have absolutely no empathy or sympathy ofr them . . . the gravy train has run out of gravy. Management is in the same position as the UAW also.
12-01-2008 @ 2:55PM
Greg said...
Think that a strike is leverage now? With average US automaker inventory at about 120 days, The auto makers can take a strike without it affecting sales on most models for months. No job bank costs for a strike, only the union strike bank takes a hit. This is why GM didn't push American Axle to settle their multi- month strike in the spring. It mostly affected SUVs and light trucks of which they had a 5 month supply. A strike only is leverage when demand is high and inventories low. The exact opposite is happenning now.
What the Detroit Three need to do is figure out how to change customer perception that their product is still inferior to non-US badged vehicles. JD Powers shows that there is little quality difference, yet equivalent non-US branded cars are gaining market share with a premium price. That is the true legacy cost of prior decade's mistakes. Once the credit markets start acting "normally" again, the Detroit Three will still have to solve this issue to survive.
12-01-2008 @ 11:11PM
John said...
I don't see that the UAW has any leverage. They will have to work for less or the Big 3 goes broke. If they go on strike the Big 3 will eventually go broke or their union strike funds go broke. The only thing they can do is take the cuts and hope for better days when they can get some of it back.
12-02-2008 @ 1:00AM
Dansel Soligate said...
Hola,
Navegando en Internet me encontré con su sitio - money.aol.com
Yo estoy el administrador del sitio y la razón por la cual los estoy contactando es porque estoy interesado en comprar un espacio de propaganda en su sitio. Le agradecería si pudiera decirme cuant cuesta un enlace de texto o anuncio en su sitio.
Gracias por adelantado
Hello,
Navigating the Internet I found your website - money.aol.com
I'm a link manager of a site and the reason I am contacting you is my interest in buying advertising space on your site. I will appreciate if you tell me how much a text link on your site would cost.
Thanks in advance
Dansel soligate
12-02-2008 @ 7:57AM
PC said...
Of all of the flap over executives with excessive pay and flying corporate jets to Washington to beg for a bail out, this is the first commentary that I have seen on the real plight of the big 3 US auto companies. No where has it been on the net work news, the main line big city newspapers, much less members of Congress asking the union what they were going to do to help the auto companies. This shows the complete bias of the US media and why it is so discredited today. They have an agenda to bash US corporations and build up the role for more and more government--whose inefficiencies are legendary.
Today it is estimated that UAW auto workers are paid 50% more than their non unionized counterparts in the USA. The big 3 can not continue with this lopsided wage scale. No wonder Gettlefinger was in DC with the corporate CEOs begging for a bailout. He is the big winner/loser in the battle.
It is time for Congress to ask the UAW the hard question---what are you going to contribute to the bail out?
12-02-2008 @ 9:35AM
BailoutBusta said...
The UAW was created to protect the average worker against greedy Corporate Managers. As long as the CEO's and Board members demand unreasonable incomes, the UAW will continue to wrangle for their fair share. We are no longer a society of manufacturing geniuses. We are now a service oriented society whose single largest export is our debt. Let the free market deal with the auto manufacturers...both the CEO's and the UAW officials...NO BAILOUTS! I'm sure Toyota and other foreign manufacturers are waiting for just the right price to snatch up Ford, GM, and Chrysler! We'll save thousands of jobs..just won't be in Detroit.
12-02-2008 @ 7:00PM
Ronald Gorski said...
The workers can take a pay cut again like they did in the late 70's and give up benefits. They can also eliminate the Jobs Bank but just remember nothing else goes down you still pay 9.00 dollars for a beer at the ball park and tickets don't go down. youe utilities are still the same food will still go up and the cost for education and taxes won't go down. The sports, movies stars and politiians will still get there large salary. Maybe we all should all work for the city,state,federal government and we still have our jobs!