AOL Money & Finance

Why don't we just hand the UAW the keys to GM and Chrysler?

Back in June, the National Center for Employee Ownership published a list of the top-100 employee-owned companies in the United States. To be considered for the rankings, companies had to have at least 50% of their stock owned by "an ESOP, a stock purchase plan in which most full-time employees can participate, a profit sharing plan or other trust, or some combination of such plans."

You might be surprised by the number of household names that made the list: Publix Supermarkets, Price Chopper, Hy-Vee, Lifetouch and Amsted Industries, just to name a few.

I wonder: Could that business model work for the beleaguered Detroit auto industry? General Motors (NYSE: GM) and Chrysler are being crushed under the weight of enormous obligations to current workers and retirees, along with long-term debt and government loans. Both companies still need more government money, and one option that's being considered is a bankruptcy filing.

Here's my plan: Have the government assist in restructuring the company into one that is employee-owned, with workers receiving stakes based on the benefits they've accrued. Then allow the shares to be freely-traded on a stock market so that workers who need cash can sell a chunk -- but provide strong penalties for workers who do so before the age of 65. Publix has stock that can be traded by employees, but GM and Chrysler might need a more liquid market.

The beauty of this plan is that it would align the interests of the UAW with the long-term health of the company. The workers would be the owners of the mess that they've created in partnership with the company's incompetent executives. The value of their stake in the company would depend on their ability to make it competitive again: Gorge on inflated wages and benefits and destroy the value of your stake. Move from the current model that pits GM's employees against its owners into a wonderful collective operation.

Would this actually work? Of course not. It's too late and even an employee-owned GM would require tens of billions in government financing, putting us back in essentially the same position we're in now. But if more had been done to align the interests of the auto industry's workers with the fortunes of the companies they punched the clock for, we might have been able to avoid this meltdown.
Get the latest on cars and trucks
from GM and all brands at AOL Autos.

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA+30.6910,464.40
NASDAQ+6.872,176.05
S&P 500+4.981,110.63

Last updated: November 25, 2009: 06:36 PM

BloggingStocks Exclusives

Hot Stocks

Learn More About GM Cars

General Motors Brands:
Find Your Next Car

AOL Autos New Cars and Used Cars

DailyFinance Headlines

Latest from BloggingBuyouts

TheFlyOnTheWall.com Headlines

BioHealth Investor Headlines

WalletPop Headlines

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance

WalletPop Headlines