Want to know why a nationalized General Motors will struggle to survive?
Just read the UAW General Motors
memo “Modifications to 2007 Agreement” sent out to UAW members
a couple of days ago.
It’s only 14 pages — and a lot
of it is dull union contract procedure and modifications.
But the memo shows how the UAW works.
And it shows that while Mr.
Obama may promise a new General Motors, you, the American taxpayer,
are getting stuck with the old UAW as your partner.
Consider the following. You
will soon own 70% of a reconstituted GM at a cost of somewhere on the order
of $75 billion.
(Not including the GMAC bailout. That will run you another $25 billion)
Then consider that the UAW will
be your primary partner in this expensive endeavor. It will control your
workforce.
It will own 17.5% of the common equity, $6.5 billion in preferred equity
and carry $2.5 billion of GM debt.
And it will have a seat on your GM board.
Now read the UAW memo and ask yourself if this is the partner you want for your huge investment.
It’s, of course, easy to brush
off some of the memo’s language — “brothers and sisters” or “in solidarity”
—
as just old-school union talk. But such words are important. They remind
the union members that they’re in this
together and that the UAW’s overarching mission is to protect its members’
interests.
In the memo, the UAW mindset
is still “us vs. them.” The “them” being GM’s management and its controlling
shareholder which is you, the taxpayer.
Of course, the UAW will make
the case it is reopening a negotiation closed only two years ago, that it
has made big
concessions and that it is treating GM no differently than Ford or Chrysler.
And that’s all true. But those
are arguments of a union — not a business partner. So the eternal conflict
remains at GM:
the investor wants profits, but the union wants wages and jobs.
Nowhere in the memo, for example,
does the UAW state that it is eager to make GM the world’s most competitive,
efficient and profitable auto company. That’s what any shareholder should
want.
But the UAW is not an ordinary
shareholder. In fact, the current UAW members are not even going to end
up as
direct shareholders — it’s the healthcare trust of the UAW retirees.
Hand it to the UAW. The Treasury
may have forced it to give some things up, but the UAW cut itself a sweet
deal.
“For our active members these tentative changes mean no loss in your base
hourly pay, no reduction in your healthcare
and no reduction in pensions.” In other words, as little change as possible.
With the UAW mindset still stuck
in the past, the new, nationalized GM will have a hard time competing with
Toyota
in the future. Just look at page after page of the modifications to worker
categories, work rules, sourcing policies
and benefit plans.
How’s this for the “new attendance procedure” in case an employee misses work:
It reads, and this is just part
of it,
“The modified procedure is a six step process. An employee facing termination
pursuant to this procedure’s sixth
occurrence may request to have their pending termination reviewed by the
Personnel Director and the Shop Chairman
to consider whether the employee’s instant absence or failure to call in
was due to documented extraordinary
circumstances beyond their control…”
Apparently, it takes six occurrences
to get yourself fired. And this is the new “modified” attendance procedure?
The old one must have been a doozy.
Is this any way to run a business?
American taxpayers, you’ll soon find out.
