The members of the UAW may finally realize that Unions don’t work. It’s common knowledge these days that the UAW was the driving force in GM’s stellar $10.6B loss in 2005, $2B loss in 2006. Or Ford’s $6B loss in 2006. The UAW drove wages to $75/hr (base + benefits) for unskilled labor. Of course, the management accepted it, so management is to blame too.
Now that Ford and GM have no money left, the UAW really can’t screw them anymore. With $12B in losses, the management at GM has pretty decent footing when it says, “sorry, can’t give you more”. It’s not the same as the concessions they gave during the auto boom.
Who’s going to get screwed now? Well, you are, of course!
First, the auto workers will get screwed. Too bad they don’t read this blog! The latest contract GM struck last week makes this obvious. The workers will get no pay raises for 4 years, in exchange for some mild promises about not getting laid off. Of course, they are so overpaid now, this isn’t a huge deal, but in 3 years, they’ll feel screwed anyway. But here is the kicker – as part of this deal, a union-run trust fund is now responsible for a huge chunk of retiree health benefits. A $51B liability. Hmmm.. I’ve been unable to find crisp details about how this is funded and how its going to work, but it sounds like the UAW is going to get about $35B from GM to fund a $51B liability. Wall Street is hailing this, of course, because GM just wrote off ~$16B in debt. That’s pretty sweet.
So, last time I checked, the UAW wasn’t exactly the best with managing money. With $35B in their pocket, do you think the Union Leaders aren’t going to be banking several 10’s of millions for themselves? They will. Who will they hire to manage this money? Their friends? For a small fee? Yes. A big fee? Yes.
When the smoke clears, the UAW will have shrunk the $35B to $30B through mismanagement of funds when they should have grown it to over $50B. As a result, auto workers will get pennies-on-the-dollar in retirement/health benefits and start screaming. GM and Ford will be bankrupt, so they won’t be able to help. Aha – this is the part where YOU get screwed. Uncle Sam will come in and save the day with their pension and healthcare bailout for auto workers at the taxpayers expense.
The UAW sucks. Is it clear yet that the UAW has nothing to do with the workers and everything to do with Union Leadership getting rich?
UAW sucked the life-blood out of GM & Ford. Now their sucking the life-blood out of their own members (no pay raises/fewer benefits). And in a few years they’ll suck the life-blood out of you.