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Reuters reports that the UAW membership has “overwhelmingly approved” its deal with Chrysler, paving the way for union ownership of the firm. So it’s fair to say that Obama’s “what we’ve seen is the unions have made enormous sacrifices on top of sacrifices that they had previously made” line sent the right message?
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There was a time when managers and executives from the Big 3 would not play golf together for fear of an anti-trust investigation.
Now, a progressive/left wing administration facilitates the UAW’s ownership of 55% of Chrysler and 39% of GM. Would the Obama Department of Justice let someone like, let’s say, Kirk Kekorian own that large an interest in two competing companies.
This is turning into a bigger clusternsfw every nsfwing day.
Some bright red lines have been crossed.
Like changing deck chairs on the Titanic….
How are these companies going to stay in business in any other fashion that sucking down the taxpayer money!?
Now they’ve made it so any private investor is going to think long and hard about loaning any money to a company that might take assistance from the government (BofA is a good example of why in another sector), there are conflicts of interest on multiple levels (is the UAW going to continue to take dues from members to represent them against the managers [i.e., the UAW]), and still no end to the bleed.
This has shown me that some people are more equal than others: Democratic Party core supporters like the UAW; and everyone else: taxpayers, stockholders, and bondholders.
Hope and change…. Hope and change…
Birth (by theft) of the Somalian auto industry.
Who is going to buy this Detroit stuff?
100% mergers of competing companies are happening all the time, so I don’t think one entity having major ownership stakes in two competitors is going to run afoul of whatever is left of anti-trust enforcement. How many big banks have merged? How many big defense contractors have merged? How many drug companies have merged? Oracle just bought Sun. Cisco has bought almost every competitor imaginable.
The UAW should really start their own brokerage house and give investment advice.
-I mean come ON! They pulled this one off.
What could possibly go wrong???
…
And we get to pay for it.
I am so thrilled, I could spit.
I had been looking forward to the Chrysler liquidation, expecting some pretty good individual models like the Ram and Wrangler to live on at Nissan or Hyundai. Unfortunately, UAW ownership probably makes this impossible. Instead, I fear we have to pay the UAW to destroy the good parts of Chrysler too.
Presents a bizarre scenario over time. Management (UAW) will still have to deal with with an uncompetitive labor compensation structure. What to do?
One way or another expect taxpayers to remain heavily “involved”.
Get the feeling that we’ll be producing or protecting “show” jobs that will cost taxpayers more than the jobs are actually worth.
There will come a time, probally not too distant, that we’ll realize that had Chrysler and probally also GM simply went ahead and let the bancruptcy process proceed, then I think there would have been an increased possibilty of both companies emerging in some fashion as viable and competitive carmakers.
Never in my worst nightmare…
Any cop will tell you they spend 80% of their time looking after 20% of the people. The “bad apples” so to speak. In the same respect unions seem to devote a lot of their resources to defend a small part of the membership (you know who you are!)
Makes me wonder how the rest of the members will take this now that they are “shareholders” in the company. Should be interesting.
There are a lot of employee owned companies in the United States. Many have operated a long time without government assistance and even been successful. Some may call employee ownership conflict of interest, but I see it as combination of interest.
If employee owners want wage increases, they now have to accept cost increases, a decline in their profits and possible job loss as a result of their own direct action.
These are powerful incentives. One of Detroit’s big problems was costs. This may solve that. But the other problem of non competitive product in design and quality remains. We will now learn if employee ownership makes any deference in this area. I doubt it.
Design and quality are related to culture and attitude. I doubt that the UAW will be any better than Cerberus at picking up the nuances that make a Honda a Honda or a Toyota a Toyota let alone putting them into the product.
So the outlook for UAW ownership is not bright.
Comrade Schreiber,
Do not be concerned by such things. We are all good friends here. Please, sit down and let us introduce you to our new people’s car. We have a five year plan to make it the best, most glorious car in the entire world. We’re sure you’ll like it very much. It’s Very Nice!
How will a union owned company work? One would assume that everyone will be a union member. That would include management. Are they allowed to join other unions? What about the food workers belonging to SEIU or electricians with IBEW and truckers that will be part of the teamsters? In Canada, will management be UAW members and employees CAW or will both management and employees be part of CAW working for the UAW?
“Management (UAW) will still have to deal with with an uncompetitive labor compensation structure. What to do?”
Hire Tanya Harding to “do her thing” over at Honda and Toyota.
Like Soviet Russia…We pretend to work and gubmint pretends to pay us.
Finally it has happened in real life. Tail wags dog.
I wonder if the UAW will now force the GM-Chrysler merger.
dgduris, thanks for the YouTube link… LOL!
I can see it now it now… UAW built hybrid Yugos with Obama’s “change” symbol as the hood ornament. LOL
Anyway… hopefully the UAW will end up cash strapped and have to sell the Jeep brand before they completely kill it.
Gentlemen, sorry to say this, but you got it all wrong. Everybody is assuming that the UAW will do this or that because they own Chrysler. “Owning” Chrysler is not the point here, the point is who is going to put the money in the company to make it work. And the answer is: the taxpayers (US and Canadian alike).
The UAW would not have to care about arguing against themselves, or making Chrysler profitable, or compete with Toyota/Honda. It doesn’t matter anymore if Chrysler is successful or not, if they make crap or not. Chrysler has been considered “too big to fail” so it will not fail. Not now, not later, not as long as the government(s) have a penny to put into this black hole. And I really don’t think that, in the future, Obama will fire Gettelfinger/Lewenza/whoever the UAW nominates to the board, the way he did with that clueless Wagoner.
Just a thought: the site has a constant stream of government bashing, some of which is no doubt justified. But in my travels, I see a deadening ineptidude made manifest more often in the private sector. Badly run businesses, lazy and disinterested workers, bad service, an unwillingness to change things that work poorly, and on and on. And that’s just around where I live.
At the national level, need I mention Enron, Madoff, Lehman(180 year old co.), the major banks (and their “shadow” divisions), brokerage houses, rating agencies, exploitative sub-prime vultures, shoddy builders, hirers of illegal workers, and on and on seemingly forever? So how about a little balance here.
My town’s government, our state’s general level of services and the quality of our parks and forests, a fine state university system, extensive health dept. facilities, crime labs, and on and on, are mostly excellent. And all taken for granted. From my perspective, the government in my state has performed a hell of a lot better over the last few decades than has Detroit auto, for instance.
But think of all the many other large-scale corporate blunderings, too. Those ships sank, the workers got screwed, and then on to the next “creative destruction.” Maybe necessary, but never pretty and people will always need a hand.
Tail wags dog
Things seem to be stepping up.
Better the tail than the a$$hole before.
After all, Obama can’t order the courts not to enforce the law, can he?
I wouldn’t put it past him. One thing you can’t ever forget with Obama is, he’s a product of the Cook County machine. In his mind, ‘laws’ only exist for the exercise and perpetuation of the Machine’s power.
Jeff Waingrow: But in my travels, I see a deadening ineptidude made manifest more often in the private sector. Badly run businesses, lazy and disinterested workers, bad service, an unwillingness to change things that work poorly, and on and on. And that’s just around where I live.
You don’t have to patronize those businesses if you don’t want to. If enough potential customers make that choice, the business must either change or die. Unless, of course, the government bails it out…
People do not have a choice of whether to do business with a government entity. If I’m unhappy with the condition of my local parks, or the service provided by my local mass transit system, do I have the right to withhold that portion of my local taxes in protest…?
Jeff Waingrow: At the national level, need I mention Enron, Madoff, Lehman(180 year old co.), the major banks (and their “shadow” divisions), brokerage houses, rating agencies, exploitative sub-prime vultures, shoddy builders, hirers of illegal workers, and on and on seemingly forever? So how about a little balance here.
And all of the big ones went out of business – unless the government intervened to keep them in business. The free market worked.
People seem to be confused. The “free market” is not synonomous with “permanent prosperity” or “every company is top notch.” It means that people have a choice, they can exercise that choice, and companies either cater to those demands, or face the possibility of bankruptcy.
97escort:
There are a lot of employee owned companies in the United States.
As I understand it, Chrysler will not be owned by Chrysler employees (or any auto employees of any company). It will be owned by a labor union (a supposedly non-profit labor union, at that).
I have not yet seen the biggest problem with this concept discussed here. It is: The Union will have a major ownership interest in Chrysler and GM. If you are Ford Motor Company negotiating a labor contract with your employees, the person on the other side of the table owns big portions of your two domestic competitors. The conflict of interest here is staggering. What if the union calls a strike? “Great! More business for ‘our’ companies”.
Is anyone among the B&B aware of another instance in American labor law where a labor union is both the bargaining agent for your employees AND a competitor? I doubt it. Seems to me that the UAW either needs to divest itself of ownership of the companies that employ its members or it needs to be replaced as the bargaining representative for Ford employees.
Some bright red lines have been crossed.
The solution is simple — get your friends in Michigan together, righteously repay the money, and use your own money to fix these companies.
This argument of yours — give us government dollars, but don’t you dare tell them how to spend it — reeks of entitlement. You think that Detroit management deserved to bailed out, yet simultaneously left to their own devices? That just does not square.
jpcavanaugh: “Chrysler … will be owned by a labor union (a supposedly non-profit labor union, at that).”
Oh, I think by acquiring the wreck called Chrysler, continuation of the union’s non-profit status will be guaranteed.
“Is anyone among the B&B aware of another instance in American labor law where a labor union is both the bargaining agent for your employees AND a competitor?”
Seems like I heard United Air Lines, no stranger to bankruptcy court, is an employee-owned company now. If so, the airline workers’ unions are both bargaining agent and competitor.
Government Ineptitude?
Hmmm!
Community Development Act of 1974?
Acorn?
Fannie and Freddie?
Bawney Fwank!
Need more examples?
50merc:
Seems like I heard United Air Lines, no stranger to bankruptcy court, is an employee-owned company now. If so, the airline workers’ unions are both bargaining agent and competitor.
Does this mean that United is owned by United employees or by the Union? I have no conceptual problem with Chrysler employees owning Chrysler, and still being represented by the UAW.
I suspect (but do not know) that United Airlines is NOT owned by a union (it deals with more than one), or by the employees of United’s competitors.
For a long time, the employees have been the defacto owners of Chrysler and GM by being the majority debt holders of these insolvent companies. The Chapter 11 reorganizations will simply recognize reality and make it official.
The Unions themselves would not own the stock. The stock would be in a trust, managed by trustees. The trust would likely have to pay taxes on the capital gains and dividends earned through the stock ownership. (It depends in part on the use of the proceeds.)
I’m guessing that the beneficiaries of the trust would not be the union, but rather the pension funds and VEBA funds that were underfunded. Because the union is the entity with the employees and management structure, the union would serve as a trustee. There may be other trustees as well.
There are quite a few publicly traded companies whose majority stockholder is a not-for-profit institution. Off the top of my head, Hershey company is the first to come to mind. Also, Hughes Aircraft was at one time owned by the Howard Hughes Medical Institute.
In Germany, capitalism is alive and well, yet union representation on the boards of directors is the norm rather than the exception.
geeber: The people have a choice in government also. The vote. It does have an effect. But the same dumb businesses can last forever with the right lease or family money or whatever. After all, Detroit had it all to itself for a very long time, no? Let’s face it, neither realm is without its distinct flaws. Who would deny it? But to couch these arguements in either/or terms is pretty shallow thinking. Myself, I’m inclined to think that Pogo was right.
Jeff Waingrow: The people have a choice in government also. The vote. It does have an effect.
That dodges the question of whether I have the ability to withhold tax dollars to express dissatisfaction with a particular service. The answer in every jurisdiction in this country is “no.” If I don’t like GM vehicles, I don’t buy one. If I don’t like the way the mass transit system is run, I still pay for it.
Jeff Waingrow: But the same dumb businesses can last forever with the right lease or family money or whatever. After all, Detroit had it all to itself for a very long time, no?
Were you ever forced to do business with them? (Even during the heyday of the Big Three, there were alternatives – first the independents in the 1950s, then AMC and the imports in the 1960s and 1970s).
The answer, I would think, is “no.”
If these companies continued to exist, other people liked what they offered enough to do business with them, and thus keep them in business.
Just because you didn’t like what they offered doesn’t mean that other people necessarily shared the same opinions. I don’t like what VW offers enough to ever buy a vehicle from that company, but apparently enough people do to keep it in business in both the U.S. and other countries. That is not a failure of the free market or a weakness of private enterprise.
Now that not enough people like what GM and Chrysler are offering to keep them in business, they are facing bankruptcy. Thus, they would face the discipline of the market, except for the fact that the government is propping them up with taxpayer money.
According to the article (if you actually took the time to read the Reuters account), there doesn’t look to be much choice in the matter.
“The UAW said its ratified agreement meets the U.S. Treasury requirements for continued government loans. Fiat also signed off on the agreement, which would give the UAW a 55 percent stake in the automaker and Fiat an eventual 35 percent stake…With the ratification vote at Chrysler, the UAW can now turn toward completing negotiations with General Motors Corp over concessions needed for the largest U.S. automaker to satisfy government-ordered cost cutting demands..”
Seems to me the UAW made a good decision here. And for those of you who feel sorry for the top executive class of America, don’t. They’ll fail somewhere else with your dollars again and blame it all on the ‘Taxicrats’ and ‘evil unions’, no worries. I’m no expert on the auto market, but this actually looks like it might work out.
This article sums up my fears. When the ‘new’ company implodes, the Gov’t will just prop it up again in a effort to Double Down on it’s ‘investment’
Fair Use Extract
The UAW in the Driver’s Seat
Whether the union’s rank and file will recognize its interest in the companies and act accordingly is another matter. Consider that one of the terms of Chrysler’s pending deal with the union is that workers won’t receive overtime pay until they work more than 40 hours in any given week.
One might well ask: Wasn’t it always that way? Well, no. Often enough, the union negotiated production quotas in local plant contracts that workers could fill in five or six hours a day — after which any work they did qualified for overtime pay. Now you understand one key reason why Detroit has arrived at this unhappy juncture.
It’s hard to imagine the mind-set that produced this sort of thing will change just because the workers will become the owners, albeit indirectly…… There’s an inherent conflict between the cost discipline required of owners and the understandable desire of employees to make more money for less work (hey, why not?). Keeping those two powerful forces in balance is critical to the success of any profit-making — or profit-aspiring — private enterprise. Even a clean and well-run union such as the UAW will have trouble squaring this circle in the long run.
So, here’s what I’m seeing. Chrysler will be owned by a trust fund set up by UAW for the purposes of paying benefits. I’m assuming, then, that this trust will be responsible for all benefits. Can anyone confirm this?
According to the article, UAW will be responsible for its own benefits after the bankruptcy. Part of the deal to C7 is to allow Chrysler out of half of the medical benefits still owed, but will have to cough up the remainder.
In my city’s downtown we have a big hulking development that’s the result of our Redevelopment Agency. All nice and neat not to mention expensive. The thought was that this mixed use development would be a hub of economic activity and source of jobs. Only trouble is that after years it remains only about 30% occupied.
I wonder if the Federal role in the auto industry will produce similar results. We’ll have the “appearance” of a car company along with “show” jobs but ultimately it’ll be a ongoing drain on the Treasury versus a source of authentic revenue.