Concessions?

One of the things that supporters of the GM/Ford/Chrysler bailout say is that it’s not fair to blame unions for the unprofitability of cars. Yes, their labor costs make them unaffordable, but the UAW has made so many concessions. It’s unfair to ask them to give up anything else.

I pretty much accepted this criticism, seeming to remember hearing about unions having to make a few cutbacks in recent years. But then I thought I’d see just how steep these concessions are. I think this article from an issue of CounterPunch should shed some light on things (in the best possible light for the UAW). Consider, for example, that the unions accepted a $1 billion cut to the retiree health care program that GM runs. That sounds pretty amazing, right? I mean, $1 billion. That’s not chump change.

Except when it is. Do you know what GM’s pension liability was in 2004? $89 billion. Health care liability for retirees in that same time? $64 billion. Those numbers are simply unsustainable for a company that doesn’t turn a profit and has a workforce one third of the size necessary to support its retirees.

Other concessions made by the unions: They shifted to a four day, 40 hour work week, leading to some loss in overtime pay (but also giving the workers a three day weekend). They opened up the shops to allow nonunion members on the floor. You mean the plants no longer force people to join an organization they might disagree with politically and in terms of what’s good for the workforce at large? Shocking. The UAW now allows plants to bargain with the unions individually instead of setting up flat, across-the-country rates of pay. I mean, doesn’t that just make sense? $20 in Cleveland isn’t the same as $20 in rural Kentucky.

I suppose these are all real concessions. But they’re all pretty minor concessions as well, in the grand scheme of things. There’s only one way that Detroit’s going to get back on its feet: make cars people want, and make them cheaper than competition. It’s hard to do number two when you’re saddled with $1,600 in legacy costs per vehicle before a worker even sets foot on the floor.