Posted by: David Welch on September 24, 2007
When the United Auto Workers walked off the job at General Motors, one UAW local president told me he lost a bet. “I didn’t think they’d walk out,” says Art Baker Chairman of UAW Local 652 in Lansing. Given the progress that the two sides made since Friday (they came to a basic understanding on a big healthcare deal) you’d think Baker was the smart money.
But in hindsight, here’s another perspective. If this deal is really supposed to be the “historic” or “transformational” or “landmark” contract (feel free to fill in your own superlative description) that has been ordered up by every industry wag in Detroit, then a strike was a foregone conclusion. First, even if UAW President Ronald Gettelfinger can live with a slew of big concessions, he needs to strike up a bit of Kabuki to show his members that he hasn’t just caved to management.
That said, GM is also asking for quite a bit in addition to hiving off management of the retiree healthcare plan onto the union. Check out GM’s wish list in a related story on www.businessweek.com. Suffice to say that GM is asking for a lot all at once. GM and rivals Ford and Chrysler can’t, as they did in 2003, walk away with another deal negotiated by milquetoast management that “narrows the gap” with Toyota but still leaves a wide competitive gulf. And Gettelfinger can’t just hand GM billions of dollars in concessions that will be blown on executive bonuses, shareholder dividends and new factories in Mexico, China and India. Simply put, the right deal for both sides—one that makes GM competitive while still guaranteeing that Americans will assemble cars—could only be won with a fight.