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GM's Labor Woes

Posted by: David Welch on April 18, 2008

There’s plenty of murmuring in Detroit that a local strike at a crucial General Motors factory in Lansing, Mich. and threats at two more assembly plants aren’t just about local issues. While the United Auto Workers union denies it, some think that the union is trying to get GM to intervene in a six-week work stoppage at American Axle & Manufacturing Inc. GM relies on American Axle for key parts for most of its truck plants and some car plants. Some of those Axle workers were GM employees back before American Axle was created out of GM’s old in-house parts business back in 1994. So if GM would just take some workers back, or give the two sides money for buyouts or even just guarantee Axle some parts business at a rate that makes its labor profitable, all would be swell.

But enough already. GM has already taken $7.5 billion in expenses helping bankrupt Delphi Corp., which was created in 1998 when GM spun out most of its parts unit. GM also has loaned Delphi another $2 billion. The reason: GM was contractually on the hook for some Delphi retiree benefits and the parts firm’s workers had the right to take openings in GM’s plants. There were legal ties that kept GM in the fold when Delphi entered Chapter 11. American Axle Chairman Richard Dauch and has no such contractual claims on GM. GM has been restructuring since 2005 and still can’t make a buck in North America. Dauch’s company was profitable last year (albeit thinly) and his compensation packages over the years have been quite fat. So have the union’s wages in Dauch’s plants, which pay more than most parts jobs. Between the two of them, they should be able to cut a deal without any help from old GM.

Both sides deny that they’re asking GM for help. But should GM executives feel pressured to get involved, as Detroit carmakers have during parts strikes in the past, they should say no. GM Chairman and CEO Rick Wagoner and his new President and COO Fritz Henderson have enough to worry about, like making money, pleasing a group of investors who grow more impatient by the day, weathering a recession and figuring out what tougher fuel economy rules will do to their business starting in 2010. Helping another parts dispute, especially one that is 14 years removed from being part of the GM family, is someone else’s job.

Reader Comments

Bill Madro, Warren MI

April 25, 2008 12:41 PM

The expectation that GM will bail out the union members once again is just another example of the "entitlement" mentality that still permeates the union leadership. How long should GM be forced to keep companies it sold years ago in the black through bailouts? 14 years is more than enough distance for GM to say no. But will GM management have the nerve to do so?


April 25, 2008 2:56 PM

Labour woes. This morning's gnuz (over KGO and from the foaming mouth of the Union's president) was that the Longshoreman's Union out here was going to shut down the entire coast on May First. This in protest to the war, of course. They have demanded for some time the instant removal of the troops, and thus far nothing like that has happened. The feel ignored by their loving Crats who, as we know, and yet some will deny, they have supported forever in their leftist/Socialist causes. One should recall that the once thriving Port of San Francisco was shut down and lost to Oakland by the Leader, Harry Bridges, Socialist back around WWII time. It has been dead as the proverbial doornail since, the wharves being vandalized and burned, destroyed to a considerable extent by bums and the usual malcontents.

Just what right this Union clown has to pull this off is, of course, NONE. But heaven help the meek Union member who suggests that it is just another stupid/meaningless move on the part of the smarts-challenged brotherhood. Accidents happen, and the bay has its share of sharks.

In short, organized labour is its own worst enemy as well as that of the rest of us. No wonder the numbers are still dropping (while the high salaries of and cries of 'unfair' by the leadership continue).

The good thing is that in killing off GM, Ford, And Chrysler, the UAW will die as well.

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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