A decade ago, the United Auto Workers were forced to negotiate a new labor contract that more or less accomplished what Sen. Bob Corker (R-Tenn.) demanded as a concession for his support of a government bailout, according to commentary published by Forbes. Without reversing the practices forced upon automakers in contract negotiations since the 1980s, Corker understood that a bailout would be meaningless, leaving the Detroit 3 vulnerable to the next recession or economic crisis. The UAW fared better under the 363 bankruptcy than it would in chapter 7 or 11, but it had to acquiesce to demands that restored labor to a variable cost and removed the gold-plated health care obligations that retirees enjoyed off the balance sheet. Work rules and job classifications were streamlined at the factory level, and the onerous and ridiculous Jobs Bank paid laid-off workers more than 90 percent of their normal wages while doing nothing. I have always held these company’s managements’ responsible for putting short-term objectives ahead of facing down the Union and its ever-greater demands that brought the domestic automakers to this crisis. The tool the Union used is the same as we see today… select a target and threaten to strike while allowing domestic rivals to capture market share during the shut-down period. Detroit’s myopia was so ingrained that it failed to understand the financial consequences of what the target company agreed to. The target auto company executives often misguidedly saw it as an opportunity to negotiate favorable terms for itself while punishing domestic rivals. That shortsighted behavior usually included the assumption that in due course the transplant factories in the south would be unionized, which, of course, has not happened, nor will it. Today’s strike only reinforces to the transplant workers that they are protected by working for financially strong companies and not by a contract.
