Business Week steps forward with the obligatory article on how United Auto Worker intransigence is worsening Detroit's woes. But midway through the piece, a passage flashes by that explains the difference between yesteryear's take-one-for-the-team unions and today's seemingly immovable objects. The difference? At one point, there was, in fact, a team:
When Chrysler wrung mid-contract cutbacks from the UAW in 1981, the company was strapped. Chrysler (DCX ) canceled its dividend, top execs took a 10% pay cut, and then-Chairman Lee A. Iacocca worked for a dollar that year. Today, both GM and Ford still pay a dividend, and GM CEO G. Richard Wagoner Jr. got a $2.5 million bonus for 2004 -- on top of his $2.2 million in salary. Both companies also have huge cash hoards -- $20 billion at GM and $23 billion at Ford. Until the companies are close to bankruptcy, union leaders see no reason to give up benefits.
What Wagoner did to deserve that bonus is far beyond my limited comprehension (helped his brand die?), but the idea that workers no longer see the top rungs sacrificing even as concessions are demanded of them is, indeed, a powerful one for explaining why so few unions seem interested in pitching in during periods of hardship. After all, it's pretty hard to explain to your union why you agreed to chip away at their health care coverage while the shareholders were paid a dividend and the executives got a bonus and the company's afloat in cash (if not profits).
If GM, Ford and their kind want to survive, they will need to restructure radically -- no one doubts that. But if they decide their only really pressing priority is ripping health care from their retirees, they're going to quickly find that the unions are deeply unimpressed with the survival plan. And even if they were able to force it onto the workers, it wouldn't save the companies' anyway. This isn't about retirees, it's about bad cars plus worse management, and leadership like this is certainly proving the latter part of that equation.
--Ezra
