The Unholy Union of Automakers and Financing

Time to smack the auto industry and the UAW again. From a column in yesterday’s Wall Street Journal:

The collective bargaining agreement with the UAW is a heavily negotiated document the size of a small telephone book. It is virtually identical for each of the Detroit Three, owing to “pattern” bargaining, but it doesn’t exist at all in their U.S. competition, the nonunionized transplants. Not only work rules, but fundamental business decisions to sell, close or spin-off plants are forbidden without permission. That permission may come, but only at a price, since everything that affects the workplace must be negotiated. …

In an environment of downsizing, the problem is exacerbated, as the entrenched bargaining structure causes innumerable inefficiencies. Typically each plant or warehouse is a “bargaining unit” and has a union president, who has a staff. If the company consolidates facilities, there will be no need for two presidents and two staffs. Since neither president wants to play musical chairs, they will both point to the bargaining agreement and resist consolidation. As a result, unnecessary facilities are not sold, but kept open, lit and heated, just to preserve a redundant bargaining-unit president and his team.

Not exactly a nimble, streamlined organization designed to compete effectively in the rapidly evolving 21st Century marketplace.

Fortunately, the government has a solution: On top of the $17.4 billion in loans already pledged to keep GM and Chrysler out of their rightful place in bankruptcy court, let’s invest $6 billion of taxpayer money in auto finance company GMAC. That way, customers who are less credit-worthy can “afford” vehicles that are overpriced to sustain entrenched unions.

Over to you, Mr. Obama, and good luck.

One thought on “The Unholy Union of Automakers and Financing

  1. Pingback: Chrysler’s New Majority Owner Will Be The UAW. Yeah, That’ll Work. :All That Is Necessary…

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