Detroit, Mich. — As General Motors and Chrysler asked U.S. taxpayers for $21 billion more in loans this week, a press report here quietly revealed that the United Auto Workers have preserved for themselves the right to personal legal expenses — to file divorce papers, draw up wills, and so on — on the company dime.
Like the infamous jobs bank — which pays idled UAW workers not to work — the legal-services perk is unprecedented in any other industry and another indication that the Detroit Three auto companies are in trouble because their business models are disconnected from the real world. And you, dear taxpayer, are now picking up the tab.
“I’ve never heard of a company offering that,” John Challenger, head of a Chicago-based workplace-consulting firm told the Detroit Free Press. “It’s something you wouldn’t see anywhere else in corporate America.”
GM, Chrysler, and their union have failed to make hard choices for decades, which is precisely why they are in their present pickle. By seeking refuge in Washington, they only continue to defer hard choices. Even now, with GM kept alive by public drip, the UAW is drawing a line in the sand on personal legal expenses, when they should be offering concessions on major issues like health benefits. Uncle Sugar, they confidently assume, will be there to bail them out.
Last week, GM announced the termination of 10,000 salaried jobs, and forced cuts in white-collar health-care benefits, retiree medical coverage, and 401k matches. Yet, under contract, the company must negotiate with the UAW on similar emergency measures. So while UAW workers maintain their gold-plated retirement health benefits, their former bosses in management have had to go on Medicare.
Detroit apologists claim that public welfare is necessary for automakers that are otherwise on course for profitability once the credit crisis passes.
But if this is so, why did the UAW itself refuse Wednesday to accept GM’s offer of equity in exchange for precious cash to fund its health-care obligations?
Or why does Chrysler’s own owner — the private equity firm Cerberus — refuse to invest more money in its property? This week, it assured Washington of its future by pointing to its new alliance with Fiat — even as Fiat refused to take a equity share and made its involvement contingent on more public loans!
America’s taxpayers, in other words, are being asked to loan money to a company that its own union, owner, and suitor refuse to invest in. So far, Washington is taking its constituents for chumps. But as stories of legal-fee bon-bons for UAW workers leak out, the public is going to get educated real fast.