One Year After Its Bankruptcy, GM Is Still Married to the UAW


Detroit — They’re b-a-a-a-a-ck. Actually, they never left. And that’s the problem.

It’s fitting that — one year to the month since GM declared bankruptcy — the annual United Auto Worker’s convention is being held here amid renewed, militant calls that the Detroit Three give back last year’s labor concessions. In retrospect, the White House–engineered bankruptcy looks like a brilliant move, artfully dodging a prolonged bankruptcy of a major American industry in the middle of a national economic free-fall.

But it is also apparent that the “UAW bailout” — engineered by a union-beholden Democratic president — did not address Detroit’s structural problem. Indeed, experts say the automakers missed a once-in-a-generation opportunity to fundamentally change the industry, scrub its union culture, and enter the 21st century with a modern, union-free business model like their U.S.-based Japanese, German, and Korean competitors.

The UAW agreed to significant concessions in return for staying in the shop, including $14 an hour wages for new hires, a wage freeze on existing employees, and a no-strike commitment at GM and Chrysler until 2015. But that was then, this is now.

The UAW has a short memory when it comes to the outrageous union benefits that drove automakers to the brink. With the industry still on its back, deeply in debt, and just showing the first signs of profitability, the UAW this week raised the volume on demands that the industry return to business as usual.

“(Ford) is making lots of profits and if we couldn’t strike, we’d have nothing to force them to get back what we’ve given up over the last two years,” says UAW official Gary Walkowicz as he targeted Ford, which — unlike GM and Chrysler — got no assurances regarding labor stoppages.

The union’s new president, Bob King, also signaled that UAW workers would already be looking to recover the 2009 concessions. King vowed the union would win back concessions — he’s already won tuition payments for hourly workers (try finding that perk in any other industry!) — and said “we are going to pound on” automakers to unionize new plants.

This is Detroit’s nightmare. Having saved the union — and the company — from wrenching restructuring, Washington’s “drive thru” bankruptcy did nothing to cure the Detroit Three of their flawed shop culture: That is, they have two managements under one roof.

“There is no evidence that they really rethought the problem,” says Michael Levine, distinguished research scholar and senior lecturer at NYU School of Law. “That is what a true bankruptcy does. It turns you loose to rethink the problem.”

“But politics played a part because the government wanted it over with. Government should have made sure they were on the road. Instead, government paved the road,” Levine adds, arguing the feds were right to step in — but should have stopped at guaranteeing supplier contracts.

Professor Lynn Lopucki of UCLA Law School admires the legal dexterity of the Obama team, but agrees however that the quick bankruptcy success may be the enemy of long-term health. “It was quite a legal success, but nothing was done to improve operations.”

In other words, Big Labor is still there. And it’s getting hungry again. You can hear the beast’s stomach growling in Detroit this week.


Sign up for free NRO e-mails today:

Subscribe to National Review