UAW Negotiating with Itself

uawMickey Kaus noted the other day that the UAW, which owns large stakes in both GM and Chrysler without paying a cent thanks to their support for the election of President Obama, is cutting their own companies a break and sticking it to Ford.

I knew they’d find a way to punish Ford: The new UAW contract with Ford apparently does not give America’s surviving non-bankrupt automaker parity with GM and Chrysler, reports Bloomberg: “The plan doesn’t include cuts to retiree benefits, such as vision coverage, that were granted to GM and Chrysler.” Rather, the pain seems even more concentrated on future hires (if there are any) than with the GM/Chrysler deals. … TTAC wonders whether the UAW had an extra incentive to resist giving concessions that might make Ford more successful now that the union owns a large chunk of its main domestic competitors. [emphases original]

Megan McArdle cries Foul!

It seem to me that this is a clear and insurmountable conflict of interest.  Should the UAW be compelled to relinquish its stake in the automakers, or stop representing Ford workers?  I’d say they should.  Not that this has a snowball’s chance in hell of actually happening.

It is, to say the least, problematic for a labor union to own competing firms.  But to the degree that the conflict of interest hurts Ford’s UAW employees, they could presumably divest and start a new union.

The real issue is the antecedent to this situation:  The federal government picking winners and losers between firms.  The federal taxpayer bailed out two of the Big 3 and now has powerful incentive to assure the success of those two companies at the expense of the third.  Not only is Ford much less likely to get government contracts now but they’re much more likely to come under higher regulatory scrutiny.  That they also have a more hostile union — one that no longer ultimately needs them to stay in business — is mere icing on the cake.

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James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College. He's a former Army officer and Desert Storm veteran. Views expressed here are his own. Follow James on Twitter @DrJJoyner.


  1. PD Shaw says:

    Wasn’t Harry Reid talking about removing the antitrust exemption enjoyed by labor under the Clayton Act of 1914? Seems like this makes the case that union pattern bargaining arrangements have not only sunk Detroit; they are going to sink the only possible survivor.

    Oh, he was talking about removing the antitrust exemption enjoyed by insurance companies that use their buying power to bargain down health care costs. We certainly could use higher health care costs these days.


  2. Zelsdorf Ragshaft III says:

    I own quite a lot of FoMoCo stock. Should I lose money do to a conflict of interest, someone beside me will pay a price beyond money.

  3. Dave Schuler says:

    It seems to me that the only way to make this work is for GM and Chrysler to agree to divide the market, cartel-style. I’m skeptical that can work without banning auto imports.

    Consequently, I wouldn’t be completely surprised at something that has the general effect of an import ban. It would need to include the domestically assembled cars made by overseas companies. It will be interesting to see what form it takes.

  4. Drew says:

    Those of us opposed to the bailouts cited this eventuality from day one.

    It stinks.

    To not have seen it coming, or to not now acknowledge what is happening, is prima facia evidence of boneheadedness.

  5. Drew, or should I say Cassandra, but why do you think so many clear, starightforward and unambiguous predictions that came true will help establish our bona fides in any other matters? After all, it’s not facts they’re after but TRUTH!

    OT – I’ve started watching Free to Choose by Milton Friedman this week and it almost makes me want to cry to see how intellectually bankrupt most of our intellegentsia was and is. It is depressingly eye-opening to see how little freedom was valued then by politicians, labor leaders and businessmen, but it is stimulating to watch Milton Friedman so easily demolish the arguments of those who attack his “radical” ideas.