[lbo-talk] Junkyard dog hits Motown

[Marvin Gandall]

Doug wrote:
>
> On May 16, 2007, at 10:01 AM, Wojtek Sokolowski wrote:
>
>> But if you want out of
>> the box thinking - why did not the union buy the share of the
>> damned thing?
>> It was sold cheaply.
>
> Yup, but I'm not sure if they could get the financing. Anyone with
> money to invest would assume that wages and benefits have to be
> slashed, and who'd trust a union to do that? A union might do that,
> but financiers don't know that.
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The unionized workforce is aging. I'd be very surprised if most autoworkers
at this stage were interested in anything other than stretching out their
time on the job as long as possible, getting as good a buyout as they can
when they're finally laid off, and above all, holding onto the major part of
their pensions and health coverage in retirement. I doubt very many want to
become shareholders or have much stomach for a fight. This is not the young,
combative, expanding workforce of the 30's and 40's whose bargaining power
increased apace with the industry's spectacular rise to world supremacy.

If these are the pressures which are filtering up from the membership, it
can hardly be surprising that the union is preparing to offer substantial
concessions in pay and benefits in exchange for some combination of layoff
by attrition, generous buyout packages, and "grandfather" rights limiting
the rollback of pension and health benefits for current employees. It has
almost certainly felt out Cerberus about the contours of a possible deal.
Any informal assurances it has received behind the scenes are pretty much
worthless, but in the end the union has probably concluded it has no other
alternative other than to accept the new owners and try to salvage what it
can from the situation.

Unfortunately, we're already familiar with this grim story, not only in
auto, but in steel, rubber, airlines, transport, construction, and the other
bastions of the old unionized economy.