UAW

Many commentators are insisting that any money to the Big Three should require that the management be replaced. To cite just one example, a WSJ editorial by Paul Ingrassia on 10 November reasons that if GM, and by extension Ford and Chrysler, are deemed too big to fail then "it's also too big to be entrusted to the same people who have led tit to its current, perilous state and who are too tied to the past to create a different future." I agree that grand restructuring needs to occur and "that will mean tearing up existing contracts with unions" etc. It is not unreasonable to request management changes under such borad restructuring. But is too much attention being paid to senior executives?

All three autos are struggling. All three autos have lost ground to foreign companies. All three autos (and even some of the foreigns) focused on the "gas guzzling" truck market (Toyota Tundra). Yet the managers and executives of these companies are all different. In fact, for a number of years Chrysler was owned by the Germans. If the problem was Rick Wagner or the Ford family, then the companies would be facing different prospects. What is shared in common among the Big Three and none of the foriegns? The United Auto Workers.

To be fair, many commentators, Ingrassia included, are calling attention to the UAW. He notes, the "union stoutly defended gold-plated medical benefits" that consisted of "no deductibles, co-pays or other facts of life." Indeed, the union fought "to protect the 'right' of workers to smoke on the assembly line."

In my estimation, the UAW is much more at fault for the demise of the Big Three. It is the common factor to the auto companies - and the dead weight they are forced to carry. Ingrassia laments that "the current board of directors and management have stuck stubbornly to [an outdated] structure." But the UAW contract, which only in 2010 will equal the pay playing field, has largely limited the auto's ability to shed jobs and restructure in the changing global market. It is the Union, with their inch thick contracts, that has stuck stubbornly to an outdated structure.

I owe thanks to my wife for pointing out the universal nature of the UAW.