GM and Ford: A UAW Ultimatum

By Douglas A. McIntyre Published Aug 26, 7:19AM EDT

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The UAW is being threatened by Ford (F) and GM (GM). Agree to cost cuts, or we move production overseas.

The sight of the gallows focuses the mind.The UAW is being asked to gut the livelihood of its own members. According to The Observer, "Ford and GM have made it clear that they expect to reduce the hourly cost from $71 to about $50 – a cut of about 30 per cent." Both of th large car companies are wiling to put billion of dollars into a pension and health-care pool run by the union. The would take the worker liabilities off of their balance sheets.

What the report does not tell is what the UAW has on its side of the ball.

The answer is, a strike. The negotiations appear to be turning more ugly than most observers said they would. The UAW management will not have the support of the rank-and-file if it appears that this set of bargaining will be the one to determine their future.

A strike may help the UAW, but it also may send the industry that pays its workers into a tailspin. Detroit cannot have its capacity off-line for any period that would allow the Japanese to pick up more market share.

And, so, it has come to this.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.