The UAW Finds Out Detroit Is "Too Big To Fail"

The UAW is dragging its feet in negotiations with GM (GM). That could be risky business. The federal government reserved the right to put the car company into bankruptcy if it did not come up with a reasonable restructuring by March 31. GM has to get the union and creditors in line or the cost cuts necessary won’t be possible.

But, the UAW does not seem to be in any particular hurry, which could put tens of thousand of its members’ jobs at risk.

According to The Wall Street Journal, "Although the UAW has said it is ready to negotiate, UAW President Ron Gettelfinger said Monday it is unclear what kind of reductions it will have to agree to."

The people at the house that Walter Reuther built are cagey. They know that the new Congress and administration will be wrestling with an economy which is surrendering over 500,000 jobs a month. While a stimulus package may fill in that hole and begin to build on that ground, the process could take several quarters. In the meantime, the federal government will do everything it can to stop the bleeding of jobs out of the economy.

By most calculations, the failure of Chrysler and GM (GM) would cost one million jobs. Some estimates put that at two million. Either way, the economy could not handle it without tipping toward a depression. The UAW knows that it holds that card and it is an ace.

Obama is willing to spend $700 billion to create four million jobs. The mathematics of Detroit is that $30 million or $40 million could keep The Big Three in business through the entire year. Keeping all of auto workers employed comes at a bargain.

The UAW is not going to do any real bargaining. It can save the jobs of its members by doing nothing at all.

Douglas A. McIntyre