A retiree healthcare deal astir in Detroit
Detroit automakers, hit with huge losses, may spin responsibility off to the labor union during contract talks this summer.
from the May 29, 2007 edition
Page 4 of 4
"Corporations really do mimic what other corporations do," says Teresa Ghilarducci, a labor economist at Notre Dame University in Indiana, who serves as a trustee on a GM VEBA.
In that light, she says it's significant that the big three are not opting for bankruptcy as a route out of their current crisis.
The union workers of some airlines have lost their retiree health plans during bankruptcy proceedings (where those liabilities can be discarded).
For the automakers, bankruptcy is less of an option. Where consumers will buy a $400 plane ticket from a bankrupt company, a $25,000 car with years of use ahead is a different matter.
The Big Three also have a tradition of finding common ground, sometimes after hard battles, with the UAW.
Cerberus, the private equity buyer of Chrysler, is expected to push hard for concessions.
But it has made early overtures that its cost-cutting won't become an all-out war on union jobs and benefits.
"John Snow [the Cerberus chairman] is from Toledo. He probably has some credibility when he says he wants to work successfully with unions," says John Paul MacDuffie, a management expert at the University of Pennsylvania's Wharton School.
Mr. MacDuffie points to the success of Wilbur Ross, an investor who has revived battered American steel factories, as an example of how buyouts can involve both profitability and good labor relations.
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