Thursday, September 22, 2011

Is the UAW consuming itself?


Readers are probably familiar with the legend of Ouroboros, the snake that eats itself. It looks as if the United Auto Workers Union has moved beyond familiarity to actual imitation. Reuters reports:

Bob King, the president of the United Auto Workers, has a problem: the labor union that credits itself with creating the American middle class has glimpsed the end of the line.

Two years after the wrenching restructuring of the U.S. auto industry and the bankruptcies that remade General Motors and Chrysler, the UAW is facing its own financial reckoning. America's richest union has been living beyond its means and running down its savings, an analysis of its financial records shows.

Unless King and other officials succeed with a turnaround plan still taking shape, the next financial crisis in Detroit may not be at one of the automakers but at the UAW itself.

That picture of the growing financial pressure on the 76-year-old union emerges from a Reuters analysis of a decade of UAW financial filings and interviews with dozens of current and former union officials and people close to the union.

. . .

King is betting that a union forged in Depression-era Detroit can connect with a generation of American workers who grew up long after the peak of the UAW's clout in the 1950 and 1960s and who live in southern states traditionally hostile to labor unions.

That will mean spending big on a campaign to attract non-union workers in plants owned by foreign automakers in the south.

. . .

That more aggressive approach threatens to push costs higher for the UAW when it has been forced to sell assets to make up from dwindling dues from a declining base of active workers.

The union has been slow to trim other outlays. Since 2007, the union's spending has included promotional items such as flyswatters emblazoned with the UAW logo ($5,000), bowling ball buffers and bags ($33,000) as well as spending on golf outings and at golf resorts ($346,000). The union says it is forced to book meetings at golf resorts because in some areas of the country those are the only conference facilities large enough.

The UAW also spent at least $2 million on advertising in 2008 to build support for the union and the first wave of "bridge" loans for General Motors and Chrysler. Both automakers were spared liquidation by a bailout orchestrated by President Barack Obama in 2009.

UAW officials acknowledge that the practice of relying on the union's savings will have to end.

"If the UAW continued to sell assets to operate, how long of a period does it take before you no longer can sustain that?" UAW Secretary-Treasurer Dennis Williams told Reuters.

. . .

The UAW remains America's richest union. The value of assets on its balance sheet top $1 billion. Some of that, especially real estate, could be worth far less if the union was forced to sell in a hurry, analysts say. Even so, the UAW's reported wealth is almost twice as much as that held by the second-richest union, which was the United Brotherhood of Carpenters in 2010.

Most of the UAW's wealth sits in its strike fund, which stood at $763 million at the end of 2010. But the sheer size of the fund masks a deterioration of the union's day-to-day finances, especially since 2007.

To bridge the gap between spending and revenue, the UAW has increasingly relied on selling its investments, which include U.S. Treasuries and stocks, and a handful of properties. From 2000 to 2006, the UAW sold $7.3 million. That ballooned to nearly $222 million from 2007 to 2010, government filings show.

"It illustrates to me that their cost structure is not aligned with the revenue that they're getting from their rank and file," said Peter Bible, former chief accounting officer for GM who is now a partner-in-charge at accounting firm EisnerAmper LLP.

. . .

The erosion of the UAW's wealth could also undercut the union's power in national politics where it remains a key ally of the Democratic Party. Williams, for example, is a veteran political organizer who campaigned for Obama in 2008 and remains close.


There's more at the link. (A more detailed version of the report, complete with graphics and images, may be found here as an Adobe Acrobat document in .PDF format. It includes an interesting sidebar on the UAW's luxury resort ownership . . . something that appears incongruous in an organization like that, to put it mildly!)

Let me say right away that I'm not anti-union. I've been a dues-paying member of a union in the past, and found membership in it to be very valuable during a couple of workplace difficulties. However, I also believe that the single largest contribution to the present problems of the 'big three' US automakers has come from the UAW. I regard it as bloated, self-centered and demanding; a liability rather than an asset to the industry and its members; and stuck in the past, unable to keep pace with the present and/or position itself for the future. Furthermore, its role in the bailouts of GM and Chrysler, where the rights of non-union employees and investors were trodden underfoot by the Administration in order to favor their union allies, was (in my opinion) as corrupt as hell.

As far as I'm concerned, the UAW could collapse completely tomorrow, and be swept into the dustbin of history, and I wouldn't shed a single tear for it. I hope it happens sooner rather than later - and not only to the UAW, but to the thuggish SEIU as well!

Peter

2 comments:

Arthur B. Burnett said...

Greetings from Texas,
I have to ask, does the person who wrote this know ANYTHING about the history or the UAW, or Unions in general. There may be Union Bosses who would lose sleep over ordering the murder of someone causing a problem, and his or her family, but not many.

perlhaqr said...

Oh, like we won't just bail them out too.