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Monday, April 21, 2014
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Published: 12/5/2008

Auto concessions welcome

THE willingness of the United Auto Workers Union to make contract concessions to help secure federal aid to the auto industry is a welcome, if somewhat belated, acknowledgement that the high cost of labor is a major factor in the industry's ongoing problems.

The Cadillac-style wage and benefit package that UAW members have enjoyed for years is the direct antecedent to the crushing pension and health-care expense Detroit's Big Three now struggle with in an effort to remain viable.

While many Americans - and, indeed, workers in other economic sectors - voice resentment that these generous contracts have made auto workers into a coddled blue-collar class, the UAW doesn't deserve all the blame. It merely succeeded at exploiting the willingness of a long line of weak industry executives who sought to buy labor peace by mollifying the rank and file.

When foreign manufacturers threatened in the 1960s, the UAW had a choice between protecting jobs and defending its upscale pay and perks. Unfortunately, it, with complicity from industry chiefs, chose to lard up wages and benefits, eventually including the jobs bank, a scheme that insulated workers from reality by giving them most of their pay even when they were laid off. As a result, the union's active membership dropped from a peak of 1.53 million in 1969, virtually all making cars, to fewer than 500,000 now, many in nonindustrial jobs.

UAW President Ron Gettelfinger, who has already presided over a host of union givebacks, indicated that he understands that further concessions are necessary if his members are to have any jobs at all.

Without agreeing to actually reopen UAW contracts at General Motors, Ford, and Chrysler, Mr. Gettelfinger said the union is willing to entertain contract changes, including phase-out of the jobs bank and a delay in company payments to the new union-run health-care fund, if the action will help convince Congress to provide $34 billion in loans needed to keep the industry afloat.

Workers on the shop floors in Toledo and Detroit may dislike the idea of such concessions but we have little doubt that, given the current and deepening recession, they now realize that the union's long-running gravy train has reached the end of the line.

Whether this fundamental shift in industry economics comes soon enough to do some good remains to be seen.



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