Business Blog: Hoover’s Business Insight Zone

Today’s Company of the Day is the United Auto Workers.

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If negotiations keep going as smoothly as this, the members of the United Auto Workers may award their leadership with a little extra time off. Last month’s UAW strike at General Motors was short enough at two days, but even it was trumped by the six-hour strike this week at Chrysler. Each of the strikes helped lead to new four-year contracts for the UAW, and in each case the parties at the bargaining table agreed to set up trust funds to cover the health-care costs of retirees, which have weighed heavily on Detroit’s Big Three in recent years. This week’s deal also allayed fears that Chrysler’s deep-pocketed owners at Cerberus Capital Management would try to play hardball with the union. (In fact, some observers questioned whether the strike was needed at all, since the sides came to terms on the same day that the walkout was called.)

The UAW, which traces its origins to the Depression era, represents the interests of 640,000 active automotive workers and half a million retirees. The union enjoyed its heyday — and held its biggest labor strikes — during the decades-long industrial boom that followed World War II in the US, but has suffered over the past 30 years as the US automotive industry has lost ground to competitors based overseas. The Big Three have argued that those rivals enjoy entrenched advantages over them, especially in the area of health care costs. (Workers in Japan and Europe typically receive health benefits from their governments rather than from their employers, as in the US.) Certainly the Big Three have lost ground to these rivals; Toyota has overtaken GM as the top worldwide car maker, not to mention Ford as the #2 maker in the US. Now Ford faces its turn with the UAW, and though the unions leaders say that talks are going well, Ford is also hurting worse than its American peers. Even a long strike might not let the UAW squeeze blood from that turnip.

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