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A Union Divided Against Itself: The UAW’s Conflict of Interest

Posted By Jesse Blumenthal On July 1, 2009 @ 3:20 pm In Economics | Comments Disabled

In the wake of the General Motors and Chrysler’s bankruptcies, United Auto Workers finds itself in a complicated position.

In some sense it has achieved a Marxist ideal: it has gained (at least some) control of its means of production. The UAW owns 55 percent of Chrysler and 17.5 percent of GM. Consequently, however, the UAW is placed in a strange situation when negotiating with Ford. [1]

Currently, the UAW has partial ownership of Ford’s competitors and varied obligations to its current workers and retirees. In short, the UAW has conflicting interests. The union is now more than a representative for labor workers. It is both the employer and the employee of Chrysler and GM; and is both the competitor and the employee of Ford. The UAW is, to say the least, conflicted.

Does the UAW intend to drive a hard bargain with itself? The labor union can give up a key bargaining chip: its threat to strike. However, will it hurt itself as an employer or help itself as an owner? In the past, it was in the interest of the UAW to create equality of labor conditions across the industry, but today the incentives have changed.

As a part of the resurrection of GM and Chrysler, the UAW agreed not to strike against those companies until 2015. Ford now wants the same concession. Rather than enter into the embrace of the government, Ford made necessary cuts which helped it weather the current economic storm. Now, as Ford deals with the UAW, it must question where the union’s intentions lie.

The UAW’s agreement not to strike against GM and Chrysler gives those companies an advantage in negotiations that Ford did not receive. As a result of its foresight, and refusal to accept bankruptcy, Ford is now at a disadvantage, while GM, Chrysler, and the UAW continue their cozy relationship. Politics really does make strange bedfellows.


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URL to article: http://blog.heritage.org/2009/07/01/a-union-divided-against-itself-the-uaw%e2%80%99s-conflict-of-interest/

URLs in this post:

[1] negotiating with Ford.: http://www.freep.com/article/20090618/BUSINESS01/906180592/Ford+wants+UAW+s+no-strike+pledge++too

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