GM/UAW Essay

This essay has a total of 922 words and 4 pages.


GM/UAW What Can We Expect?
In the past, General Motors (GM) has been the top seller of the three major automakers and
had one of the strongest unions in the United States. Today, GM is decreasing in rank due
to other automakers. The moral among the members of the United Auto Workers (UAW) is
diminishing. If things continue on this current path, GM may be of the pass. Even with all
the discounts GM is advertising, this may not be enough to pull them out of their
financial burden. Could the answers to GM worries be the UAW?

The UAW was organized in the late 1930's. The purpose of the organization was to protect
the workers rights. GM was not in agreement with the workers forming a union. After much
debate, the workers staged a sit down strike that lasted about six weeks. This
tremendously affected GMs' profits and they decided to give recognition to the UAW as
having the right to represent workers who are union members.

The UAW and GM are both strong organizations in their own rights. They must put aside
their past disagreements and come together to help GM out of this financial situation. GM
has threatened to make cuts on their own, causing breakdown in the relationship with the
union. UAW is willing to make concessions, but not to the extent of what GM is demanding.
UAW needs to open a contract talk before 2007, in order for GM to survive. Without a GM
there will be no UAW, and UAW needs to remember that.

GM and UAW seem to be playing a dangerous game that can destroy many people's lively hood.
GM is hurting financially and instead of asking for help from the UAW, GM prefer to
threaten them about health care costs. GM chairman, G. Richard Wagoner Jr., said recently
that he prefers to collaborate with the UAW on health care issues rather than a fight. Mr.
Wagoner stated that he would press the issues for health care cost cuts with or without
the union's approval. It is crystal clear that we need to achieve a significant reduction
in the health care cost disadvantage and it needs to be done now (Welch, 2005).

GM is seeking to slash health care cost and the stakes are massive. Billion in potential
savings for GM if their demands are met, but if not GM will have lost billions if the UAW
strikes. The last walk out in 1998 lasted 54 days and cost GM two billion. The cost paid
by the striking union members went months without weekly 40 hour paychecks. This put a
financial burden on many families, especially those families with both parents working for
GM (Gandel, 2005).

GM problems are international. One billion was estimated in first quarter losses, with its
enormous obligation to retirees. GM paid 5.2 billion to retirees and their dependents. The
legacy cost burden will increase as more workers retire and the number of active employees
continues to drop. Although cutting medical benefits for union retirees and its workers
would save GM one billion a year, it will not be enough. If GM went after retiree
benefits, this could spark a labor war. Despite all the tough talk, neither side wants to
go to war. This would be devastating to all concerned. GM board gave the UAW a June
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