GM: Just Take The Job Cuts

GM (GM) and its Detroit peers have been pushing the UAW to consider establishing a fund to handle the health care costs of its members. The car companies would contribute as much as $60 billion to this fund, but its would take huge employee liabilities off of their balance sheets. A similar system was set-up between Goodyear (GT).

Now the news has emerged that GM has offered an alternative. No fund. Deep job cuts. According to The Wall Street Journal this proposal calls for "more-painful cuts in several areas so that GM can inch closer to labor-cost parity with its chief rival, Toyota (TM)."

The options of taking large numbers of jobs out of the GM workforce presents a real problem for the UAW leadership. A number of local unions have voted to authorize a strike. Who pays their benefits is secondary to whether they have jobs or not.

The negotiations between the union and the so-called Big Three will almost certainly move past their deadline on September 14. It is still not clear that any progress has been made on setting up a UAW run fund for pensions. If the car companies cannot have that, job cuts are the only other bargaining position that they can take.

A bit of a revolt among the rank and file could lead to labor stoppages. This would be short of a full-blown strike, but it could disrupt vehicle supply nonetheless. UAW members know which plants produce the best-selling vehicles.

If "mini-strikes" being, there is no telling where they will stop.

Douglas A. McIntyre