There was a time when a strike at General Motors could be a trendsetting event. The legendary 1936-37 "sit-down strike" led to the emergence of the United Auto Workers as the dominant union in the auto industry. A 69-day strike in 1970 helped push the country into a recession. A wildcat walkout at Lordstown, Ohio, in 1972 was widely interpreted as a symptom of the baby boomers' workplace alienation.
By contrast, the brief walkout by 73,000 UAW workers that ended Wednesday was front-page news but in an anachronistic sort of way. Both GM and the UAW are shadows of their former selves, shrunken by years of unsuccessful competition with Japanese companies. Nowadays, GM loses $1,436 on every car and truck it builds in the United States. These horrific numbers are the consequence of years of shortsighted labor negotiations in which the auto union demanded lush wage and benefits packages and the auto companies wrote them into legally binding contracts, thinking that they could pass the costs on to consumers forever. Until 2005, one of the benefits was free health coverage for retirees, paid for by the companies. The cost to GM of doctor visits and prescription drugs for working and nonworking UAW members and their spouses was up to $1,634 per vehicle in 2005.
Thus, the great issue of this industrial conflict was not the right to organize, youthful alienation, or even wages and conditions, but health care. The agreed-upon solution is for GM to make a one-time payment of $35 billion into a health-care trust fund that the union will administer. No longer will the company pay for benefits out of its cash flow; no longer will GM and the UAW bargain over such questions as the co-payment for Viagra (an actual subject of negotiation in 2005). It will be up to the union to administer the program; it remains to be seen whether the UAW will offer the still-sweet $370-per-year insurance deal that the company has had to provide since union "givebacks" in 2005. The company says the agreement will reduce its current $5.6 billion health-care burden by about $1 billion per year; Ford and Chrysler should enjoy commensurate savings if they sign similar deals as expected. Also, the UAW has agreed to let the company hire non-manufacturing workers at lower, nonunion rates, a key concession that the union had resisted for years.
In return, the union receives some job-security concessions, which, though modest, are probably unrealistic, along with the prospect of signing up a few thousand temporary workers who will be reclassified as full-time. What both sides really seem to be hoping for is that the new agreement is not too little, too late to salvage a once-proud sector of American manufacturing - and the co-dependent labor and corporate institutions that have run it for generations. The auto industry and its unionized workers did not get into this hole overnight, and they won't get out of it quickly - if ever. But at least they realize they must stop digging.
