Uaw And Gm example essay topic

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 deadline to come up with a deal. Getting big savings without touching retirees will be almost impossible. Analysts have predicted GM to lose 4 billion this year alone. So far the UAW said they will not reopen the current national collective bargaining agreement to help cut automaker health care cost.

They claim that they are doing everything possible to prevent GM from going under because it helps them too. It would be a mistake to allow significant change in health care benefits to wait until the contract is renegotiated in 2007. The UAW's preference for a national health care plan is unrealistic. Health care inflation is seriously hindering the ability of GM to compete. Neither the Bush administration nor Congress is inclined to offer any aid through national health care. GM spends roughly 1,500 per car in health care cost.

While downsizing cuts GM's payroll, the bill for retiree health care and pensions rises. GM legacy costs made the stock unattractive and high cost left GM with less to spend on innovation. When the old contract expires in September 2007, and GM market share will continue to erode and legacy cost burdens will crush GM (Gandel, 2005). There are some alternatives for GM and the UAW on this issue. GM and UAW could negotiate modest savings in prescription drugs. They could raise co-pays and deductibles on some of its nontraditional HMOs and PPOs.

This alone will save GM about 200 million. Paring the doctor network to eliminate high-cost health care provider could save up to 400 million a year. GM also could eliminate many of its nontraditional plans by getting nearly all UAW workers and retirees in GM's Blue Cross / Blue Shield plans. Half of GM union members already subscribe. This could net the company a bigger bulk rate. If the UAW agrees, this could save GM at least 500 million a year.

The union can act like it is not their problem, its time for GM and UAW to collaborate. It may be against their standards and morals, but the UAW must give GM a significant break on health care before the organizations are damaged irreversibly.