The government having a major stake in an American company was obviously in-conflict with the Constitution, but the United Auto Workers union (UAW) having a large stake in GM and Chrysler was an outright conflict-of-interest. Obama followers said that it would not cause any problems and that Conservatives were just overreacting. Bloomberg.com reported today, that the UAW is refusing to give Ford the exact same concessions it gave to the GM and Chrysler which will put Ford at a competitive disadvantage against its two propped-up competitors.
“Ford, the only major U.S. automaker to avoid bankruptcy this year, sought concessions similar to those secured by General Motors Co. and Chrysler Group LLC…Ford has said it needs the concessions to ensure that it doesn’t have a labor-cost disadvantage against GM and Chrysler, which unloaded debt, closed plants and eliminated dealership contracts in their court restructurings…About 75 percent of members voting nationwide rejected the deal, one of the people said. It called for a six-year ban on strikes over wages and benefits.”
Concerns over the UAW taking this approach at strengthening their financial stakes in GM and Chrysler by holding Ford to a non-competitive agreement have now been proven true. The UAW stands to take a possibly-fatal financial blow if GM and Chrysler do not succeed. By trading cash for stock in those companies, the UAW is now relying on the two bankrupt car companies to return to profitability.
GM is coming back to the government for another bail-out as it’s restructuring plans are not making the company successful. How much of a hand does the Obama administration have in formulating this strategy to ruin the only non-government owned, non-union backed American automotive company? The President would lose a large portion of his support if the UAW was destroyed by the fall of GM and Chrysler. The administration now has a personal interest in seeing Ford at a disadvantage to its two new assets.
This is precisely why the government should not get involved in private industry. It cannot be impartial, it will destroy the free-market system one industry at-a-time. This is the disassembly of capitalism, “brick-by-brick” as Robert McChesney, an Obama Czar, claimed they would do. How long until America wakes up?
I, for one, hope Ford shuts-down every factory in Michigan between now and the end of its current UAW contract (2011). FMC should then open even more plants in right-to-work states such as Texas and see where the competitive advantages are then.