1 Comment

• Natalia says:

  Dear Bryce,

  It is likely that this message won’t reach you, but I felt the need to respond to your criticism.

  Though there are undoubtedly many factors that contributed to the fall of GM, I would not dismiss the union’s fault so lightly. Yes, GM did jump the gun by producing trucks instead of green cars, but many of their products still sold. When they sold, however, the margin realized by GM was much slimmer than that of its competitors. With legacy costs (pensions and benefits) at $1,600 per vehicle, nowhere near its Japanese competitors, GM had little room for price flexibility. GM’s unionized labour demanded significantly higher wages than a non-unionized workforce. Less and less money became available for marketing and R&D. UAW strikes cost GM billions of dollars and led to more and more inflexible labour contracts. So no, the union was not the only cause of GM’s bankruptcy, but it is hardly sophomoric to suggest that it was not a major one.

  Here is a good Wall Street Journal article with more on this (http://online.wsj.com/article/SB124389995447074461.html).

  These are things I would address if I were writing a paper on UAW’s role in the collapse of GM. But I wasn’t. I was simply expressing my frustration at the ludicrous stubbornness of the ATU – Local 741 in demanding a 20% raise during the recession and being unwilling to settle for reasonable counter-offers. A union weighed heavy on GM; a union weighs heavy here.

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