So what you're saying YIP, is companies really are able to make changes needed to remain competitive even if there is a pilot union. Glad you finally changed your mind.
Only at viable companies, company leveraged to the hilt are hindered by union resistance to change and the fear the strike they will interrupt cash flow and bring an eventual end to the company The 1994 UAW/GM confrontation is a classic example of a unions ability to destroy a company.
In 1994 the UAW pushed GM into a deal it knew it could most likely not fulfill. It gave unlimited medical and COLA to retirees. GM knew a lengthy strike might drive them into BK. They had exhausted the equity markets, and borrowing was no longer an option they fully leveraged. Much like living off your credit cards. So they bet on maybe things would work, but they knew in the end they were in trouble. The power of a potential union strike drove them to make a bad management decision.
As they lost market share to foreign rivals, Detroit's auto makers and the UAW lost the power to set standards on labor costs. Yet during the prosperous 1990s, they seemed reluctant to accept the fact that their business model -- with its expensive defined-benefit health and pension programs -- was driving the domestic industry toward ruin. The UAW and its biggest employer have effectively conceded that their golden age of dominance is over.
GM executives consistently acknowledged that it couldn't be competitive in North America without a fundamental change in its labor-cost structure. But the UAW wanted more, so in 2004 they got pay for employees who were no longer employed by GM because their factory had been shutdown. BK became the only hope.
The UAW got a harsh lesson in the consequences of bankruptcy proceedings when former GM parts unit Delphi Corp. sought Chapter 11 protection in 2005, and pushed through substantial job and wage cuts under a deal subsidized by GM.
GM's obligation to provide health care for 412,356 union members, retirees and surviving spouses lies at the heart of 1994 agreement. Even after a partial overhaul of retiree health-care benefits in 2005, GM still faced a $51 billion obligation to UAW members. Health-care obligations added more than $1,900 to the cost of every GM vehicle sold in the U.S. in 2006, a heavy burden given that many GM vehicles sold for less than competing Toyota vehicles.
Now non-union Toyota employee make more than UAW new hire GM employees
