GM/UAW High-Wire Act Becomes Higher

I’ve previously posted about the high-wire act being performed by General Motors and the United Auto Workers. In light of President Obama’s recent declaration that GM has 60 days, and only 60 days, to get its act together, the high-wire act has become more dangerous. Since this announcement, the b-word (bankruptcy) has been on the tip of everyone’s tongue.

According to the New York Times, the only way GM can avoid bankruptcy is to obtain further concessions from UAW on a labor contract that’s long been the envy of the entire labor movement. The difficulty for UAW leaders isn’t just persuading the membership to agree to more wage and benefits cuts (similar to what’s already been done at Ford). It’s also knowing that if GM does go into bankruptcy, a bankruptcy judge could set aside all labor contracts, terminate pension plans, and take other action designed to make GM come out of the bankruptcy on more solid footing.

It’s by no means a given that a bankruptcy judge will side with the company and against the union in all respects. In fact, that’s unlikely. Right now, the UAW still has some clout and some control over what will happen. In bankruptcy, both clout and control will be gone. Think about performing on a high-wire stuck between a rock and a hard place. Yikes!