"What's happening at Chrysler and GM is not employee ownership in any recognizable way," said Corey Rosen, founder and executive director of the nonprofit National Center for Employee Ownership. "The employees don't own any part of Chrysler or GM, it's the health trust, and they're going to sell that stock as soon as they can. It's more like somebody saying 'I can't pay the money I owe you, so take some stock and you can sell it.'"
That's exactly what the union intends to do, its president Ron Gettelfinger said Friday in an interview with National Public Radio.
"The VEBA's going to be stressed in order to pay the benefits. So what we will need to do ... is as soon as we possibly can, to start selling these shares," he said.
Fiat is a likely buyer for at least part of the UAW shares, should they gain value. Under its deal with Chrysler, the Italian automaker takes an initial 20% stake in exchange for small-car technology. That can rise to 35% as goals are met, and Fiat has options to bring its stake up to 51%.
Even with the stock, the union won't have much say in the Chrysler boardroom. The trust gets just the one board seat, and it has to vote its shares "in accordance with the direction of the independent directors on the Chrysler board," according to a summary of the UAW's contract concessions.
Owning 55% of a company doesn't mean you're managing or even significantly influencing it. Three big employee groups at Chicago-based UAL Corp. agreed to wage cuts and work rule changes in 1994 in exchange for 55% of UAL's stock and board seats.
It worked for a year or so. Management introduced task force teams and invited employees into strategy sessions aimed at lowering costs. But the sense of partnership soon unraveled as the employees learned that stock ownership didn't translate to real power or even an ability to sway the board. The employee stock ownership program was eventually eliminated during UAL's Chapter 11 restructuring, in 2003.
Employees of Tribune Co. also got majority ownership as part of the 2007 deal that made multibillionaire investor Sam Zell chairman and CEO. But they also shouldered a good deal of the risk — without control, or even board representation. The future of Tribune's ESOP is highly tenuous with the Chicago company now in bankruptcy court.
The UAW for years had a seat on the boards of Chrysler and DaimlerChrysler AG — Chrysler's previous owner — but had little to show for it, said Harry Katz, dean of the Cornell University School of Industrial and Labor Relations. "That never connected down to the shop floor," he said.
Unlike European unions, the UAW has shied away from boardroom power plays, instead exercising its will at the bargaining table, he said.
Katz said the UAW, through the stock it will get, has gained power relative to management, but it doesn't mean as much when there are no profits to divvy up.
The union was able to preserve base wages and rich health benefits, which is remarkable even though it had to make other concessions, Katz said. He noted that workers represented by the UAW fared far better than nonunion employees at other companies that have entered bankruptcy protection, such as defunct Houston-based energy company Enron Corp.