GM could be forced to shut its doors at a cost of 1 billion per week if Delphi’s union contract cancellation request is denied. The United Auto Workers Union has said it would be "impossible to avoid a long strike" and that there is no reason to continue talks at this point.
It would seem the union has the upper hand. However, GM and Delphi are sending the signal back that if the union strikes there may not be any jobs to go back to after the strike.
The union is the real loser here. Either way they lose. If they go on strike GM and Delphi will have to file for bankruptcy and shut the doors and their contracts are void. If they offer concessions they still lose because jobs and wages will be cut and they give up power.
GM can win either way. Although chapter 11 maybe bad for publicity it maybe a chance to void union contracts and cut excess fat. If the union offers concessions they still win because GM can still cut and trim costs.
Either way the US economy in the long run will benefit. GM has been run like a government pork project since the 50’s. It’s time they get competitive in the global economy. However, in the short run this shake up will sting.
1 comment:
Hannah seems to have a good handle on the game theory: the dominant strategy for GM is to not negotiate, and the resulting outcome for the union doesn't seem to depend much on their strategy choice.
As to Cole's point about the claims made by unions, they can say these things because the are exclusionary institutions. If they can make insiders happy by hurting outsiders, then they have succeeded.
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