Worker Ownership of Ford?

While the GM and Chrysler bailouts have prompted discussion of governments taking equity stakes in those companies, Business Week reports that Ford’s effort to restructure without government loans may make the United Auto Workers its largest shareholder.

Henry Ford famously said, “Failure is simply the opportunity to begin again, this time more intelligently.” It seems unlikely that worker ownership is what he had in mind.

One comment

  • The same thing will happen at GM and Chrysler, too, under a proposed deal to fund the UAW’s retiree health care trust fund (called “VEBA”) half with equity of the major auto companies.

    That requirement was imposed by George W., in one of his parting acts, in order to shift more of the risk associated with the restructuring to workers (both active and retired).

    The 3 companies owe approximately $50 billion in liability for the health care benefits it promised to existing retirees. If half of that is paid in the form of stock in the 3 companies (heck, why not just pay it with Monopoly money?), then the UAW’s VEBA would end up owning about one-third of the companies (depending on how much new equity is also issued to bondholders as part of their coming “haircut”).

    This will indeed be a hugely ironic outcome. The union will own the companies, hoping that they survive so as to continue funding retiree health benefits, unfunded pension obligations, and (of course) current employment opportunities. This creates all kinds of troublesome conflicts of interest (does this mean the union would ever go on strike against itself?).

    Who would have thought that America’s bizarre failure to provide public health care would ever lead to this equally bizarre form of worker-owned socialism?

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