Michael Barone

The United Auto Workers' strike against General Motors last week turned out to be brief. The company and union negotiators reached agreement not much more than 48 hours after union members started picketing. It barely made the front pages of most newspapers and seems to have made few ripples in the stock market. It didn't last long enough for any Democratic presidential candidate to walk the picket line.

What a contrast with the last UAW national strike against GM. In September 1970, 400,000 workers, 0.5 percent of the nation's non-farm employees -- one of every 200 workers -- walked off the job. Last week, only 73,000 workers struck, 0.05 percent of the national total.

The 1970 strike lasted two months, during which the national unemployment rate rose from 5.1 percent to 5.5 percent. It was estimated that the strike cut the growth in gross domestic product for the quarter from 2.5 percent to 1.4 percent.

The 2007 strike lasted two days, and its effect on GDP seems negligible. At the time of the 1970 strike, GM accounted for 50 percent of all U.S. auto sales and foreign manufacturers for only 15 percent. Now, GM accounts for 24 percent of U.S. auto sales and foreign manufacturers 49 percent.

And, of course, there is this: In 1970, GM was the nation's largest corporation, hugely profitable, so dominant in the industry that its executives were fearful the government would bring an antitrust suit against it. In the past two years, GM lost $12 billion.

No one seems to have expected this back in 1970. "We are the architects of the future," Walter Reuther, UAW president from 1946 until his death in a plane crash in the spring of 1970, proclaimed. The 1970 contract restored the cost-of-living adjustments Reuther had set aside three years before, instituted "30-and-out" (retirement after 30 years) and increased the already lavish healthcare benefits.

The definitive book on the 1970 strike, "The Company and the Union," by William Serrin, published in 1973, criticized the union for not asking for more. John Kenneth Galbraith's "The New Industrial State," published in 1967, predicted that big corporations would only get bigger, that they could create through advertising demand for their products and that U.S. auto companies could increase sales by jazzy styling and planned obsolescence (i.e., cars that would wear out in two or three years).

This has not proved to be a sustainable business model, as GM executives figured out some time ago and as the UAW effectively conceded last week. Thanks largely to the healthcare and retiree benefits, GM's hourly labor costs in the United States are about $75, compared with about $50 for Toyota and other non-U.S. companies.


Michael Barone

Michael Barone, senior political analyst for The Washington Examiner (www.washingtonexaminer.com), is a resident fellow at the American Enterprise Institute, a Fox News Channel contributor and a co-author of The Almanac of American Politics. To find out more about Michael Barone, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com. COPYRIGHT 2011 THE WASHINGTON EXAMINER. DISTRIBUTED BY CREATORS.COM


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